Bhutan: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Bhutan.

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Overview

Bhutan is a country located in the continent of Southern Asia, sharing its borders with China and Tibet. The prominent industries in the country include agriculture, tourism, mining, and hydropower.

Neeyamo provides assistance for onboarding and management of employees in Bhutan along with processing of a firm's payroll, compliance, benefits and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Thimphu

Currency

Bhutanese ngultrum

Official Language

Nepali and Tshangla

Fiscal Year

1 July - 30 June

Date Format

YYYY/MM/DD

Country Calling Code

+975

Time Zone

GMT+6

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards providing both short-term and long-term benefits for their employees.

Employee Taxes

Provident Fund System: 5%

The income tax Rate is as follows:

Up to Nu. 200,000 0%
Nu. 200,001 to Nu. 250,000 10%
Nu. 250,001 to Nu. 500,000 15%
Nu. 500,001 to Nu. 1,000,000 20%
Above 1,000,000 25%

Employer Taxes

Provident Fund System: 5%

Payroll Cycle

Overview

Undoubtedly, payroll is a critical process for any organization. Pay cycle in Bhutan refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

Frequency

In Bhutan, the pay cycle is monthly.

13th Month Cycle

There is no statutory requirement to pay the 13th or 14th month salary.

Global Work

Overview

An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.

An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with the employee in Bhutan for operational tasks, with the knowledge that they have a cost-effective solution support their global payroll & HR requirements, as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

Minimum wage is 3,750 Bhutanese ngultrum per month.

Overtime

An employee working overtime shall be paid overtime pay for the number of hours worked:

  • Normal rate of pay calculated on an hourly basis for work other than between 10 PM and 8 AM
  • 1.5 times the normal rate of pay calculated on an hourly basis for work between 10 PM and 8 AM

Data Retention Policy

Employee records should be maintained and stored for a minimum duration of 3 years.

Hiring and Onboarding Requirements

Hiring

  • Human Resource specialists are responsible to upshot good hiring decisions, according to the needs of an organization’s workforce.
  • Interview is the particular step in the selection process. It is the opportunity for the employer and forthcoming employee to learn more about each other and authenticate information provided by both.
  • Once the employee is selected, employment contract is rolled out to employees.
  • Employment contracts should contain duration, description of the job, notice periods for termination, wages, hours of work, granted leave.

Onboarding

Show new hires your company is well organized and considerate by preparing a comprehensive welcome pack. This kit should include:

  • Company Policies
  • Office perks
  • Introductions to team members and important names to know
  • An understanding of your management structure and where to go when they have questions
  • A clear rundown of paperwork and other forms needed by HR

Probation

An employee who is employed for one year or more shall be on probation for 6 months days within which period either party may terminate the contract by giving the other party notice of 7 days.

Leave

Public Holidays

Bhutan has 16 public holidays.

January 2: Winter Solstice
January 22: Traditional Day of Offering
February 21: Dangpa Losar | Anniversary of his Majesty the King
February 22: Losar Holiday | Anniversary of his Majesty the King Holiday
February 23: Anniversary of his Majesty the King Holiday
April 30: Zhabdrung Kuchhoe
May 2: Birth Anniversary of the 3rd Druk Gyalpo
June 4: June Lord Buddha's Parinirvana
June 23: Birth Anniversary of Guru Rinpoche
July 21: The first Sermon of Lord Buddha
September 23: Blessed Rainy Day
October 24: Dassain
November 1: Druk Gyalpo Coronation Anniversary
November 4: Descending Day of Lord Buddha
November 11: Anniversary of the 4th Druk Gyalpo
December 17: National Day

Sick Leave

  • Employees who work for 6 months or more in continuous employment are entitled to be paid sick leave.
  • For full-time employees, sick leave entitlements accrue at a minimum rate of 5 working days per year, such accrual to commence after the employee has completed 6 months of service.

Maternity Leave

  • A female employee shall be entitled to three months’ maternity leave in addition to other leaves on production of a medical certificate duly signed by a recognized medical practitioner in Bhutan
  • A female employee shall be entitled to maternity leave with salary subject to three confinements during the entire service of the employee.
  • In the event of miscarriage, a maximum leave of four weeks shall be granted on the production of a medical certificate from a recognized medical practitioner in Bhutan

Paternity Leave

Male employees are entitled to 10 working days of paid paternity leave

Other Leave

Those employees who have been a part of the company for six constant months are allowed to take advantage of paid casual leave in case of a family emergency or self-care day. These holidays can also be utilized if the employee is getting married, there is a marriage in their family, family births and deaths, to care of family members in case of sickness, and any other reason that has been discussed with the employer.

Termination

Termination and offboarding requirement

  • A minimum of one month's notice shall be issued by the Employer/Employee intending to terminate the contract before expiry of the term.
  • In the event of failure to serve the notice in advance of the required period, the defaulting party shall pay to the other, the basic pay of the employee for the stipulated notice period.
  • A contract employee shall not be indispensable to the Government of Bhutan and hence shall be liable to be removed from service at any time when the Government finds his services redundant or on violation of any of these provisions.
  • An employee who retires on superannuation or after completion of 5 years’ service shall be eligible for receiving gratuity and other benefits
  • The amount of gratuity payable to an employee shall be an amount equivalent to one month’s last basic pay of the employee for every completed year of service with the employer times the number of years of his active service with the employer.
  • If at any time during his employment, the employee shall be tried for gross misconduct or breach or non-observance of any of the stipulation herein.
  • The employee shall, at the option and discretion of the employer, forfeit the gratuity.
  • In addition to such forfeiture, the employer may terminate the services of the employee forthwith and without any notice or payment in lieu thereof.
  • Upon such termination, the employee shall not be entitled to claim any compensation or damages.

Notice Period

A minimum of one month's notice shall be issued by the party intending to terminate the contract before expiry of the term.

Procedure

Section 24 of the Labour Act prescribes the procedure for dismissing a worker, which requires providing the allegation to him or her in writing and giving the opportunity for a hearing. However, no prior approval from a government agency is required by law.

Severance Pay

An employee who retires on superannuation or after completion of 5 years’ service shall be eligible for receiving gratuity and other benefits.

The amount of gratuity payable to an employee shall be an amount equivalent to one month’s last basic pay of the employee for every completed year of service with the employer times the number of years of his active service with the employer.

Visa

Visa

The government of Bhutan issues the work permit for one year for just one time. Once the permit expires, the applicants have to reapply annually to maintain their legal employment status. In addition, if an employee has extended their work permit for three years, the permit holder must leave the country for at least six months and then they can reapply.

Visa Requirements

Documents required for Bhutan work permit are:

  • One must have a valid passport
  • One must have approval from the department of labor
  • One must have an employer undertaking form
  • One must have a medical fitness certificate
  • One must have a signed declaration of the compliance

Employee Background Checks

Legal and Background Checks

  • Criminal Records
  • Civil Records
  • Education Degree
  • Employment Verification
  • ID Check
  • Social Media check

Last updated on April 30, 2023. 

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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