| Key Takeaways |
|---|
| 1. Payroll is monthly with a minimum wage of BTN 3,750 per month, ensuring fair compensation for all employees. |
| 2. Personal income tax is progressive up to 30% with no local employment taxes. Both employers and employees contribute 5% to the Provident Fund. |
| 3. Standard working hours are 8 per day and 48 per week, with overtime limited to 12 hours weekly and rest periods of at least 24 consecutive hours per week. |
| 4. Employees receive 18 annual leave days and at least 9 public holidays, plus additional paid leave for sickness, maternity (2 months), and paternity (10 days). |
| 5. Termination requires at least 30 days' notice, with gratuity pay after 10 years of service and strict rules protecting against unfair dismissal. |
Discover the global hiring and employment landscape in Bhutan – a serene Himalayan kingdom known for its unique approach to development and Gross National Happiness.
Personal Income Tax
| Taxable Income (BTN) | Progressive Tax Rate (%) |
|---|---|
| Up to 300,000 | - |
| 300,001–400,000 | 10 |
| 400,001–650,000 | 15 |
| 650,001–1,000,000 | 20 |
| 1,000,001–1,500,000 | 25 |
| Over 1,500,000 | 30 |
A surcharge at the rate of 10% of the personal income tax amount shall be levied if the annual personal income tax is equal to or more than BTN 1,000,000.
Local Tax
Statutory Contributions
Employer Contributions
| Contribution rate | |
|---|---|
| Provident Fund | 5% |
Employee Contributions
| Contribution rate | |
|---|---|
| Provident Fund | 5% |
Payment of Wages
An employment contract shall specify a pay period of up to one month, at the end of which the employer shall pay the employee their wages.
Minimum Wage
The national minimum wage in Bhutan is set at BTN 3,750 per month.
Statutory Bonus
There are no statutory bonuses in Bhutan.
Termination
A party to an employment contract may at any time give to the other party notice in writing of their intention to terminate the contract, provided that the relevant notice period and gratuity requirements are observed.
Notice Period
Employers shall ensure that an employment contract of at least a year specifies a notice period for its termination of not less than 30 days.
Either party may terminate the contract without waiting for the end of the notice period by paying to the other party a sum equal to the basic rate of pay which the employee would have earned during the notice period.
That being said, employers can dismiss an employee without notice or payment in lieu if the employee has been guilty of a serious misconduct that makes it unreasonable for their employment to continue, provided that they have taken all reasonable steps to ascertain the employee's guilt and given the employee a reasonable opportunity to defend themselves against the allegations.
Severance Pay
Upon the termination of an employment contract by either party, the employee shall be entitled to a gratuity payment on the completion of at least 10 years of continuous service, including any probationary period.
The amount of gratuity payable shall be computed based on the employee's last basic pay drawn, times the number of completed continuous years of service, including any probationary period. This shall be paid within 15 working days from the employee's date of separation from the enterprise.
Note: An employee who has been dismissed on the grounds of serious misconduct shall not be entitled to receive gratuity payment.
Probationary Period
An employment contract of at least a year may contain a probationary period of up to 180 days, within which either party may terminate the contract by giving the other party a 7-day notice.
Employers shall not require their employees to repeat a probationary period in relation to the same work or materially similar work.
Work Time Rules
Standard Working Hours
Standard working hours in Bhutan are subject to a maximum of 8 hours per day and 48 hours per week.
Break Period
Employees are entitled to the following rest and meal breaks, both of which shall not be included as part of their working hours:
| Rest break | Meal break |
|---|---|
|
10 minutes after 2 hours of work from the time of commencement of each day's work. However, an employee working less than 2 hours per day is not entitled to a rest break. The employee may choose to forego their rest break and add it to their meal break, or forego it completely to enable an earlier finish time, provided that their employer agree. |
30 minutes after 4 hours of work. However, an employee working less than 4 hours per day is not entitled to a meal break. |
The actual duration and timing of rest and meal breaks can be varied by mutual agreement, but shall not be less than 30 minutes per 8-hour period.
In addition to the above, employers shall also allow their employees a 1-hour interruption to their work every 4 hours for a period of a month immediately after the expiry of their maternity leave to nurse their child, and these interruptions shall be treated as work time for which the employee shall be paid.
Overtime
Employees below the supervisory level shall be paid overtime that is not less than their normal rate of pay when they are required to work outside of their standard working hours.
Overtime hours must not exceed 12 hours per week, and all overtime work shall only be performed upon mutual agreement by both the employee and the employer.
Weekly Rest Days
Employees shall be entitled to a daily rest period of at least 12 consecutive hours and a weekly rest period of at least 24 consecutive hours.
Holiday and Leave Entitlements
Public Holidays
Employees shall be entitled to have at least 9 public holidays per year, inclusive of the birth anniversary of His Majesty the King and the National Day, taken as paid leave. There are 21 days of public holidays in Bhutan for 2025.
| Holiday | Date |
|---|---|
| Winter Solstice (Nyilo) | January 2 |
| Traditional Day of Offering | January 30 |
| Birth Anniversary of His Majesty the King | February 21–23 |
| Losar New Year | February 28–March 1 |
| Birth Anniversary of Third Druk Gyalpo | May 2 |
| Shabdrung Kuchoe | May 7 |
| Lord Buddha's Parinirvana | June 11 |
| Birth Anniversary of Guru Rinpoche | July 5 |
| First Sermon of Lord Buddha | July 28 |
| Blessed Rainy Day | September 23 |
| Thimphu Drupchen Dromchoe (only in Thimphu) | September 28 |
| Dashain Festival | October 2 |
| Thimphu Tshechu (only in Thimphu) | October 2–4 |
| Coronation of His Majesty the King | November 1 |
| Birth Anniversary of Fourth Druk Gyalpo, Descending Day of Lord Buddha | November 11 |
| National Day | December 17 |
If the employee is required to work by the employer on a public holiday, the employer shall pay an additional 50% of the employee's normal rate of pay.
Annual Leave
Employees are generally entitled to paid annual leave that accrues at the minimum rate of 1.5 days per month, or a minimum of 18 working days per year. The accrual of annual leave entitlements shall commence after the employee has completed their probationary period.
Employers shall pay to the employee the annual leave not taken at the normal rate of pay at the end of every calendar year. However, both parties may come to an agreement whether to use or cash out the unused annual leave.
Note: The accrual of annual leave entitlements shall commence after the employee has completed their probationary period.
Sick Leave
Employees shall be entitled to at least 5 working days of paid sick leave per year.
Unused sick leave shall accumulate for 5 years, or longer if agreed between the employee and the employer, following which the unused portion of leave is forfeited by the employee. In any case, unused sick leave entitlements cannot be cashed out.
On the other hand, employees who have used up all their sick leave entitlements, but are still unable to work due to sickness may, at the employer's discretion, draw from their unused casual or annual leave entitlements.
Maternity Leave
Pregnant employees with at least 12 continuous months of service shall be entitled to at least 2 continuous months of paid maternity leave.
The employee shall only be entitled to take a maximum of 3 periods of maternity leave during their service with an employer.
The employee on maternity leave shall be entitled to use any unused annual or sick leave entitlements to extend their period of paid leave. Furthermore, they are also entitled to take unpaid leave to extend leave period with the agreement of the employer.
If the employee's pregnancy terminates before the expected date of birth, other than by the birth of a living child, they are entitled to the following leave options:
| Paid | Unpaid |
|---|---|
| Leave taken from unused paid sick leave, casual leave or annual leave | Unpaid leave for as long as a certified medical practitioner certifies it to be necessary |
Paternity Leave
An employee with at least 12 continuous months of service shall be entitled to at least 10 working days of paid paternity leave, provided that their legal spouse gives birth. Unless otherwise agreed with the employer, the employee shall take their paternity leave within 2 weeks of the birth of the child.
The employee shall only be entitled to take a maximum of 3 periods of paternity leave during their service with an employer.
Other Leave
Employees who have completed their probationary period shall be entitled to at least 5 working days of paid casual leave per year. Any unused casual leave entitlements shall be merged with the employee's annual leave.
An employee who has used up their casual leave entitlements, but requires additional casual leave may, at the employer's discretion, draw from their unused annual leave entitlements.
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