Labor law in Bhutan

The Department of Labour within the Ministry of Industry, Commerce and Employment administers the national labor-law system. The Chief Labour Administrator, Labour Officers, Labour Inspectors and the courts or arbitrators handle different administrative, inspection and dispute functions. The main legal sources are the Labour and Employment Act of Bhutan 2007, the Regulation on Working Conditions 2022, the Regulation on Occupational Health, Safety and Welfare 2022, and the Rules and Regulations on Foreign Workers Management 2024. A review of the Act was announced for 2025, but the official core framework remains the 2007 Act. Public-service employees may also be covered by special rules, and civil-service rules apply where special legislation already regulates the matter. Uniformed services are excluded from ordinary occupational-health-and-safety inspections. An employer must register an existing workplace with the Department of Labour within 60 days and a new workplace within 90 days after business commencement. Registration supports approval of internal service rules, access to Department of Labour services and the employment of foreign workers. Employers should keep employee, wage and permit information current. An employment contract must be written and the employee must receive a copy. It should state the duration, specific task, notice period, wages, working hours, probation, and leave. If the parties do not write a contract, the employment relationship still receives the minimum protection provided by the Labour and Employment Act. If the contract does not state its duration, it is generally presumed to be indefinite. An employer may transfer a contract to another employer only with the employee’s free consent, and existing terms and rights remain protected. A probation period is available only for a contract lasting at least one year and may not exceed 180 days. Either party may end the employment during probation with seven days’ notice. An employer may not impose a second probation period for the same or a similar job. Training agreements follow separate rules. A registered company, an industrial operation, or an employer with at least five regular employees must have approved internal service rules. The employer consults the Workers’ Association or employees, obtains at least three signatures and submits the rules to the Chief Labour Administrator. The rules do not take effect before approval. The authority generally acts within 21 working days, and the employer normally has 14 working days to correct identified defects. Changes require consultation and the agreement of at least 90% of employees. Employers may not discriminate in recruitment, dismissal, transfer, training, demotion, wages or working conditions because of race, colour, sex, marital status, pregnancy, religion, political opinion or social origin. Equal work or work of equal value requires equal pay. Additional protection or assistance for particular groups remains possible. The general minimum employment age is 18. Separate rules allow only narrowly limited work for children aged 13 to 17, and dangerous work remains prohibited. A pay period may not exceed one month. The employer pays wages at the end of the pay period, directly in cash or into an account nominated by the employee at a Bhutanese bank. Deductions are allowed only under the Labour and Employment Act. The national minimum wage is set by an order of the Ministry of Industry, Commerce and Employment and may use daily, monthly or hourly rates; the currently applicable amount should be checked in an official source rather than taken from an old figure. On termination, the employer pays outstanding wages within seven calendar days. If wages remain unclaimed, the employer immediately notifies the Chief Labour Administrator and must attempt payment within 60 calendar days. Normal working time may not exceed eight hours per day and 48 hours per week. Overtime requires mutual agreement and may not exceed 12 hours per week. Overtime worked between 22:00 and 08:00 receives at least 50% above the normal rate, as does work on a public holiday. Employers record normal and overtime hours and the applicable rates. Employees receive a 10-minute rest break after two hours, a 30-minute meal break after four hours, at least 30 minutes of break time during an eight-hour period, at least 12 hours of daily rest and at least 24 hours of weekly rest. After probation, annual leave accrues at no less than 1.5 working days per month, or at least 18 working days per year. Employees normally give at least 14 calendar days’ notice for annual leave. Unused annual leave is paid at the normal rate when employment ends. Paid sick leave is at least five working days per year and may accumulate for five years. After probation, paid casual leave is at least five working days per year; unused casual leave is merged into annual leave. After 12 months of continuous employment, an employee receives at least two months of maternity leave paid at the last basic pay, with a maximum of three periods, and at least 10 working days of paid paternity leave, usually within two weeks after the birth and with a maximum of three periods. The employee should return to the same or a materially similar position at no lower pay. Bhutan provides at least nine paid public holidays each year. Pregnant employees may not be assigned work between 22:00 and 08:00 during the protected period. Additional rules cover hazardous work and pregnancy. Sexual harassment is prohibited in recruitment and employment. Employers must assess workplace risks, eliminate or reduce them, establish safe procedures, provide information and training, maintain records and prepare an emergency plan when the workplace has at least 20 employees. Personal protective equipment is provided, maintained and supported with training at the employer’s cost. Employees in hazardous processes may require medical examinations; the employer bears the cost where the service is not provided by the state health system, and the absence is paid. Enterprises with at least 20 employees register an occupational health and safety committee through the Bhutan Labour Information Management System when required by the Department of Labour. Employers report accidents and incidents to the Chief Labour Administrator within the applicable category-based period, generally two to five calendar days. Retaliation for an accident or occupational-disease claim is prohibited, and compensation may apply to work-related death, occupational disease, total permanent disablement and temporary partial disablement. A Workers’ Association is the local formal mechanism for collective worker representation. Under the Labour and Employment Act, an enterprise with at least 12 employees under contract may have an association. The working-conditions regulation also requires at least five years of commercial operation and at least seven workers over 18 for formation. Employees may join or decline freely, and an enterprise may have no more than one association. Management and supervisory employees are excluded. The association can represent rights and interests, assist with individual complaints, participate in occupational-health-and-safety committees and negotiate a collective bargaining agreement. Employer interference is prohibited. For collective bargaining, an employer meets the association within 30 days after a claim and negotiates in good faith. The agreement must be written and dated, approved by more than half of members present, and submitted to the Chief Labour Administrator within seven calendar days. The authority provides compliance advice within seven calendar days. A non-compliant agreement must be renegotiated, and it becomes binding after endorsement. A collective agreement does not automatically apply where no agreement exists. A workplace grievance procedure must be written in simple language, explained to all employees and prepared with consultation and signatures from the Workers’ Association or employee representatives. The employer may not retaliate against a complainant. If the grievance remains unresolved, the employee submits it to the Chief Labour Administrator in writing within 15 working days. A dispute notice identifies the parties, place, subject and earlier attempt to resolve the matter. A Labour Officer investigates within two working days and reports or updates the status within seven days. If settlement fails, the parties jointly appoint a conciliator within four calendar days. Failed conciliation leads to court proceedings or arbitration, depending on the applicable procedure. A party to a grievance, conciliation or court process receives paid time away from work. Labour Inspectors conduct routine, follow-up and special inspections. An announced inspection generally requires at least two working days’ notice, while an unannounced inspection may take place at a reasonable time. An Improvement Notice is issued during the visit or generally within five working days and is followed by a compliance check. A Prohibition Notice may stop work presenting an immediate health or safety risk. A Penalty Memo may address a basic-rights violation without a prior Improvement Notice. Inspection reports remain confidential unless disclosure is required for court or official duties. Employment ends automatically by mutual agreement, impossibility caused by events outside the parties’ control, death, retirement, expiry of the contract, or completion of the agreed task. Otherwise, either party gives written notice of at least 30 days, with the same notice period for both sides, or pays basic wages for the notice period instead. Probation uses the seven-day rule. Dismissal may not be based on association activity, health-and-safety representation, a complaint or proceeding, protected grounds, maternity or paternity leave, or the lawful exercise of worker rights. Dismissal for serious misconduct without notice requires reasonable fact-finding and an opportunity for the employee to respond. Redundancy requires a genuine loss of work or employee need and compliance with the statutory notice and process. A wrongful-dismissal claim follows the dispute process; remedies may include reinstatement with the employee’s consent or compensation of one month’s pay for each year of continuous employment, up to six months. The employer bears proof of a valid reason. A provident-fund payment is available after at least five years of continuous employment at termination and includes employee and employer contributions with interest. Below five years, the employee generally receives the employee contributions with interest, subject to special rules for redundancy, disaster and time-bound projects. Payment is due within 15 working days. Gratuity is generally available after at least 10 years of continuous employment, including probation, unless the contract or internal rules grant an earlier right, and it is also paid within 15 working days. Nominees may have rights after an employee’s death. Foreign workers are subject to the 2024 foreign-worker rules in addition to the labor-law requirements. The Chief Labour Administrator approves recruitment, and the worker may work only for the approved employer, site and occupation. A regular permit may last up to one year, a short-term permit up to 30 days without renewal, a border-town permit up to one year with daily exit, and a permit for a highly skilled worker up to six hours where the relevant category applies. Changing the employer, site or occupation requires approval. Regular and border-town renewals should be made at least 14 calendar days before expiry. The employer pays the agreed wage monthly into the worker’s individual Bhutanese bank account, provides insurance and worker compensation, prevents abuse and exploitation, follows occupational-health-and-safety rules, and bears recruitment and repatriation costs. Immigration authorities handle the separate immigration status and permit procedure. Employees and employers generally begin with the employer or internal grievance procedure, then use the Department of Labour, Labour Officer or Labour Inspector, and finally the court or an arbitrator where the procedure requires it. Sexual-harassment matters may also be reported to the employing agency or the Royal Bhutan Police. Keep the contract, internal rules, payslips, payment records, working-time and leave records, safety and incident records, notices and correspondence. No general flat fee or fixed duration for every proceeding is established in the reviewed sources, so the current official form, portal and procedure should be checked before filing. Workplace custom may supplement a grievance or practice, but it cannot replace the minimum standards in the Act or regulations.