• Foreign Workers: Foreign nationals require approval from the Department of Labour before they can be employed in Bhutan.
• Work Permit: Regular work permits are generally valid for a maximum of one year and may be renewed subject to approval. Short-term, border-town and hourly work permits are also available for specific circumstances. 
• Employer Approval: Employers must obtain the required approval before recruiting foreign workers and must comply with the applicable foreign-worker management requirements.
• Eligibility: Foreign workers must generally be at least 18 years old, medically fit, have the required professional skills and experience, and be free from criminal records.
• Short-Term Work: A short-term work permit is available for foreign workers required for periods of less than 30 days, subject to the applicable application and medical-clearance requirements.

• Payroll Frequency: Employment contracts must specify a pay period of one month or less, with wages paid at the end of the specified period.
• Income Components: Basic salary, allowances, overtime, bonuses and other employment benefits may form part of employee remuneration.
• Provident Fund Contributions: Employers and employees must each contribute a minimum of 5% of monthly basic wage to an approved provident fund after completion of the probation period. 
• Employer Contributions: Employer provident fund contribution: 5%. Employee provident fund contribution: 5%. The employer is responsible for depositing both contributions.
• Minimum Wage: Bhutan's national minimum wage is Nu. 215 per day for unskilled workers, with higher rates applying to certain skilled categories. 
• Wage Payment: Wages must be paid directly to employees, including through a bank account nominated by the employee. 
• Tax Withholding: Employers are responsible for applying the applicable tax-deduction requirements to employment income and reporting the relevant information to the Department of Revenue and Customs.

• Contract Types: Employment contracts must set out the terms and conditions of employment and clearly define the rights and obligations of both parties.
• Probation: Contracts of one year or more may include a probationary period of up to 180 days. During probation, either party may terminate the contract by giving 7 days' notice. 
• Working Hours: Standard working hours must not exceed 8 hours per day or 48 hours per week. Overtime must be agreed between the employer and employee and generally cannot exceed 12 hours per week. 
• Overtime: Overtime must be compensated at no less than the normal rate of pay. Work during public holidays attracts an additional 50% of the normal rate, while certain night overtime attracts an additional 50%. 
• Notice Periods: Employment contracts must specify a notice period of at least 30 days, with the same notice period applying to both employer and employee. 
• Termination: Employment may be terminated in accordance with the terms of the contract and applicable labour legislation. Specific statutory procedures apply to matters including redundancy and serious misconduct.
• Gratuity: Employees are generally entitled to gratuity after completing 10 years of continuous employment, unless the employment contract or Internal Service Rules provide an entitlement after a shorter period. 
• Collective Bargaining: Workers' associations may negotiate collective bargaining agreements with employers, subject to the requirements of the labour regulations.

• Provident Fund: Employers and employees each contribute at least 5% of monthly basic wage to an approved provident fund after probation. 
• Annual Leave: Employees are entitled to paid annual leave after completing probation, accruing at a minimum rate of 1.5 days per month, or 18 working days per year. Unused annual leave may be encashed subject to the statutory requirements. 
• Sick Leave: Employees receive at least 5 working days of paid sick leave per year. Unused sick leave can accumulate for up to five years unless a longer period is agreed. Medical certification may be required by the employer. 
• Casual Leave: Employees receive at least 5 working days of paid casual leave per year after completing probation. Unused casual leave is merged with annual leave. 
• Maternity Leave: Employees who have completed at least 12 months of continuous employment are entitled to a minimum of 2 months of paid maternity leave at their last basic pay. 
• Paternity Leave: Employees with at least 12 months of continuous employment are entitled to a minimum of 10 working days of paid paternity leave, normally taken within two weeks of the birth. 
• Public Holidays: Employees are entitled to a minimum of 9 paid public holidays each year. Employees required to work on a public holiday receive an additional 50% of their normal rate of pay. 
• Workers' Protection: Employers must provide safe working conditions and comply with statutory occupational health and safety requirements.

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• Tax Residency: Under the Income Tax Act 2025, an individual may be considered resident in Bhutan where they have a permanent home in Bhutan and meet the applicable residence conditions, or where they are present in Bhutan for 183 days or more in any 12-month period. Government employees posted abroad may also qualify as residents
• Personal Income Tax: Bhutan's Personal Income Tax applies to taxable income from employment and other specified sources. The new Income Tax Act of Bhutan 2025 came into force on 1 January 2026, replacing the previous 2001 income-tax legislation.
• Tax-Free Threshold: The first Nu. 300,000 of annual taxable income is subject to a 0% rate.
• Tax Rates: From 2026, PIT is progressive, with rates ranging from 5% to 30% above the tax-free threshold.
• Tax Year: January 1 – December 31.
• Tax Filing: The Department of Revenue and Customs administers PIT and provides online filing through its revenue administration system. 
• Employment Income: Employment income includes salary, allowances, fees and remuneration, bonuses, commissions, leave encashment, profit shares and other employment benefits, subject to the applicable deductions and exemptions.