
Lucas Botzen
Founder & Managing Director
Last updated:
September 21, 2025
What is an Employer of Record in Bhutan?
View our Employer of Record servicesAn Employer of Record (EOR) in Bhutan is a company that legally hires employees on your behalf. This allows you to build a team in Bhutan without needing to set up a local entity. An EOR handles all the HR tasks like payroll, taxes, benefits, and compliance with Bhutan's labor laws. Think of them as your local HR partner, managing the administrative side of employment so you can focus on your business. For companies looking to hire in Bhutan, an EOR provider like Rivermate can simplify the process. You can learn more at https://rivermate.com/employer-of-record.
How an Employer of Record (EOR) Works in Bhutan
Using an EOR in Bhutan streamlines the process of hiring employees. Here is a simple breakdown of the steps:
- You Find the Talent: Your company is responsible for finding and selecting the candidate you want to hire in Bhutan.
- The EOR Hires the Employee: The EOR provides a compliant employment contract and legally hires the employee on your behalf.
- HR and Payroll Management: The EOR manages all payroll, tax deductions, and social security contributions. They ensure everything adheres to Bhutanese labor regulations.
- You Manage Daily Work: Your new employee works for your company, and you manage their day to day tasks and responsibilities.
- Ongoing Compliance: The EOR stays current with any changes in local labor laws to ensure ongoing compliance.
Benefits of Using an EOR for Hiring in Bhutan
Using an EOR to hire in Bhutan offers several advantages, especially for companies expanding internationally. It provides a fast and efficient way to enter the Bhutanese market without the significant investment of time and money required to establish a local legal entity. This allows you to start operations and onboard new team members quickly.
- Avoids Setting Up a Local Entity: You can hire employees in Bhutan without the cost and complexity of registering a local company.
- Ensures Legal Compliance: An EOR has expertise in local labor laws, which helps you avoid legal issues and penalties. They manage employment contracts, taxes, and social security contributions correctly.
- Saves Time and Resources: By outsourcing HR and administrative tasks, your team can focus on core business activities.
- Faster Market Entry: An EOR allows you to hire employees and begin operations in Bhutan much faster than if you were to establish your own entity.
Responsibilities of an Employer of Record
As an Employer of Record in Bhutan, Rivermate is responsible for:
- Creating and managing the employment contracts
- Running the monthly payroll
- Providing local and global benefits
- Ensuring 100% local compliance
- Providing local HR support
Responsibilities of the company that hires the employee
As the company that hires the employee through the Employer of Record, you are responsible for:
- Day-to-day management of the employee
- Work assignments
- Performance management
- Training and development
Costs of using an Employer of Record in Bhutan
Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Bhutan includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Bhutan.
Employ top talent in Bhutan through our Employer of Record service
Book a call with our EOR experts to learn more about how we can help you in Bhutan







Book a call with our EOR experts to learn more about how we can help you in Bhutan.
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Hiring in Bhutan
Hiring in Bhutan requires understanding its unique employment landscape. The country's labor laws aim to protect employees while fostering a productive work environment. You'll find that written contracts are mandatory, and specific regulations govern everything from working hours to holiday leave. Navigating these rules is key to a smooth and compliant hiring process.
Employment contracts & must-have clauses
In Bhutan, you must provide a written employment contract to every employee. This document is the foundation of your relationship and must be in writing to be legally binding. Think of it as a clear agreement that protects both you and your employee by setting clear expectations from the start.
You can use either indefinite or fixed-term contracts. Indefinite contracts are for ongoing employment, while fixed-term contracts specify an end date or the completion of a specific project.
Your employment contracts must include these essential clauses:
- Identification of both parties: Names and addresses of the employer and employee.
- Job details: The employee's title and a clear description of their duties.
- Workplace location: Where the employee will be based.
- Start date: The official commencement date of employment.
- Contract duration: Specify if it's a fixed-term or indefinite contract.
- Working hours: The expected hours of work.
- Compensation: Details of the salary, wages, and any other benefits.
- Leave entitlements: Information on annual, sick, and other types of leave.
- Probationary period: If applicable, the duration and terms must be stated.
- Termination clauses: Procedures and notice periods for ending the contract.
- Dispute resolution: The process for handling disagreements.
Probation periods
Probation periods in Bhutan allow you and your new employee to assess if the role is a good fit. The maximum duration for a probationary period is up to six months. During this time, either you or the employee can terminate the contract with a shorter notice period, typically just one week. It's important to clearly state the length and terms of the probation period in the employment contract.
Working hours & overtime
Standard working hours in Bhutan are straightforward. The law sets the maximum at eight hours per day and 48 hours per week. For work beyond these standard hours, you must pay overtime.
Category | Details |
---|---|
Standard Workday | 8 hours |
Standard Workweek | 40-48 hours |
Overtime Pay | At least 1.5 times the employee's regular hourly wage. |
Night Work Premium | Work between 10:00 PM and 7:00 AM may entitle employees to additional compensation. |
Public & regional holidays
Your employees in Bhutan are entitled to paid public holidays. These holidays are a mix of national celebrations and Buddhist festivals. The dates for many of these holidays are based on the Bhutanese lunar calendar and can change each year.
Here are some of the key public holidays for 2024:
- Winter Solstice (Nyilo): January 3
- Traditional Day of Offering: January 12
- Losar (New Year): February 10-11
- Birth Anniversary of His Majesty the King: February 21-23
- Shabdrung Kuchoe: April 18
- Birth Anniversary of the Third Druk Gyalpo: May 2
- Lord Buddha's Parinirvana: May 23
- Birth Anniversary of Guru Rinpoche: June 16
- First Sermon of Lord Buddha: July 10
- Blessed Rainy Day: September 22
- Dashain: October 12
- Coronation of His Majesty the King: November 1
- Birth Anniversary of the Fourth Druk Gyalpo: November 11
- Descending Day of Lord Buddha: November 22
- National Day: December 17
Hiring contractors in Bhutan
Hiring independent contractors in Bhutan can give you flexibility and access to specialized skills without the commitment of a full-time employee. Contractors are considered self-employed and are not covered by the same labor laws as employees, meaning they are not entitled to benefits like paid leave or social security.
However, it is crucial to classify workers correctly. Misclassifying an employee as an independent contractor can lead to significant legal and financial penalties, including back payments for benefits and taxes. The key distinction lies in the level of control. An employee's work, hours, and methods are dictated by the employer, while a contractor retains autonomy over how they complete a project.
An Employer of Record (EOR) can help you mitigate this misclassification risk. An EOR ensures that your workers are classified correctly according to Bhutanese law. They handle the legal and administrative tasks of employment, making sure you stay compliant with local regulations. This allows you to focus on your business while the EOR manages the complexities of local labor laws.
Compensation and Payroll in Bhutan
In Bhutan, your approach to compensation and payroll is a direct reflection of your company's values. The country's focus on Gross National Happiness often translates into a work culture that values employee well-being. This means that creating a fair and transparent pay structure is not just good practice, it's essential to attracting and keeping the right people for your team. A well-structured compensation plan goes beyond just salary; it includes benefits and allowances that contribute to your employees' financial security and overall happiness.
Payroll cycles & wage structure
In Bhutan, the payroll cycle is typically monthly. You will pay your employees at the end of each calendar month. Direct bank transfers are the standard and preferred method for salary payments. You are also required to provide a payslip with each payment. This document should clearly break down the gross salary, any deductions, and the final net pay.
Your employees' salaries will vary based on their education, experience, and the industry you operate in. Beyond the basic salary, it is common to offer allowances. Some common allowances include:
- Dearness Allowance: To help with the cost of living and inflation.
- Housing Allowance: To assist with accommodation costs.
- Travel Allowance: For commuting or work-related travel.
Overtime & minimums
Standard work hours in Bhutan are capped at eight hours a day and 48 hours a week, spread over a maximum of six days. If your employees work beyond these standard hours, you must pay them overtime. The overtime rate is at least 1.5 times their normal hourly wage. For any work done between 10:00 PM and 7:00 AM, you are required to pay an additional premium.
Bhutan has a national minimum wage, which the Ministry of Labour and Human Resources reviews and adjusts periodically. You must adhere to this minimum wage, regardless of the size of your company or your industry.
Employer taxes and contributions
As an employer in Bhutan, you are responsible for contributing to the social security of your employees. The primary contribution is to the Provident Fund.
Contribution | Rate | Notes |
---|---|---|
Provident Fund | 5% of employee's basic salary | This is a mandatory contribution for employees in the private sector. |
Employee taxes and deductions
You are responsible for withholding Personal Income Tax (PIT) from your employees' monthly salaries. This is done through the Pay As You Earn (PAYE) system. Bhutan uses a progressive tax system, meaning the tax rate increases with income. A new Income Tax Bill for 2025 has been proposed with updated tax brackets.
Contribution | Rate | Notes |
---|---|---|
Provident Fund | 5% of basic salary | This is the employee's matching contribution to their retirement savings. |
Here are the proposed personal income tax rates for 2025:
Annual Taxable Income (BTN) | Tax Rate |
---|---|
Up to 300,000 | 0% |
300,001 to 500,000 | 5% |
500,001 to 700,000 | 10% |
700,001 to 1,200,000 | 15% |
1,200,001 to 2,000,000 | 20% |
2,000,001 to 3,500,000 | 25% |
Above 3,500,000 | 30% |
Source: Asia News Network
Employees can claim several deductions to reduce their taxable income. These include:
- Provident Fund Contributions: The employee's 5% contribution is deductible.
- Life Insurance Premiums: Premiums paid for life insurance can be deducted.
- Education Allowance: An allowance for the education of children may be deductible.
How an Employer of Record, like Rivermate can help with payroll taxes and compliance in Bhutan
An Employer of Record (EOR) manages monthly payroll calculations, employer contributions, and tax filings in-country on your behalf. Rivermate handles registrations, payslips, statutory reporting, and remittances to authorities so you stay compliant with local rules and deadlines—without setting up a local entity. Our specialists monitor regulatory changes and ensure correct rates, thresholds, and caps are applied to every payroll cycle.
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Benefits and Leave in Bhutan
In Bhutan, employee benefits and leave are rooted in the country's guiding principle of Gross National Happiness. The Labor and Employment Act of 2007 shapes the core of these policies. This means you'll find a strong emphasis on worker well being. The system includes a mix of required benefits and additional perks that companies might offer. Understanding these is key to hiring in Bhutan.
Statutory leave
The law in Bhutan sets out several types of required leave for employees.
- Annual Leave: After a full year of work, employees get 30 days of paid leave. For those who have worked more than six months but less than a year, leave is calculated at 1.5 days for each month worked. Unused annual leave can be carried over, up to a maximum of 90 days.
- Sick Leave: Employees are entitled to five days of paid sick leave per year after they have been with a company for six months. If an employee is sick for more than three days in a row, they will need to provide a medical certificate.
- Maternity Leave: Mothers in the private sector are generally entitled to three months of paid maternity leave. For government-owned companies, this is extended to six months.
- Paternity Leave: Fathers receive a shorter period of paid leave when their child is born.
- Casual Leave: Employees can take up to 10 days of casual leave each year for personal matters that come up unexpectedly.
Public holidays & regional holidays
Your employees in Bhutan are entitled to paid time off for public holidays. Some holidays are observed nationwide, while others are specific to certain regions.
Date | Holiday | National/Regional |
---|---|---|
January 2 | Winter Solstice (Nyilo) | National |
January 30 | Traditional Day of Offering | National |
February 21-23 | Birth Anniversary of His Majesty the King | National |
February 28-March 1 | Losar New Year | National |
May 2 | Birth Anniversary of Third Druk Gyalpo | National |
May 7 | Shabdrung Kuchoe | National |
June 11 | Lord Buddha's Parinirvana | National |
July 5 | Birth Anniversary of Guru Rinpoche | National |
July 28 | First Sermon of Lord Buddha | National |
September 23 | Blessed Rainy Day | National |
September 28 | Thimphu Drubchen Dromchoe | Thimphu |
October 2 | Dashain Festival | National |
October 2-4 | Thimphu Tshechu | Thimphu |
November 1 | Coronation of His Majesty the King | National |
November 11 | Birth Anniversary of Fourth Druk Gyalpo | National |
November 11 | Descending Day of Lord Buddha | National |
December 17 | National Day | National |
Typical supplemental benefits
Beyond the legally required benefits, many employers in Bhutan offer additional perks to attract and keep great employees. Here is a look at both the required and the common optional benefits.
Statutory Benefits | Non-Statutory (Supplemental) Benefits |
---|---|
National Pension and Provident Fund contributions | Transportation allowance |
Overtime pay | Housing allowance |
Severance pay | Meal subsidies or canteen facilities |
Worker's compensation for workplace accidents | Training and development opportunities |
Performance bonuses | |
Group life insurance | |
Wellness programs |
How an EOR can help with setting up benefits
Setting up a benefits plan in a new country can be complex. An Employer of Record (EOR) simplifies this process for you. We handle the details of enrolling your employees in all the required national programs, like the pension and provident fund.
An EOR also helps you create a competitive benefits package that includes attractive supplemental perks. We can advise you on what is typical in the local market. This helps you attract top talent while we make sure your benefits plan follows all of Bhutan's labor laws.
How an Employer of Record, like Rivermate can help with local benefits in Bhutan
Rivermate provides compliant, locally competitive benefits—such as health insurance, pension, and statutory coverages—integrated into one EOR platform. We administer enrollments, manage renewals, and ensure contributions and withholdings meet country requirements so your team receives the right benefits without added overhead.
Termination and Offboarding in Bhutan
When your time with an employee in Bhutan comes to an end, you need to follow a clear process. Bhutan's laws for ending employment protect both you and your employee. You must have a valid reason for termination, like the end of a contract, poor performance, or redundancy. Following the correct steps is key to a smooth and legal offboarding. This includes giving proper notice and paying any required severance.
Notice periods
Giving an employee notice before their last day is a standard requirement. The amount of notice depends on how long they have worked for you.
Here are the minimum notice periods required by law:
Length of Service | Minimum Notice Period |
---|---|
Less than 6 months | 1 week |
6 months to less than 5 years | 1 month |
5 years or more | 3 months |
You must give the notice in writing. If your employment contract states a longer notice period, you must follow that.
Severance pay
In certain situations, like redundancy, you need to provide severance pay. The payment amount is based on the employee's length of service and their last basic wage.
The standard way to calculate severance is:
- (Last Basic Monthly Wage / 30) * 15 * Number of Years of Service
This ensures that employees have some financial support while they look for new work.
How Rivermate handles compliant exits
When you manage an employee's exit, you want to do it right. We help you navigate every step of the offboarding process in Bhutan.
- Clear Guidance: We provide you with the exact steps to follow for a compliant termination.
- Correct Calculations: We calculate notice periods and severance pay accurately based on local laws.
- Documentation: We help you prepare all the necessary paperwork for a smooth exit.
Our goal is to make sure the process is fair, compliant, and straightforward for everyone involved. We handle the complexities so you can focus on your business.
Visa and work permits in Bhutan
Getting the right visas and work permits in Bhutan is a careful process. The system is designed to protect the local workforce, so hiring foreign nationals requires clear justification. For anyone looking to work in Bhutan, you'll need both a work permit and a visa. The employer must lead this process. They need to prove that a local candidate couldn't fill the position.
Employment visas & sponsorship realities
When you hire employees in Bhutan, the work permit application is employer-driven. This means you, as the employer, must sponsor the application. You have to show the Department of Labour why you need to hire a foreign worker and that the role requires skills not easily found in Bhutan.
An Employer of Record (EOR) can manage this for you. An EOR acts as the legal employer in Bhutan, handling everything from contracts and payroll to visa and work permit applications. This allows you to hire employees in the country without setting up your own local company.
Here's what that process typically looks like:
- Justification: The EOR helps you prepare the paperwork to demonstrate the need for a foreign employee.
- Application: The EOR submits the application to the Department of Labour for approval.
- Immigration: Once approved, the EOR works with the Department of Immigration to secure the final work permit and visa.
Using an EOR simplifies the process and helps ensure you meet all local labor laws.
Business travel compliance
For short-term business visits, you still need to follow specific rules. All visitors, unless from India, Bangladesh, or the Maldives, must get a visa before traveling to Bhutan. You cannot buy a plane ticket to Bhutan without first having your visa clearance.
Key things to know for short trips:
- Visa Application: You can apply for a visa through the Bhutanese Department of Immigration website. The fee is $40, and processing can take up to five days.
- Sustainable Development Fee (SDF): A daily fee of $100 per person is required for most visitors. This fee supports development projects in Bhutan.
- Guides: While you no longer need a tour operator for all travel, you must have a guide if you travel outside the main cities of Paro and Thimphu.
Always check the latest rules with the Department of Immigration before you travel, as requirements can change.
How an Employer of Record, like Rivermate can help with work permits in Bhutan
Navigating work permits can be complex and time‑sensitive. Rivermate coordinates the entire process end‑to‑end: determining the right visa category, preparing employer and employee documentation, liaising with local authorities, and ensuring full compliance with country‑specific rules. Our in‑country experts accelerate timelines, minimize refusals, and keep you updated on each milestone so your hire can start on time—legally and confidently.
Frequently asked questions about EOR in Bhutan
About the author

Lucas Botzen
Lucas Botzen is the founder of Rivermate, a global HR platform specializing in international payroll, compliance, and benefits management for remote companies. He previously co-founded and successfully exited Boloo, scaling it to over €2 million in annual revenue. Lucas is passionate about technology, automation, and remote work, advocating for innovative digital solutions that streamline global employment.