Hiring Employees in Bhutan: A Comprehensive Guide

Thanks to its mystic beauty, Bhutan has fascinated travelers over the years. Still, even as the Himalayan kingdom continues to see enhanced tourist footfall, its economic growth is rising. From 2021 to now, its economy grew by 4.39%. While the country mostly has many trade agreements with India, more and more foreign investors are looking to make Bhutan their investment hub.

The country focuses on its Happiness Index more than Gross Domestic Product or GDP. The latter stands at $2,707 billion currently. The government has been actively working to develop the productive base of Bhutan as well as social welfare improvement. Bhutan ranks 89 on the Ease of Doing Business list, so it is easy to process registrations and hiring requirements as you hire staff in Bhutan.

As you begin the recruitment and selection in Bhutan and decide to hire  staff in Bhutan, it would help to know that it is the wealthiest economy. It is in the context of nominal gross domestic product per capita for South Asia, with the figure at $3,491 in 2022. Forestry, hydropower, and agriculture are the top domains in Bhutan that also see increased interest from offshore companies. The workforce here is well-versed in English and has the latest IT-backed skills. These qualities make the workforce a worthy hire for investors in Bhutan.

Things to Know Before Hiring in Bhutan

As you begin hiring employees, remember to follow the laws to hire employees in Bhutan.

It will help to ensure no penalties or missing out on compulsory mandates as you hire staff in Bhutan.

• The Labor and Employment Act of Bhutan of 2007 applies to all recruitment and selection in Bhutan.
• The Bhutanese market is attractive to foreign employers because of the governmental interest in keeping carbon footprints to a bare minimum. In fact, despite industrial progress in sectors such as forestry and hydropower, the country is carbon-negative.
• Bhutan has been an adapter of the latest tech while being interested in harnessing green technology.
• Thanks to an easy-to-process visa structure, those employed in Bhutan can also bring their family to settle or visit easily. It gives employers an advantage when they figure out how to hire an employee in Bhutan.

Employment Contract

An employment contract is standard and issued to employees during an appointment. Only when both employer and employee agree upon all terms and sign the same the job position fills up officially. It is vital when you figure out how to hire an employee in Bhutan.

• Such work contracts are in the official languages of Bhutan-Nepali and Tshangla-during the recruitment and selection in Bhutan. It is common to draw up an English translation of the same.
• All contracts for hiring staff in Bhutan apply to fixed tenures but can see an indefinite extension.
• Employers must maintain all data and records for employees hired during a recruitment drive for at least three years.

For purposes linked to recruitment and selection in Bhutan, the employment contract must mention the following-

• Employer details
• Employee role and profile of job involved
• Employee perks
• Duration of contract
• Probation and notice periods
• Salary and social security contribution split
• Work hours per week and overtime pay
• Employee breaks
• Annual leaves and public holidays
• Termination and severance details

Probation and Termination

• An employer may terminate the employee’s services once the probation period expires due to non-performance or misbehavior at work or company restructuring.
• In such a scenario, there is no need for any severance pay.

Notice period

• As per the laws governing recruitment and selection in Bhutan, the notice period is one month for both employer and employee looking to serve notice.
• For teaching staff in Bhutan, the notice period is of three months.

Employment laws

When handling any recruitment and selection in Bhutan, the employment laws apply across all aspects, including workplace conditions.

• It is important to note that work permits in Bhutan apply to only one specific type of work. Therefore, no one can work under an employer across multiple disciplines.
• A work permit is valid only for a year, following which renewal is mandatory. For highly skilled people, the permit for stay extends for up to three years in Bhutan.
• If any employer engages in recruitment and selection in Bhutan and hires at least five staff, he must ensure proper organization rules and maintain work records.
• All superannuated employees and those that complete five years of employment with a single company receive gratuity benefits.

Working hours and breaks

When you hire staff in Bhutan, here are the details on working hours-

• The standard hours of work for staff in Bhutan are 48 hours per week at 8 hours daily work and six days every week.
• Employees can work overtime as per regular hourly pay if the span is between 10 am to 8 pm.
• Employees can work overtime at 1.5 times the fixed hourly pay if the span is between 10 pm and 8 am cycle.

Payroll

• When you hire employees in Bhutan, paying a monthly salary is a standard norm.

Minimum wage

• The average wage to hire employees in Bhutan is Nu 3,750.00 per month.

Bonuses

• There is no bonus payment in Bhutan.

Holidays for employees

Official public holidays in Bhutan are as below-

Other Leaves

Vacation Leave

1 – The paid annual vacation period in Bhutan is available for employees that complete six months of continuous service with a company.

2 – The annual leave quota is 18 days and is available to employees only after completing a year of service.

These leaves can be accumulated and used after being clubbed together.

Maternity and Paternity Leave

1 – Pregnant employees are entitled to two months of maternity leave, which is continued post-childbirth.

2 – Sometimes new moms availing maternity leave (on condition of having completed a year of employment with one employer) can combine annual and unused sick leaves to extend the maternity leave period.

3 – Moms can avail the maternity leaves only thrice during employment with an employer.

4 – Fathers can also take paid paternity leave for ten days.

Other Leaves

1 – In Bhutan, employees get paid sick leave for five days a year.

2 – An employee can take leave for marriage and bereavement at the employer’s discretion, but there are no mandates.

Social security

The social security contribution break-up in Bhutan is as under-

• Employee contributions at 5%
• Employer contributions at 5%

Taxation

• Bhutan’s corporate tax rate is 30% of the net profit of any registered company.
• The standard VAT rate varies between 0-100%
• The income tax brackets in Bhutan follow a progressive structure, as mentioned below-

The Cost of Hiring an Employee in Bhutan

In terms of the recruitment fees in Bhutan and costs for recruitment in Bhutan, the main expenses employers could incur are as under-

• Advertisement for job openings
• Hiring expenses
• Meetups and interview costs
• Visa expenses
• Work permit and renewal expenses
• Payroll
• Taxes and social security
• Salary and benefits
• Vacation and leaves expenses
• Contracting and legal work expenses
• Onboarding expenses

What Does a Company Need to Hire Employees in Bhutan?

Based on a valid permit, employers in Bhutan can employ skilled workers with permits for up to a year and highly skilled workers for up to three years.

• Employers can employ a workforce from outside Bhutan only when the same is unavailable in the country.
• To hire employees in Bhutan, complying with all laws is compulsory.

The documentation to hire staff in Bhutan for an organization are-

• Visa
• Work permit for the employee
• Passport copy of the employee
• Employee photograph
• Age proof of the employee
• Employment contract
• Notarized company registration certificate
• Tax registration certificate

Various options for Hiring Employees in Bhutan

For the processes of recruitment and selection in Bhutan, there are a couple of structures to follow-

• Internal hiring: You may set up a traditional team for HR and then hire staff in Bhutan. However, your company needs an experienced in-house HR team for such a scenario. The team will engage in research as well as help new hires join an open job in Bhutan.
• Employer of Records (EOR) service: For any need related to hiring staff in Bhutan, outsource all your needs to any EOR service provider. Such providers have the resources and systems for handling new hires and also deal with contracts in Bhutan. It smoothens the management processes and covers all legal needs.

The Steps to Hiring in Bhutan

All hiring processes in Bhutan processes follow a standard structure, as mentioned below.

1. Advertising all jobs

• Advertise any open position on job boards, social media sites, and industry hiring spaces in Bhutan.
• Use references and local networks to leverage your access to prospective candidates.
• Mention the job duties for open roles while laying down the minimum qualifications and experience you need from any candidate.

2. Choosing the best applicant for recruitment and selection in Bhutan

• Candidates generally send in applications via their resumes or CVs online or offline.
• Draw up a list of the most eligible applicants.
• Set up the interview round and then inform the candidate through email.

3. Interviewing for recruitment and selection in Bhutan

• Schedule the interview on-site or online, as per convenience.
• Discuss the expected duties from the candidate at work, and give an idea of the culture the company promotes.

4. Final job offer and employment contract

• Make a final offer through an offer letter and draft the employment contract.
• Ensure you follow all laws for recruitment and selection in Bhutan by mentioning the needful headers on the contract.

5. Onboarding and employee induction

• Onboarding occurs once the employer concludes the contractual formalities.
• You may wrap up the process for recruitment and selection in Bhutan when employee induction occurs.

Let Multiplier be Your EOR Platform in Bhutan

When you hire staff in Bhutan, it is mandatory to follow all labor codes. You could face penalties when violating norms while hiring in Bhutan. Partnering with a reputed PEO-EOR company for recruitment and selection in Bhutan can be faster and hassle-free.

You may trust Multiplier in this regard. Multiplier provides SaaS-based Employer of Record solutions that helps employers better understand the Bhutanese market without setting up a branch!

Recruitment and selection in Bhutan becomes worry-free, and you finally solve the dilemma of hiring employees in Bhutan quickly.