Bhutan is not a jurisdiction that often comes to mind, but the happy country has received attention recently as the up-and-coming place to do business in Asia. We set out 8 useful employment laws that companies should know about ahead of entering the Bhutanese market.

What are the key statutes?

Employment and labour issues in Bhutan are largely governed by the Labour and Employment Act of Bhutan, 2007.

How does a foreigner enter Bhutan to work?

Foreign would-be employees need to obtain a work permit in order to work in Bhutan. A work permit is usually issued for  a particular job and is valid only for that area specified in the work permit. Highly skilled professionals and technical experts are allowed to stay and work in Bhutan for a maximum of a period of three years; skilled and technical workers are allowed to stay and work in Bhutan for a maximum period of one year.

Are employers required to establish work rules?

Employers are required to establish internal work rules once they have 5 or more employees.

Is there a minimum wage payable to employees?

The national minimum daily wage is BTN 125 per day (approximately USD 2), as calculated for a daily worker.

Are employees entitled to paid annual leave?

Employees who work for 6 months or more in continuous employment are entitled to paid annual leave. Annual leave entitlements accrue at a minimum rate of 1.5 days per month, or a minimum of 18 working days per year, such accrual to commence after the employee has completed 6 months of service. However, employees are not entitled to take annual leave until a minimum of 12 months of continuous employment has been completed.

Are employees entitled to 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.

Are employees entitled to any other types of leave?

Employees who work for 6 or more months in continuous employment are entitled to paid casual leave for family-related matters. These include the employee’s marriage, marriage of the employee's brothers, sisters or children, bereavements of immediate family members, and care of immediate family members in times of sickness and in such other circumstances as agreed with the employer. For full-time employees, casual leave entitlements accrue at a minimum rate of 5 working days per year, from the commencement of the employment period, such accrual to commence after the employee has completed 6 months of service.

Do employers make pension and/or social security contributions?

Employees who have completed their probation period as indicated in their contracts of employment are entitled to participate in the provident fund scheme. The contributions of both the employer and employee commence from the first pay period after the completion of the probation period, and the number of years of participation in the scheme will be calculated from the completion of the probation period.

The employer and employee are each required to contribute a minimum of 5% of the employee’s monthly basic wage to the employee’s provident fund account.