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Benefits and Entitlements Overview

Learn about mandatory and optional employee benefits in Bhutan

Mandatory benefits

In Bhutan, the Labour Employment Act of 2007 stipulates mandatory benefits that all employers must provide to their employees. These benefits are designed to promote a healthy work-life balance, employee well-being, and financial security.

Employees accrue annual leave at a minimum rate of 1.5 days per month, totaling 18 days per year. Paid leave is only awarded after completing six months of continuous service. In addition, employees are entitled to a minimum of 5 working days of paid sick leave per year, again after completing six months of service. Bhutan observes 16 public holidays, offering additional paid days off throughout the year.

Leave for Family Reasons

Employees are entitled to six months of paid maternity leave. This leave is counted as part of active service for promotion purposes. While specific details are scarce, Bhutanese labor law acknowledges the right to paternity leave.


Bhutan has a mandated minimum wage, though the specific amount can vary depending on the industry and location. Any hours worked beyond the standard workweek require overtime compensation at a rate of 1.5 times the standard pay rate.

End of Employment

Both employers and employees are required to provide a notice period before termination of employment. The specific length of the notice period is determined by the terms of the employment contract or as dictated by law. In cases of termination by the employer, severance pay may be required by law depending on the reason for termination and the employee's length of service.

Social Security

Bhutan operates a provident fund system that offers retirement benefits, disability benefits, and survivor benefits. This system covers employees working for at least one year in firms with at least five employees. Both employers and employees contribute a minimum of 5% of the monthly basic salary.

Optional benefits

In Bhutan, many companies offer additional perks to attract and retain top talent, beyond the strong foundation of employee benefits mandated by the Labour Employment Act.

Health and Wellness Benefits

Some employers provide health insurance plans to their employees, either partially or fully subsidized.

Financial Security Benefits

Companies may offer bonuses tied to individual or team performance to incentivize productivity. Additionally, some Bhutanese businesses share a portion of their profits with employees, fostering a sense of ownership and engagement.

Work-Life Balance Benefits

Employers may offer flexible work arrangements, such as compressed workweeks or telecommuting options, to promote a better work-life balance for employees. To support working parents, some companies may offer childcare subsidies or on-site childcare facilities.

Other Optional Benefits

Employers may provide meal allowances to help offset employee lunch expenses. Companies may offer transportation allowances or operate shuttle services to ease employee commutes. Some employers may offer educational reimbursement programs to support employees' professional development.

This list is not exhaustive, and the specific benefits offered can vary depending on the company size, industry, and overall benefit package strategy. Optional benefits can be a powerful tool for employers in Bhutan to distinguish themselves from competitors and create a more attractive workplace.

Health insurance requirements

Bhutan's Labour Employment Act of 2007 does not currently mandate health insurance as a compulsory employee benefit. However, the landscape of health insurance in Bhutan is evolving, with a growing focus on employee well-being.

Employer-Sponsored Health Insurance

While not mandatory, some Bhutanese companies offer health insurance plans to their employees, either partially or fully subsidized. This trend is likely to continue as businesses recognize the value of a healthy workforce and strive to attract top talent in a competitive market.

There's a lack of publicly available data on the prevalence of employer-sponsored health insurance in Bhutan. Consulting with recruitment agencies or HR professionals in Bhutan can provide more specific insights into current industry practices.

National Health Insurance Initiatives

Bhutan's government prioritizes affordable and accessible healthcare for its citizens. The Ministry of Health has explored the possibility of implementing a national health insurance scheme, though a concrete plan is yet to be established.

Here are some existing government programs that address healthcare access:

  • Basic Health Services Package: This program provides free essential healthcare services to all Bhutanese citizens at public health facilities.
  • Medicines for All: The government subsidizes essential medicines to ensure affordability for citizens.

These initiatives demonstrate the government's commitment to public health, and future developments in national health insurance are worth keeping an eye on.

Retirement plans

Bhutan has a comprehensive approach to retirement benefits, which includes a mandatory social security program and the option for private plans.

National Pension and Provident Fund (NPPF)

The NPPF is a mandatory social security program established in 1976. It covers both public and private sector employees, providing retirement benefits. Here's a breakdown of the NPPF structure:

  • Membership: All regular employees in the public and private sectors with a minimum service of one year in firms with at least five employees are automatically enrolled in the NPPF.
  • Contributions: Both employers and employees contribute a minimum of 5% of the monthly basic salary towards the NPPF.
  • Benefits:
    • Retirement Pension: Upon reaching retirement age (65 for public sector and 60 for private sector), members become eligible for a monthly pension based on their contributions and length of service.

Private Provident Funds (PPFs)

Some Bhutanese companies offer private provident fund schemes as part of their employee benefit packages. These plans can be a valuable supplement to the NPPF, potentially offering higher contribution limits and more flexible withdrawal options.

Important Note: Regulations around private provident funds can vary. It's crucial for employees to carefully review the specific terms and conditions of their employer-sponsored PPF plan.

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