Labour and Employment Act, 2007

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LABOUR AND EMPLOYMENT ACT OF BHUTAN 2007

PREAMBLE.. .........................................................................1
CHAPTER I ........................................................................... 2
PRELIMINARY ...................................................................... 2

Title, Commencement and Extent ..............................................2

Application of this Act .................................................................2

Repeals. ......................................................................................3

CHAPTER - II ........................................................................ 3
PROHIBITIONS. ....................................................................3

Prohibition of forced or compulsory labour .................................3

Prohibition of the worst forms of child labour ............................. 4

Prohibition against discrimination of employees & job seekers. 5

Prohibition against sexual harassment .......................................5

CHAPTER - III ....................................................................... 7
LABOUR ADMINISTRATION.. ............................................. 7

Functions of the labour administration. ...................................... 7

Functions of the Chief Labour Administrator ..............................7

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Functions of Labour Relations Officer ........................................9

Functions of the Labour Inspector ..............................................9

Powers of the Labour Inspector ................................................10

Identity Cards ............................................................................11

Confidentiality ...........................................................................11

Person with specialised knowledge ..........................................12

Duty to avoid conflicts of interest ..............................................12

Entry and inspection to be allowed ...........................................12

Protection from prosecution. .....................................................13

CHAPTER - IV.. ...................................................................13
NOTICES.. ..................................................................... 13

Improvement Notice. .................................................................13

Prohibition Notice.......................................................................14

Appeals against notices ............................................................14

CHAPTER - V ......................................................................15
CONTRACTS OF EMPLOYMENT. .....................................15

Application of Chapter V.. .........................................................15

Existing contracts to continue in force. .....................................15

Implied terms in a contract of employment ...............................16

Transfer of contract of employment ..........................................17

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Term and Conditions of a contract of employment .................. 18

When a contract of employment is enforceable .......................18

Notice period for termination of a contract of employment .......19

Probation ...................................................................................19

Internal service rules .................................................................19

Automatic termination of a contract of employment .................20

Termination by either party .......................................................21

Unlawful reasons for termination ..............................................21

Summary dismissal for serious misconduct ............................. 22

Redundancy ..............................................................................23

When a contract of employment may be terminated ................24

Wrongful dismissal ....................................................................24

Remedies for wrongful dismissal ..............................................24

CHAPTER - VI .....................................................................25
COMPENSATION AND BENEFITS ....................................25

Compensation ...........................................................................25

Benefits .....................................................................................26

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Application of Chapter VII..........................................................26

Working Hours...........................................................................26

Leave.........................................................................................26

Public holidays...........................................................................27

Night work and risky work..........................................................27

Work on return from maternity leave.........................................28

Nursing mothers........................................................................28

Continuous employment............................................................29

CHAPTER - VIII....................................................................29
WAGES................................................................................ 29

Application of Chapter VIII.........................................................29

Payment of wages.....................................................................29

Overtime....................................................................................30

Pay rates for night work.............................................................30

Payment of wages on termination of contract of employment.. 31

Unclaimed wages......................................................................31

Deductions.................................................................................31

Wage records............................................................................32

Ministry’s power to fix a minimum wage or wages.................... 34

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Application of Chapter IX ...........................................34
Employer’s Duty to employees ..................................34
Employer’s duty to non-employees ........................... 36
Employer to bear cost of occupational health & safety ...... 36
Health and safety policy ............................................ 37
Reporting of an accident or incident ...............................38
Accident records ....................................................... 38
Duties of employees .................................................. 39
Right of an employee ................................................ 39
Appointment of health and safety representative ...... 40
Duties of other persons ............................................. 41

CHAPTER - X .............................................................. 41
MINIMUM AGE FOR ADMISSION TO EMPLOYMENT 41

Application of Chapter X ............................................41
Age of employment .............................................................41
Questions as to age .................................................. 42
Deeming employment ........................................................42

CHAPTER XI ..................................................................... 43
WORKERS’ ASSOCIATION ........................................ 43

Formation of Workers’ association ............................ 43

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Duty to negotiate in good faith...................................................44

CHAPTER - XII.....................................................................44
RESOLUTION OF LABOUR DISPUTES.............................44

Application of Chapter XII..........................................................44

Employee’s right to time off with pay to attend procedures.......44

Workplace grievance procedure................................................45

Settlement of a dispute at the workplace.................................. 46

Notification of a dispute.............................................................46

Investigation and report by Labour Relations Officer................47

Appointment of a conciliator......................................................47

Duties of a conciliator................................................................48

Conciliator’s report and record of agreement............................48

Certification of record of agreement

by Chief Labour Administrator...................................................49

Failure of conciliated agreement to comply with this Act.......... 50

Settlement by court or arbitration.............................................. 50

Appointment of an arbitrator......................................................51

Appeal against arbitrator........................................................... 51

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Prohibitions................................................................................52

Duties of an employment agent.................................................52

Application for a licence.............................................................52

Grant, amendment, cancellation and renewal of licence.......... 52

Appeal against decision to grant, amend, renew

or repeal a licence.....................................................................52

Offence of non-compliance with licence....................................53

Employment agent to submit information..................................53

CHAPTER – XIV...................................................................53
EMPLOYMENT OF FOREIGNERS......................................53

Prohibition relating to the employment of a foreigner without a

permit.........................................................................................53

Other prohibitions relating to the employment of a foreigner.... 54

Issue of criteria and quotas....................................................... 54

Appeal against decision relating to a permit..............................55

Power of Department of Immigration.........................................55

Offences relating to permits.......................................................55

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Authority to prosecute................................................................55

Disclosure of Information...........................................................56

Rule making power....................................................................56

Authoritative Text.......................................................................56

Amendments..............................................................................56

DEFINITIONS....................................................................... 57

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WHEREAS, the well being of workers contribute to the Gross
National Happiness.

WHEREAS, workers play a crucial role in the development of the
Kingdom, it is essential that their welfare is promoted and protected
through a fair and just labour administration system suitable for
Bhutan.

WHEREAS, it is the desire of His Majesty King Jigme Singye
Wangchuck, that all Bhutanese, particularly the educated youth are
gainfully employed.

WHEREAS, it is the desire of the country to create employment
opportunities including self-employment.

WHEREAS, it is the desire of the government to encourage private
sector development and entrepreneurship.

Therefore, the Labour and Employment Act governing employment
and working conditions have been enacted by the National
Assembly of Bhutan during its 86th Session, on the Sixteenth Day of
the Eleven Month of the Male Fire Dog year, corresponding to the
Fourth Day of the First Month of the year 2007.

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Title, Commencement and Extent

1. This Act shall:
(a) be called “THE LABOUR AND EMPLOYMENT ACT OF

BHUTAN 2007”.
(b) come into force on the Third Day of the First Month of the

Female Fire Hog Year, corresponding to the Twentieth
Day of the Second Month of the Year 2007; and

(c) extend to the whole of Bhutan.

Application of this Act

2. This Act shall apply to matters relating to labour and
employment in the Kingdom of Bhutan.

3. This Act shall not apply to the employment and working
conditions of :

(a) the uniformed members of the Royal Body Guards;
(b) the uniformed members of the Royal Bhutan Army;
(c) the uniformed members of the Royal Bhutan Police.

4. Any matter pertaining to labour and employment not covered
under any other laws shall be covered by this Act from the date
of its enactment.

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(a) the Rules and Regulations for Employment of Bhutanese
Nationals in the Private Sector (1998).

(b) chapters 1,2,4 and 5 and paragraphs 1,2,3,4,5,and 7 on
the procedure for recruitment of Foreign Workforce of the
Chathrim for Wage rate, Recruitment Agencies and
Workmen’s Compensation 1994.

CHAPTER - II
PROHIBITIONS

Prohibition of forced or compulsory labour

6. No person shall make use of, cause or permit any form of
forced or compulsory labour that is extracted from any person
under the menace of any penalty and for which the person has
not offered himself or herself voluntarily.

7. Section 6 does not apply to:
(a) work required of a prisoner to assist in public services;
(b) work required of a person in times of an emergency such

as war, fire, flood, famine, earthquake, violent epidemic or
epizootic diseases, that would endanger the existence or
the well-being of the whole or part of the population; and

(c) work required of a person for shabtog lemi or other labour
contributions for important local and public celebrations.

8. A person who contravenes section 6 shall be guilty of an
offence which shall be a felony of the fourth degree.

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(a) any form of practices such as sale and trafficking, debt
bondage, forced or compulsory labour, including
recruitment for use in armed conflict;

(b) the use, procuring or offering of the child for prostitution,
for the production of pornography or for pornographic
performances;

(c) the use, procuring or offering of the child for illicit activities,
in particular for the production and trafficking of drugs;

(d) work under particularly difficult conditions such as work for
long hours or during night or work where the child is
unreasonably confined to the premises of the employer; or

(e) work which, by its nature or the circumstances in which it
is carried out, is likely to harm the health, safety or morals
of a child including:
(i) work which exposes a child to physical, psychological

or sexual abuse;
(ii) work underground, under water, at dangerous heights

or in confined spaces;
(iii) work with dangerous machinery, equipment or tools,

or which involves the manual handling or transport of
heavy loads; or

(iv) work in an unhealthy environment that may expose
the child to hazardous substances, agents or
processes, or to temperatures, noise levels, or
vibrations damaging to his or her health.

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Prohibition against discrimination of employees and job
seekers
11. An employer and an employment agent shall not discriminate

against employees or job applicants for vacancies in
connection with recruitment, dismissal, transfer, training and
demotion.

12. An employer shall not discriminate against an employee with
regard to wages and working conditions.

13. Discrimination regarding pay conditions takes place in the case
of failure to give equal pay for equal work or work of equal
value.

14. Sections 11 to 13 do not apply where:
(a) a member of the employer’s immediate family is

considered for the particular job;
(b) a distinction, exclusion or preference is made by the

employer in respect of a particular job based on the
inherent requirements of that job; or

(c) special assistance or protection is provided to a person
having special requirements relating to sex, age,
disablement or family responsibilities.

15. A person who contravenes sections 11 to 13 shall be guilty of
an offence and shall be liable to pay a fine of minimum one
year to a maximum of three years of the Daily Minimum
National Wage Rate.

Prohibition against sexual harassment
16. An employer shall not sexually harass:

(a) a person seeking employment with that employer; or

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(a) another person employed by his or her employer;
(b) his or her employer; or
(c) a person seeking employment with his or her employer.

18. For the purposes of sections 16, 17 and 19, sexual harassment
includes:

(a) making an unwelcome sexual advance or an unwelcome
request for sexual favours to the other person; or

(b) engaging in any other unwelcome conduct of a sexual
nature in relation to the other person.

19. In sections 16 to 18 "conduct of a sexual nature" includes-
(a) subjecting a person to any act of physical intimacy;
(b) making any oral or written remark or statement with sexual

connotations to a person or about a person in his or her
presence; or

(c) making any gesture, action or comment of a sexual nature
in a person's presence.

20. A person who contravenes sections 16 to 19 shall be guilty of
an offence which shall be a petty misdemeanour. In addition,
the Court may impose fine at the rate of the Daily Minimum
National Wage Rate to a maximum of 3000 days in accordance
to the severity of the offence.

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Functions of the labour administration

21. The labour administration shall provide policies and
programmes in the areas of :

(a) employment promotion;
(b) labour protection;
(c) labour relations;
(d) vocational education and training; and
(e) occupational standards setting and certification.

Functions of the Chief Labour Administrator

22. The Head of the Secretariat of the Ministry shall be the Chief
Labour Administrator whose functions shall be to:
(a) promote effective co-operation between the Labour

Inspection Division and other government agencies
engaged in similar activities;

(b) promote the collaboration between the labour inspectorate
and employers and employees;

(c) provide advice to the Minister on policies, programmes
and activities relating to the administration of this Act and
regulation;

(d) bring to the notice of the Minister of any defects or abuses
at workplaces not specifically covered by existing legal
provisions;

(e) refer a matter to the Minister for a decision to prosecute for
breach of this Act; and

(f) perform any other functions as may be necessary to carry
this Act into effect.

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23. The powers of the Chief Labour Administrator are:
(a) to approve, recommend and endorse any matter relating to

the administration of the Act and to issue licenses,
required under this Act;

(b) to intervene on behalf of an employee in any civil
proceedings against his or her employer in respect of any
cause of action arising out of this Act and to give evidence
in a prosecution for breach of this Act;

(c) to exercise the powers and functions of a labour Inspector
under section 26 to 29 of this Act;

(d) to receive and require production of information required
by this Act and its regulations;

(e) to determine appeals against the issue of improvement
and prohibition notices issued under section 40 to 43 of
this Act;

(f) to direct the dispute resolution process under this Act and
to certify a record of agreement ; and

(g) to exercise any other power as may be necessary to carry
this Act and its regulations into effect.

24. The Chief Labour Administrator may delegate in writing to an
officer of the Royal Government of Bhutan, the exercise of his
or her powers (except his or her powers under section 48 and
49 of this Act) and the performance of his or her functions:

(a) either as a whole or in part; and
(b) subject to any specified conditions, qualifications or

reporting requirements that the Chief Labour Administrator
may set.

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25. The Labour Relations Officer shall be a civil servant and his or
her functions are:

(a) to promote workplace harmony and co-operation;
(b) to provide advice and information to employers and

employees about their rights and obligations under this
Act;

(c) to investigate the nature and causes of a labour dispute
and assist the parties to reach a resolution to their dispute;

(d) to advise a conciliator appointed under section 196 to 198
of this Act on the rights and obligations of employers and
employees under this Act;

(e) to report to the Chief Labour Administrator on matters
relating to the conduct of a labour dispute; and

(f) to perform any other functions as may be necessary to
promote workplace harmony and co-operation.

Functions of the Labour Inspector

26. The Labour Inspector shall be a civil servant and his or her
functions are :

(a) to advice and inform employees and employers about their
rights and obligations under this Act;

(b) to facilitate the implementation of this Act by providing
information, advice and guidance to employers, employees
and to self-employed and other workers who are not
subject to contracts of employment;

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(d) to report to the Chief Labour Administrator on the results of
inspections and of any defects and problems in
workplaces; and

(e) to enforce the posting of notices required by this Act or the
regulations.

Powers of the Labour Inspector
27. The Labour Inspector, with prior authority of the Chief Labour

Administrator may:
(a) enter at reasonable times any factory, plant or

establishment, construction site or other areas, workplace
or environment where work is performed by any employee
of an employer where the inspector believes activities or
information relevant to the provisions of this Act is present;
and

(b) inspect and investigate during regular working hours and
other reasonable times and within reasonable limits and in
a reasonable manner, any such place of employment and
all pertinent conditions, structures, machines, apparatus,
devices, equipment and materials therein, and to question
privately any such employer, owner, operator, agent or
employee if the Labour Inspector believes that conditions
likely to endanger employees exist.

28. In making his or her inspection and investigations under this
Act, the Labour Inspector may require the attendance and
testimony of witnesses and the production of evidences.

29. In the case of failure or refusal of any person to appear as a
witness, the Labour Inspector may:
(a) obtain an order from the Dzongkhag or Dungkhag court

under whose jurisdiction the person is found requesting
that person to produce evidence or give testimony relating
to the matter under investigation or in question;

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(c) take or remove for purposes of analysis, samples of
materials and substances used or handled.

Identity Cards

30. The Chief Labour Administrator shall issue each Labour
Inspector and Labour Relations Officer with an identity card
which they shall present on entry into a workplace.

Confidentiality
31. A Labour Inspector, Labour Relations Officer and any other

person advising a Labour Inspector under section 34 of this
Act shall treat as confidential and not reveal any manufacturing
or commercial secrets which may come to his or her knowledge
in the course of executing his or her duties unless:

(a) the Inspector is required to divulge this information by a
Court of law; or

(b)s the Inspector is required to divulge this information as a
part of his or her work as a Labour Inspector.

32. A Labour Inspector, Labour Relations Officer and any other
person advising a Labour Inspector shall treat as confidential
the source of any complaint relating to a breach or suspected
breach of this Act.

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Person with specialised knowledge

34. The Chief Labour Administrator may request a person with
specialised knowledge to attend a workplace or other premises
to assist and advise the Inspector in executing his or her
powers under this Act.

Duty to avoid conflicts of interest

35. A Labour Inspector, a Labour Relations Officer or an Advisor to
an Inspector, who has the personal, pecuniary or direct interest
that may prejudicially affect the consideration of any matter
before him shall not inspect or supervise on that matter so as to
avoid the possibility of prejudice.

36. A Labour Inspector, Labour Relations Officer or an Advisor who
contravenes section 35 shall be guilty of an offence which shall
be petty misdemeanour.

Entry and inspection to be allowed

37. A person shall at reasonable times allow an Inspector or
Inspector’s advisor acting under section 34, exercising his or
her powers under this Act and regulations access to premises,
workplaces and other places.

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Protection from prosecution
39. While acting in his or her position as Labour Inspector, Labour

Relations Officer or an Advisor, no Labour Inspector, Labour
Relations Officer or Advisor is liable for any other act done in
relation to the performance of his or her duties or functions
under this Act.

CHAPTER - IV
NOTICES

Improvement Notice

40. Where a Labour Inspector is of the opinion that a person:
(a) is contravening any provision of this Act or its

regulations; or
(b) has contravened a provision in circumstances that make

it likely that the contravention will continue or be
repeated, the inspector may issue to the person an
improvement notice requiring the person to remedy the
contravention or likely contravention.

The Labour Inspector shall specify a day that is more than 7
and less than 35 calendar days after the day the notice was
issued, before which the person is required to remedy the
contravention or likely contravention.

41. A person who contravenes section 40 shall be liable to pay a
fine at the rate of the Daily Minimum National Wage Rate to a
maximum of 360 days.

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Prohibition Notice

43. If a labour inspector is of the opinion that there is occurring or
may occur any activity at a workplace involving an immediate
risk to the health and safety of any person, the inspector may
issue a prohibition notice to the person who has or may be
reasonably presumed to have control over the activity, to
prohibit the activity.

44. If a Labour Inspector is of the opinion that at the workplace
there is occurring or may occur an activity which involves or will
involve an immediate risk to the health and safety of any
person, the inspector shall specify the reason for that opinion.

45. A person who contravenes section 43 and 44 shall be guilty of
an offence which shall be:

(a) a misdemeanour; or
(b) if aggravated circumstances exist, a felony of the fourth

degree.
46. Section 43 and 44 does not apply to a person who has lodged

an appeal under section 47.

Appeals against notices
47. A person issued with an improvement notice or a prohibition

notice may appeal to the Chief Labour Administrator in writing
within fifteen calendar days after the notice is issued.

48. The Chief Labour Administrator shall inquire into the
circumstances relating to the notice and, giving his or her
reasons in writing within 15 working days.

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(a) in the case of an improvement notice, be suspended; and
(b) in the case of a prohibition notice, remain in force until the

Chief Labour Administrator makes his or her decision.
50. A person who fails to comply with a notice that is affirmed by

the Chief Labour Administrator under section 48 shall be guilty
of an offence which shall be:
(a) a misdemeanour; or
(b) if aggravated circumstances exist, a felony of the fourth

degree.

CHAPTER - V
CONTRACTS OF EMPLOYMENT

Application of Chapter V
51. Chapter V applies to employment for a duration of one year or

more except for employment arrangements between members
of a family unless a contract of employment specifies
otherwise.

52. If an employer assigns the same or similar work for the same
wages to an employee employed for one year or more, the
employee shall be deemed to have been employed under a
contract of employment as set out in chapter V.

Existing contracts to continue in force

53. A contract of employment that is in force at the time of the
commencement of this Act is deemed to have been made
under this Act provided that the minimum conditions set out in
this Act are met.

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Implied terms in a contract of employment

55. An employer shall provide an employee with work during the
contracted period that is the same or of a similar nature to the
primary duties in the contract.

56. If the employer fails to provide work, the employer shall pay the
employee wages at the same rate as if the employee had
performed the day’s work unless:

(a) the employee has broken the contract of employment; or
(b) it is impossible to uphold the contract of employment due

to circumstances beyond either party’s control.
57. An employee shall be willing and available to work in

accordance with the terms of the contract of employment
unless:

(a) the employer has broken the contract of employment; or
(b) it is impossible to uphold the contract of employment due

to circumstances beyond either party’s control.

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(a) the employer fails to pay wages in accordance with
Chapter VIII; or

(b) the employee is continuously absent from work for more
than three consecutive work days without the prior leave of
the employer, unless the employee has a reasonable
excuse for such an absence and has informed or
attempted to inform the employer of the excuse prior to or
at the earliest opportunity during such absence.

Transfer of contract of employment to another employer

59. If an employer sells or otherwise transfers to another person a
business in which an employee works under a contract of
employment, the employer shall not transfer the contract of
employment to the other person unless the employee has freely
consented to the transfer.

60. If a contract of employment is transferred from one employer to
another:

(a) the terms and conditions of the contract are preserved on
that transfer; and

(b) any rights the employee may have had against the
transferring employer are preserved against the new
employer.

Contracts to be in writing

61. An employer shall ensure that a contract of employment with an
employee is in writing and that a copy of it is provided to the
employee.

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63. An employer who contravenes sections 61 and 62 shall be
guilty of an offence of violation.

Term and Conditions of a contract of employment

64. An employer shall ensure that a contract of employment
specifies:
(a) the duration;
(b) a specific task to be performed;
(c) notice period for termination of the contract; and
(d) wages, working hours, probation period and leave

provisions.
65. Unless there is proof to the contrary, if a contract of

employment (whether written or unwritten) fails to specify a
term of duration, it is presumed that the contract of employment
is for an indefinite period and shall continue in force until it is
terminated in accordance with this Chapter.

66. An employer who contravenes sections 64 and 65 shall be
guilty of violation. In addition to, the Ministry may direct the
employer for payment of appropriate damages or
compensatory damages.

When a contract of employment is enforceable

67. A contract of employment is enforceable if it-
(a) has been signed or personally marked by the employer or

the employer’s representative and the employee or, in the
case of an unwritten contract, there is evidence of an oral
agreement between the parties;

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(c) is for lawful purposes; and
(d) was freely entered into without threat or undue influence.

Notice period for termination of a contract of employment
68. An employer shall ensure that a contract of employment with an

employee specifies a notice period for the termination of the
contract of not less than 30 days.

69. If a contract of employment fails to specify a notice period or if
the contract of employment is an unwritten contract, the notice
period is deemed to be the relevant notice period specified in
section 68.

70. The length of notice period shall be same for the employer and
the employee.

71. An employer or the employee who contravenes sections 68 to
70 shall be guilty of violation.

Probation
72. A contract of employment of one year or more may contain a

period of probation of a maximum of 180 days within which
period either party may terminate the contract by giving the
other party notice of 7 days.

73. An employer shall not require an employee to repeat a
probationary period in relation to the same work or materially
similar work.

74. Sections 72 and 73 do not apply to training agreement.
75. An employer who contravenes sections 72 to 74 shall be guilty

of an offence which shall be petty misdemeanour.

Internal service rules
76. An employer with an enterprise that is either-

(a) a registered company under the Companies Act of the
Kingdom of Bhutan (2000); or

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77. The internal service rules shall be framed as per the Rules and
Regulations to this Act.

78. The internal service rules may contain terms and conditions of
employment that are more than the minimum set down in this
Act but any terms or conditions which are less than the
minimum terms of this Act shall be void.

79. The internal service rules are not enforceable until they have
been approved by the Chief Labour Administrator as being in
compliance with this Act.

80. An employer who contravenes sections 76 to 79 shall be liable
to pay a fine at the rate of the Daily Minimum National Wage
Rate to a maximum 3 years of the Daily Minimum National
Wage Rate.

Automatic termination of a contract of employment

81. A contract of employment shall be terminated:
(a) by mutual agreement;
(b) if either party is unable to fulfill the contract due to

circumstances outside the control of the parties;
(c) if the employee dies;
(d) the employee retires; or
(e) at the end of the agreed term of the contract or on the

completion of the task specified in the contract of
employment.

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other party notice in writing of his or her intention to terminate
the contract.

83. Either party may terminate the contract without waiting for the
end of the notice period, by the terminating party paying to the
other party a sum equal to the basic rate of pay which the
employee would have earned during the notice period.

84. The relevant notice period is the period referred to in sections
68 to 70.

Unlawful reasons for termination
85. An employer shall not terminate a contract of employment

because:
(a) the employee is or has acted in the capacity as a health

and safety representative or as a member of a Workers’
Association;

(b) the employee has filed a complaint or participated in
proceedings against an employer involving an alleged
violation of laws;

(c) of the employee’s race, colour, sex, marital status,
pregnancy, religion, political opinion or social origin;

(d) the employee is absent from work on maternity leave or
paternity leave;

(e) the employee has exercised his or her right to remove
himself or herself from dangerous work under sections
162;

(f) the employee has been temporarily absent from work
because of illness or injury, as certified by a medical
practitioner; or

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86. An employer who contravenes section 85 shall be guilty of an
offence which shall be a misdemeanour. In addition, the court
may direct the employer for reinstatement of the employee or
for payment of appropriate damages or compensatory
damages.

Summary dismissal for serious misconduct

87. An employer may terminate a contract of employment by
dismissing an employee without notice or payment in lieu of
notice if the employee has been guilty of serious misconduct
that makes it unreasonable for the employer to continue to
employ that employee if:

(a) the employer has first taken all reasonable steps to
ascertain whether or not the employee’s conduct amounts
to serious misconduct; and

(b) the employee has been given a reasonable opportunity to
defend himself or herself against the allegations.

88. For the purposes of section 87, serious misconduct includes:
(a) fraud, theft or misuse of the employer’s property, including

the employer’s intellectual property;
(b) assault and other serious crimes;
(c) wilful insubordination or disobedience of a repeated or

serious character;
(d) habitual irregular attendance;
(e) sabotage;
(f) wilful damage;

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(h) abandonment of the employee’s post;
(i) persistent absence from the workplace without good

excuse; or
(j) wilfully offending the Tsa Wa Sum.

89. An employee terminated under section 87 and 88 shall be
entitled to his or her pay that is owing to him or her up to the
time of the dismissal or abandonment.

Redundancy

90. An employer may terminate a contract of employment if the
employer no longer requires:

(a) the work which is carried out by an employee or a number
of employees; or

(b) the skills and ability of an employee or employees.
91. If an employer terminates a contract of employment under

section 90, the employer shall:

(a) consult with the Workers’ Association or, if there is no such
Association, the employees at the workplace, advising of
the number of employees likely to be made redundant and
the period over which this may occur;

(b) give notice according to sections 68 to 70 and additional
notice of seven days for every year of continuous
employment by the employee for that employer up
to a maximum of 42 days; and

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When a contract of employment may be terminated

92. A contract of employment is terminated:
(a) when the conditions specified in section 81 occurs; or
(b) by either party giving notice or making payment according

to sections 82 and 83, provided the employer does not
terminate a contract for an unlawful reason specified in
section 85.

Wrongful dismissal

93. If an employer terminates a contract of employment in a
manner or for reasons that contravene sections 92, the
employee may initiate the dispute resolution procedures set out
in Chapter XII.

Remedies for wrongful dismissal

94. If proceedings have been initiated in a Court of law under
section 204 and 205 for wrongful dismissal, the Court may do
one or more of the following-

(a) with the consent of the employee and the employer, order
that he or she be reinstated to his or her employment to
the same or equivalent position and that the employee be
treated as if he or she had never been dismissed;

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(c) order costs to be paid by one party to the other in such
sums as the Court considers just in all the circumstances.

95. In an action for wrongful dismissal, the burden of proving the
existence of a valid reason for the termination shall rest on the
employer.

CHAPTER - VI
COMPENSATION AND BENEFITS

Compensation

96. An employer shall compensate all his or her employees
against:

(a) death due to work accident or occupational diseases;
(b) total permanent disablement;
(c) temporary partial disablement.

97. Section 96 applies to all types of employment.
98. An employer who contravenes section 96 and 97 shall be guilty

of an offence which shall be a felony of the fourth degree. The
court may order payment of compensation as prescribed in the
rules.

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99. An employee, upon retirement from the services shall be
entitled to the following benefits:

(a) Gratuity; and
(b) Provident fund or Pension.

100. Section 99 applies to employees employed under contract of
employment under chapter V.

101. The entitlements and procedure for the entitlement of sections
96 and 99 shall be as specified in the rules to this Act.

102. An employer who contravenes section 99 to 101 shall be guilty
of an offence which shall be a felony of the fourth degree. The
court may order payment of compensation as prescribed in the
rules.

CHAPTER - VII
HOURS OF WORK AND LEAVE

Application of Chapter VII
103. Chapter VII applies to all forms of employment

Working Hours

104. The Ministry shall fix the duration of working hours from time to
time and an executive order shall be issued to this effect.

105. No employee shall be required to work beyond the maximum
working hours specified in the executive order.

Leave

106. An employee is entitled to the following type of leaves.
(a) Sick Leave;

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107. The procedure for entitlement of the above leave shall be as
specified in the rules to this Act.

Public holidays
108. An employee is entitled to a minimum of 9 public holidays each

year, inclusive of the birth anniversary of His Majesty the King
and the National Day, to be taken as leave with pay based on
the employee’s normal rate of pay that was paid to the
employee in his or her most recent pay period.

109. An employer may agree with his or her employees to substitute
a public holiday under section 108 with another public holiday.

110. If an employee is required to work by the employer on a public
holiday, the employer shall pay additional 50% of the
employee’s normal rate of pay.

Night work and risky work
111. An employer shall not require a pregnant employee to work

between the hours of 10 o’clock at night and 8 o’clock in the
following morning:

(a) 140 days before she is due to give birth and 56 days after
she has given birth to the child; or

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112. If an employee is withdrawn from night work under section 111
or if, due to her pregnancy or breastfeeding, an employee’s
work is a risk to the health or safety of the employee or her
unborn or newborn child:

(a) the employer shall temporarily adjust the employee’s
working conditions or hours of work to avoid exposure to
the risk; or

(b) if an adjustment is not feasible or can not reasonably be
required to be made, the employer shall transfer the
employee to other appropriate work that-
(i) will not expose her to the risk; and
(ii) is, as nearly as possible, comparable in status and

pay to that of her present work.

Work on return from maternity leave

113. On return from maternity leave, the employer shall place the
returning employee in the same or a materially similar position
to the position held by the employee immediately before
starting the leave.

Nursing mothers

114. An employer shall allow an employee to interrupt her work
every 4 hours for one hour for a period of one month
immediately after the expiry of her maternity leave to nurse her
child and those interruptions shall be treated as work time for
which the employee shall be paid.

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115. If the Chief Labour Administrator is of the opinion that an
employer is intentionally avoiding the payment of leave to an
employee by breaking a contract of employment, the Chief
Labour Administrator may deem a contract or contracts to be
continuous for the purposes of calculating the leave entitlement
of the employee.

116. A person who contravenes sections 111 to 115 shall be guilty
of an offence which shall be a misdemeanour.

CHAPTER - VIII
WAGES

Application of Chapter VIII

117. Chapter VIII applies to all forms of employment
Payment of wages
118. A contract of employment shall specify a pay period of one

month or less at the end of which the employer shall pay the
employee his or her wages.

119. An employer shall pay the employee the wages owing to him or
her at the end of the period specified under section 118.

120. An employer shall pay wages to an employee directly and not
through another person:

(a) in cash to the employee directly;

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(c) by bank cheque, draft, money order or electronic fund
transfer;
(i) on a working day; and
(ii) at the employee’s workplace.

121. An employer shall not charge an employee any costs
associated with the way the employer pays a wage to an
employee.

122. An employer shall not pay wages at a shop, store or place
where alcohol is served unless the employee’s workplace is a
shop, store or place where alcohol is served as part of the
employer’s normal trade or business.

123. An employer who contravenes sections 118 to 122 shall be
liable to pay a fine at the rate of the Daily Minimum National
Wage Rate to a maximum of 90 days of the Daily Minimum
National Wage Rate.

Overtime
124. An employer shall pay an employee employed below

supervisory level, overtime of a minimum of the employee’s
normal rate of pay when the employee is required to work
outside any of the periods referred to in section 104

Pay rates for night work
125. If an employee below supervisory level is required by the

employer to perform night duty besides his normal day shift by
the employer and outside the time period referred to in section
104 the employer shall pay the employee additional 50% of the
employee’s normal rate of pay for the number of hours worked.

126. An employer who contravenes section 125 shall be guilty of an
offence which shall be a petty misdemeanour.

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calendar days after the termination of a contract of employment
with that employee.

128. An employer who contravenes section 127 shall be liable to pay
a fine at the rate of the Daily Minimum National Wage Rate to a
maximum of 90 days of the Daily Minimum National Wage
Rate.

Unclaimed wages
129. If an employee has left the employment of an employer and the

employer cannot locate the employee to pay his or her wages
owed, the employer shall:

(a) immediately notify the Chief Labour Administrator that the
employee cannot be located; and

(b) take all reasonable steps within 60 calendar days of the
termination of the employment to locate and pay the
wages to the employee or to the employee’s nearest
relative.

130. An employer who contravenes section 129 shall be liable to pay
a fine at the rate of the Daily Minimum National Wage Rate to a
maximum of 90 days of the Daily Minimum National Wage
Rate.

Deductions
131. An employer may deduct from an employee’s wages:

(a) income tax payable by the employee;
(b) a deduction for absence from work (other than being on

leave) equivalent to the normal rate of pay the employee
would have earned if he or she were not absent.

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(d) a deduction to repay any advance in wages paid to the
employee by the employer;

(e) payment towards the employee’s personal fund, group
insurance scheme, and superannuation or membership
subscription, if the employer has the employee’s written
consent;

(f) the reasonable cost of any loss or damage to tools or other
property caused by the negligence of the employee;

(g) overpayments of wages made by mistake to the employee
if the overpayment was made in the immediately preceding
3 months;

(h) repayments of any loan the employer made or guaranteed
to the employee; and

(i) any other deduction allowed by law.
132. An employer shall not deduct an amount that would reduce the

wages payable to the employee for a pay period to less than
one half of the total wage.

133. An employer who contravenes section 132 shall be guilty of an
offence which shall be a petty misdemeanour.

Wage records
134. An employer shall advise an employee in writing of his or her

entitlement to wages, immediately at the commencement of an
employee’s employment and when there is a change to the
employee’s entitlements, including:
(a) the employee’s position (if relevant);
(b) the normal rate of pay and the total earnings of the

employee based on the normal rate of pay (expressed
monthly or, if the contract of employment is for a lesser
period, for that period).

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employee, specifying the amount of deductions, where the
deductions are to be paid and how frequently the
deductions will be made.

135. An employer shall advise an employee in writing each time an
employer pays a wage to the employee:

(a) the pay period for the payment of the wages;
(b) the employee’s position (if relevant);
(c) the number of working days or hours worked at normal

rates of pay and the normal rate of pay;
(d) the amount of overtime worked during the wage period (if

any) and the rate for that overtime;
(e) any other allowances or payments due;
(f) any deductions made from the total earnings of the

employee; and
(g) the total amounts due to the employee after all deductions

have been made for that wage period.
136. The employer shall establish and maintain a register of the

information referred to in sections 134 and 135 and keep that
register for 5 years.

137. An employer who contravenes section 136 shall be liable to pay
a fine at the rate of the Daily Minimum National Wage Rate to a
maximum of 3 years of the Daily Minimum National Wage
Rate.

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138. The Ministry may in consultation with the government, the
employers and the employees fix a minimum wage or wages to
come into effect:

(a) 90 calendar days after the making of the order; or
(b) from a date fixed by the Ministry in the order but not earlier

than the date of the order.
139. Every minimum wage shall be expressed in a daily rate and a

monthly rate.

CHAPTER - IX
OCCUPATIONAL HEALTH AND SAFETY

Application of Chapter IX

140. Chapter IX applies to all types of employment except in
farming.

Employer’s Duty to employees

141. An employer shall provide and maintain a working environment
for employees that is safe and without risks to health.

142. An employer shall provide accident compensation for all the
employees.

143. Without limiting sections 141 and 142, an employer shall:
(a) identify existing and new hazards at work and assess each

identified hazard to determine whether or not it is a hazard
to any employee at work;

(b) eliminate or reduce the health and safety risks of each
significant hazard at the workplace;

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(d) incorporate occupational health and safety planning and
management in the design and planning stages of a
project;

(e) institute and maintain effective communication and co-
operation with a health and safety representative (if any)
and employees about health and safety matters at the
workplace; and

(f) implement systems-
(i) to monitor the health and safety conditions at the

workplace;
(ii) to keep information and records relating to the health

and safety of employees at the workplace;
(iii) to provide the results of any health monitoring of an

employee to that employee;
(iv) without revealing confidential medical information

about an individual employee, to provide the results
of monitoring under subsection (i) to a health and
safety representative at the workplace;

(v) to compensate an employee if personal injury is
caused to the employee by accident arising out of and
in the course of his employment. However, the
employer is not liable in respect of an injury caused
by an accident which is directly attributable to:
(i) the wilful disobedience of an employee to an order

expressly framed for the purpose of securing the
safety of the employees, or

(ii) the wilful removal or disregard by the employee to
any safety guard or other device when he or she
knew to have been provided for the purpose of
securing the safety of the employees.

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144. More detailed Occupational Health and Safety standards for
specific sector for specific types of work shall be as specified in
the regulation to this Act.

145. An employer who contravenes sections 141 to 144 shall be
guilty of an offence which shall be a felony of fourth degree. In
addition, the court may impose appropriate compensatory
damages.

Employer’s duty to non-employees
146. An employer shall ensure that, persons (other than the

employees of the employer) are not exposed to risks to their
health or safety arising from the conduct of the undertaking of
the employer.

147. An employer who contravenes sections 146 shall be guilty of an
offence which shall be a felony of fourth degree. In addition, the
court may impose appropriate compensatory damages.

Employer to bear the cost of occupational health and
safety
148. An employer shall not require an employee to pay for any

machineries, systems, arrangements, facilities, equipment,
protective clothing and equipment, information, instruction,
training or supervision provided and maintained at a workplace
in relation to occupational health and safety.

149. If an employee is made to bear the cost under section 148 by
the employer, the Ministry may direct the employer to refund
the amount incurred by the employee.

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150. An employer that is either-
(a) a registered company under the Companies Act of the

Kingdom of Bhutan (2000); or
(b) a small, medium or large scale industry; or
(c) falling outside section 150 (a) and (b) and having twelve or

more employees,
shall prepare and implement an occupational health and
safety policy that ensures that each workplace of the
enterprise is safe and healthy by:
(i) addressing the hazards and risks at the workplace or

workplaces;
(ii) outlining the procedures and responsibilities for

preventing, eliminating and minimising the effects of
those hazards and risks;

(iii) identifying the emergency management plans for the
workplace or workplaces; and

(iv) specifying how consultation, training and information
are to be provided to employees at the workplace or
workplaces.

151. The employer shall prepare and implement the policy in
consultation with the health and safety representative and
Workers’ Association (if any) at each workplace of the
enterprise or, if there is no such representative or association,
the employees at each of the workplaces.

152. The employer shall display the policy in a prominent place at
each permanently sited workplace of the enterprise.

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Reporting of an accident or incident
154. An employer shall immediately notify the Chief Labour

Administrator of an accident or an incident that:

(a) resulted or could have resulted in death, loss or
impairment of bodily function, loss of consciousness,
electrical shock, acute or chronic symptoms of exposure to
any substance at the workplace, any other serious bodily
injury or any injury or disease requiring medical treatment;
or

(b) caused a loss of production or working time at the
workplace.

155. In the event of death of his or her employee due to accident at
work an employer shall immediately notify the nearest police
station giving details of the accident.

156. An employer who contravenes sections 154 and 155 shall be
liable to pay a fine at the rate of the Daily Minimum National
Wage Rate to a maximum of 1 yearof the Daily Minimum
National Wage Rate.

Accident records

157. An employer shall prepare a written record of the accident or
incident referred to in sections 154 and 155 and submit to the
Chief Labour Administrator within 5 calendar days of the
employer becoming aware of it.

158. The contents of the record shall be as specified in the rules and
regulations to this Act.

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159. While at work, an employee shall:
(a) take reasonable care for his or her own health and safety

and for the health and safety of any other employee or
person who may be affected by his or her acts or
omissions at the workplace; and

(b) shall not be under the influence of alcohol, drug or any
psychotropic substance.

160. An employee shall not:
(a) wilfully or recklessly interfere with or misuse anything

provided in the interests of health and safety or welfare at
the workplace; or

(b) wilfully place at risk the health or safety of any person at
the workplace.

161. An employee who contravenes sections 159 and 160 shall be
liable to pay a fine at the rate of the Daily Minimum National
Wage Rate to a maximum of 1 yearof the Daily Minimum
National Wage Rate

Right of an employee
162. If an employee has reasonable justification to believe that a

work situation presents an imminent and serious danger to his
or her life or health, the employee may remove himself or
herself from that situation.

163. An employee taking action under section 162 shall immediately
report to the employer’s representative or to the employer of
that situation.

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there is a continuing or imminent threat of serious harm to
an employee; or

(b) withhold pay from the employee by reason of his or her
action under section 162 provided that the employee stays
at the workplace and continues to demonstrate his or her
willingness to work.

165. An employer shall be liable for violation if the employer takes
any punitive or discriminatory action against an employee who
exercises his or her right under section 162 to 164.

Appointment of health and safety representative
166. The employees at a workplace may appoint one of its members

to be their health and safety representative at that workplace to:

(a) act on behalf of the employees in relation to health and
safety matters;

(b) raise issues which are of concern to the employees about
occupational health and safety;

(c) consult with the employer’s representative or if there is no
such representative, the employer, on health and safety
matters; and

(d) provide a focal contact for labour inspection and for the
employer in relation to occupational health and safety.

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167. A person who designs, manufactures, imports or supplies any
machineries or chemicals for use at a workplace shall:

(a) ensure that the machineries or chemicals are designed,
manufactured and labelled to be safe and without risks to
the health or safety of employees when used properly and
in accordance with relevant information and instructions
provided by the designer, manufacturer, importer or
supplier; and

(b) take such steps to provide adequate information and
instructions to purchasers and users about the use for
which each machine or chemical has been designed, its
correct installation and any requirements necessary to
ensure that it will be safe and without risks to health when
properly used.

168. A person who contravenes section 167 shall be liable to get his
business licence:

(a) suspended, in the first instance; and
(b) cancelled, in the second instance.

CHAPTER - X
MINIMUM AGE FOR ADMISSION TO EMPLOYMENT

Application of Chapter X

169. Chapter X applies to all forms of employment.
Age of employment
170. Minimum age of employment shall be 18 years.

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172. A person who contravenes section 170 and 171 shall be guilty
of an offence which shall be a felony of the third degree.

173. The Ministry shall make reasonable efforts to provide
vocational education and training opportunity to a Bhutanese
who is below 18 years old seeking employment.

Questions as to age

174. For the purposes of this Chapter, if a question arises about the
age of a child, a labour inspector may refer any of the
documents such as the Census Identity Card, Birth Certificate,
School Leaving Certificate, Health Card, etc. issued by the
relevant authorities.

Deeming employment

175. If a person causes or permits a person to:
(a) work as a domestic servant in a home which is not the

home of the person’s immediate family; or
(b) participate or assist in a business, trade, calling or

occupation carried on for profit:
the person is deemed to be employed whether or not he or she
receives payment or other reward for his or her participation or
assistance.

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Formation of Workers’ association

176. The workers of an enterprise of twelve or more workers
employed under contract of employment as per chapter V may
form one workers’ association to represent their interests.

177. No managerial employee shall be elected to a workers’
association, and a workers’ association shall not represent the
interests of a managerial employee.

Functions of a workers’ association

178. A workers’ association-
(a) may represent the employees concerned in any matter

affecting their rights and interests arising out of their
employment at the enterprise;

(b) is entitled to negotiate a collective bargaining agreement
with the employer relating to the terms and conditions of
employment of the employees concerned;

(c) may participate in the dispute resolution process in
Chapter XII; and

(d) may perform any other functions specified by this Act.
179. If a workers’ association has been elected to represent the

workers at an enterprise, no person or association other than
the workers’ association or its authorised representative may
act or purport to act for the workers in negotiating a collective
bargaining agreement.

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enterprise shall negotiate with each other:

(a) in good faith;

(b) in a manner that serves the Tsa Wa Sum; and

(c) in accordance with the procedures (if any) set out in
regulations.

181. The rights and proceedings of the meetings of the workers’
association shall be specified in the rules and regulations to this
Act or shall be governed by other relevant Acts of the Kingdom.

182. Notwithstanding sections 176 to 181, the workers’ associations
shall be prohibited from propagating any activity that will
adversely affect the security of the people and the economic
wellbeing of the country.

183. A person who contravenes section 180 to 182 shall be guilty of
an offence as defined in the Penal code of Bhutan.

CHAPTER - XII
RESOLUTION OF LABOUR DISPUTES

Application of Chapter XII

184. Chapter XII applies to all types of employment.

Employee’s right to time off with pay to attend procedures

185. An employee who is a party to a workplace grievance or a
labour dispute is entitled to time off with pay based on the
employee’s normal rate of pay in order to attend the grievance,
conciliation or Court proceedings or procedures relating to the
dispute.

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187. A person who contravenes section 185 and 186 shall be guilty
of an offence which shall be a petty misdemeanour.

Workplace grievance procedure

188. An employer of an enterprise with 12 or more employees shall
in consultation with the worker’s association at the enterprise
or, if there is no such association, the employee(s), prepare
and implement a workplace grievance procedure for use at
each workplace.

189. The workplace grievance procedure shall:
(a) be in writing;
(b) give an employee an opportunity to raise his or her

grievance and to be heard;
(c) enable the prompt and fair resolution of a grievance which

arises at the workplace;
(d) allow any issue or situation at the workplace relating to the

conditions of employment to be grounds for a grievance;
(e) enable an employee raising a grievance to participate

directly in the grievance procedure and to be assisted or
represented by the workers’ association (if any) or a
person of his or her own choosing;

(f) ensure that the party or parties raising a grievance is kept
informed of the steps being taken under the procedure and
of the action taken on the grievance;

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(h) allow the parties to a grievance to draw up an agreement
resolving the dispute that is binding on the parties,
provided that the agreement does not contravene the
provisions of this Act.

190. The employer shall make the grievance procedure known and
available to the employees at the workplace.

191. An employer who fails to comply with sections 188 to 190 shall
be guilty of an offence which shall be a petty misdemeanour.

Settlement of a dispute at the workplace

192. If a grievance arises at a workplace, the parties to the
grievance shall genuinely attempt to settle the grievance by
applying the grievance procedure or, if there is no grievance
procedure, by meeting to discuss the matter in dispute.

Notification of a dispute

193. If a grievance remains unresolved following an attempt to settle
it by applying the workplace grievance procedure at a
workplace, the party or parties who initiated the grievance shall
notify the Chief Labour Administrator that a labour dispute
exists.

194. The notice under section 193 shall state:
(a) the names of the parties to the dispute;
(b) the place where the dispute exists; and
(c) the subject matter of the dispute.

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195. Within two working days of receipt of notice of a labour dispute
under section 193 the Chief Labour Administrator shall direct a
labour relations officer to:

(a) investigate the labour dispute, including the facts of the
dispute, the procedures which the parties have followed in
attempting to resolve the dispute, and whether any of the
parties are in breach of this Act or regulations;

(b) advise the parties about their respective rights and
obligations under the law in relation to the dispute and
their options for settling the dispute;

(c) assist the parties to reach a resolution to their dispute;
(d) report back to the Chief Labour Administrator within 7

working days on the facts of the dispute and whether it has
been resolved or not; and

(e) report to the Chief Labour Administrator about the terms of
the resolution if the parties have resolved the dispute.

Appointment of a conciliator

196. The Chief Labour Administrator shall direct the parties to
appoint a conciliator to assist the resolution of the dispute if:

(a) a labour relations officer reports that the parties have failed
to resolve the dispute; or

(b) The Chief Labour Administrator is of the opinion that one
or more terms of a resolution fails to comply with this Act.

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198. If the parties are unable to agree on a conciliator, the parties
shall advise the Chief Labour Administrator of that fact within
the 4 day period and the Chief Labour Administrator shall
immediately appoint two conciliators to assist in the resolution
of the dispute.

Duties of a conciliator
199. A conciliator shall:

(a) commence the conciliation promptly;
(b) conduct the conciliation in the manner which is fair and

balanced to each of the parties involved in the labour
dispute;

(c) call the parties to the dispute to attend meetings to discuss
the dispute;

(d) if the conciliator is not a labour relations officer, be
assisted by a labour relations officer; and

(e) allow the parties to appear on their behalf or be
represented.

Conciliator’s report and record of agreement
200. Within 4 days after conducting conciliation under section 199, a

conciliator shall:

(a) in case of successful resolution of the dispute, submit to
the Chief Labour Administrator:
(i) a report stating the names of the parties, the issues in

dispute and how the dispute was resolved; and

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(b) in the case of a failure to reach a resolution of the dispute,
submit to the Chief Labour Administrator a report stating
the names of the Parties, the issues in dispute and why in
his or her opinion the dispute was not resolved.

201. A record of agreement is binding on the parties if the
agreement has been certified by the Chief Labour Administrator
as being in compliance with this Act.

Certification of record of agreement by Chief Labour
Administrator

202. If a record of agreement submitted to the Chief Labour
Administrator is, in his or her opinion-

(a) in compliance with this Act, the Chief Labour Administrator
shall:
(i) certify in writing that the agreement is in compliance;

and
(ii) notify the conciliator and the parties to the dispute that

the record of agreement complies with the Act and is
enforceable; or

(b) not in compliance with this Act, the Chief Labour
Administrator shall advise the conciliator and the parties as
soon as possible that the agreement is not enforceable
and specify where the agreement fails to comply with this
Act.

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202 (b) from the Chief Labour Administrator that a record of
agreement is not enforceable, the parties shall, within 3 working
days of that notification, seek to agree to amend the agreement
to comply with this Act and:

(a) if the parties agree to amend the agreement, they shall
resubmit the amended agreement to the Chief Labour
Administrator for certification under section 202; or

(b) if the parties fail to agree to amend the agreement, the
parties shall notify the Chief Labour Administrator in writing
of that failure.

Settlement by court or arbitration

204. This section applies to a labour dispute that:
(a) has not been resolved following the conciliation

procedures in this Chapter; or
(b) has resulted in a record of agreement that, in the opinion

of the Chief Labour Administrator, is inconsistent with this
Act.

205. The Chief Labour Administrator shall direct the parties to such
disputes:

(a) in the case of a rights dispute, to take the dispute to a
Court of law of the Kingdom of Bhutan for settlement; or

(b) in the case of an interests dispute, to take the dispute to
an arbitrator appointed under section 206 for settlement.

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206. The Ministry shall appoint a person to be an arbitrator to settle
an unresolved interests dispute.

207. The arbitrator shall:
(a) commence the arbitration promptly;
(b) conduct the arbitration in a manner which is fair and

balanced to each of the parties involved in the labour
dispute;

(c) if the arbitrator considers it necessary, appoint a person
with expert knowledge to assist in an advisory capacity;

(d) call the parties to the dispute to attend meetings to discuss
the dispute; and

(e) allow parties to appear on their own behalf or to be
represented.

208. The arbitrator has the power to:
(a) call the parties to the labour dispute;
(b) call witnesses;
(c) cause an oath to be administered and examine the parties

and witnesses; and
(d) call for the production of books, and documents.

209. A decision of the arbitrator shall be binding on the parties.

Appeal against arbitrator

210. The party to a labour dispute who is aggrieved by the decision
of an arbitrator may appeal against that decision to a Court of
law on a matter of law.

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Prohibitions
211. A person shall not act as an employment agent unless the

person is licensed.

Duties of an employment agent
212. An employment agent shall ensure that if the agent recruits and

places an employee with an employer, the terms and conditions
of that employment complies with the provisions of this Act and
regulations.

Application for a licence
213. A person may apply for an employment agent’s licence for

recruitment of foreign workers in the country and placement of
Bhutanese workers abroad by submitting to the Chief Labour
Administrator in the manner set out in the regulations to this Act
and the Immigration Act.

Grant, amendment, cancellation and renewal of licence
214. The procedure for the grant, amendment, cancellation and

renewal of licence shall be in accordance to the procedure
specified in the regulations.

Appeal against decision to grant, amend, renew or repeal
a licence
215. Any person aggrieved by a decision of the Chief Labour

Administrator for grant, renewal and cancellation of licence may

appeal to the Minister, who may determine the matter in such

manner as the Minister considers just.

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comply with the terms and conditions of the licence.

217. A person who contravenes section 216 shall be guilty of an
offence under the Licencing Rules and Regulations.

Employment agent to submit information
218. An employment agent shall submit the following information to

the Chief Labour Administrator on a quarterly basis:

(a) the number of male and female job seekers registered with
the agent;

(b) the number of job vacancies registered with the agent;
(c) the number of male and female job seekers placed in

employment by the agent;
(d) the number of males and females who came to the agent

for career advice or any other service offered by the agent;
and

(e) any other information required by the Act and its rules and
regulations.

CHAPTER – XIV
EMPLOYMENT OF FOREIGNERS

Prohibition relating to the employment of a foreigner without a
permit
219. No person shall employ a foreigner unless the employer has an

approval of the Chief Labour Administrator to employ a
foreigner.

220. No person shall knowingly assist a person to employ a
foreigner without a permit

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222. A person who contravenes sections 219 to 221 shall be guilty
of an offence which shall be a felony of the fourth degree.

Other prohibitions relating to the employment of a
foreigner
223. No employer shall terminate a contract of employment of an

employee who is a citizen or resident of the Kingdom of Bhutan
for the purpose of employing a foreigner.

224. An employer shall not terminate the contract of employment of
a citizen or resident of the Kingdom of Bhutan under sections
90 and 91 unless he or she has first terminated the contracts of
all foreigners employed by him or her who are working in a
capacity similar to that of the citizen or resident.

225.A person who contravenes sections 223 and 224 shall be guilty
of an offence which shall be a misdemeanour.

Issue of criteria and quotas
226. The Government may, by written notice, issue the Ministry with:

(a) criteria for determining a recommendation to issue a
permit;

(b) quotas for:
(i) the maximum number of foreigners who may work in

the Kingdom of Bhutan; and
(ii) the maximum number of foreigners who may work in

specified industries, occupations or both in the
Kingdom and which takes into account the research
and recommendations from the Ministry to the
government; and

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Appeal against decision relating to a permit

227. An applicant who is aggrieved by a decision of the Chief Labour
Administrator may appeal to the Minister, who may determine
the matter in such manner as he or she considers just.

Power of Department of Immigration

228. The Department of Immigration shall, at any time exercise the
powers and authority on matters relating to foreign workers in
accordance with the Immigration Act.

Offences relating to permits

229. A person who fails to comply with the terms and conditions of a
permit shall be guilty of an offence which shall be a
misdemeanour.

230. A person who forges or counterfeits a permit shall be guilty of
an offence which shall be a felony of the fourth degree.

CHAPTER - XV
MISCELLANEOUS PROVISIONS

Authority to prosecute

231. The Ministry may institute proceedings in a Court of Law for an
offence against this Act or the regulations.

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this Act applies to provide such information as is reasonably
necessary to enable the purposes of this Act to be carried out.

233. For the purpose of obtaining such information, the Chief Labour
Administrator may issue a notice in writing requiring that
person to produce the information specified in the notice and in
such form and manner and within such time as specified.

Rule making power
234. The Ministry may make rules and regulations necessary to

carry out its functions economically, efficiently and effectively in
accordance with law

Authoritative Text
235. The Dzongkha text shall be the authoritative text if there exist

any difference in meaning between the Dzongkha and the
English text of the Act.

Amendments
236. The amendment of this Act may be effected only by the

Parliament.

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otherwise, the words, phrases and acronym are defined as
follows:

“Act” means the Labour and Employment Act, 2007 and
includes any other regulations issued under the Act ;

“Chief Labour Administrator” means for the purpose of
this Act, the Head of the Secretariat of the Ministry of Labour
and Human Resources or an officer of the Royal Civil
Service recruited, selected and appointed under the Bhutan
Civil Service Rules to exercise the functions and powers in
sections 22 to 24 of this Act;

“Citizen or resident of the Kingdom of Bhutan” for the
purposes of Chapter XIV means a person:
(a) who is a citizen by birth or registration under the

Citizenship Law (1958);
(b) who is a citizen by naturalisation under the Citizenship

Act (1985); or
(c) who is living in the Kingdom and whose father or mother

is a Bhutanese citizen.
“Collective bargaining agreement” means an agreement

made in writing between an employer and worker’s
association under 178 and 179;

“Contract of employment” means an agreement, whether
oral or in writing, expressed or implied to employ or to serve
as an employee for payment and includes a contract of
training;

“Continuous employment” means employment under an
unbroken contract of employment, whether full or part time work;

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“employee” means a person employed under a contract of
employment;

“employer” means a person who employs one or more other
persons under a contract of employment;

“employment agent” means a person, independent of the
labour administration, who:

(a) places employees with employers, resulting in their
formation of a contract of employment but without the
employment agent becoming a party to the contract of
employment; or

(b) employs an employee with a view to making that
employee available to a third person and the third
person assigns and supervises the execution of the
employee’s tasks;

“employment promotion” may include policies,
programmes and activities to:

(a) register job seekers and job vacancies and to match and
place job seekers against the vacancies;

(b) provide career guidance and counselling services;
(c) disseminate information on job and training

opportunities; and
(d) conduct job fairs from time to time.

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“foreigner” for the purposes of Chapter XIV means a person:
(a) who is not a citizen or resident of the Kingdom of

Bhutan; or
(b) who is living in the Kingdom and is married to a

Bhutanese citizen;
“grievance” means a complaint by one or more employees, a

workers’ association or an employer regarding any matter
arising at a workplace that is affected by this Act;

“interest dispute” means a labour dispute about a demand
from a party to a dispute to negotiate changes to, or the
introduction of, new privileges or conditions relating to any
matter arising at a workplace that is affected by this Act;

“labour administration” means the agency of the Royal
Government of Bhutan charged with the administration of this
Act and regulations;

“labour dispute” means an actual, threatened or probable
dispute notified under section 193 involving any employer,
one or more employees or a workers’ association about any
other matter affected by this Act;

“Labour Inspector” means an officer of the Royal Civil
Service recruited, selected and appointed under the Bhutan
Civil Service Rules to exercise the functions and powers in
sections 26 to 29 of this Act;

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(b) improve the working conditions at workplaces; and
(c) promote and enforce occupational health and safety;

“labour relations” may include policies, programmes and
activities to:

(a) promote individual and collective workplace harmony
and co-operation; and

(b) minimise the number and impact of workplace conflict
and labour disputes;

“Labour Relations Officer” means an officer of the Royal
Civil Service recruited, selected and appointed under the
Bhutan Civil Service Rules to exercise the functions in
section 25 of this Act;

“large scale industry” means an industry whose input
capital is from Ngultrum 100 million and above;

“managerial employee” means an employee who has
supervisory or managerial responsibilities for the work of
others, as well as his or her own work at a workplace;

“medium scale industry” means an industry whose input
capital is from Ngultrum 10 million to 100 million;

“Ministry” means the Ministry of Labour and Human
Resources;

“Minister” means Minister for Labour and Human Resources;
“Department of Immigration” means the Department of

Immigration of the Ministry of Home and Cultural Affairs in
the Royal Government of Bhutan;

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“normal rate of pay” means the rate of pay for a specific
unit of work or time and excludes allowances, bonuses,
overtime payment and other benefits;

“occupational health and safety representative” means
an employee elected under section 166 to represent the
employees at a workplace on matters concerning
occupational health and safety;

“overtime pay” means pay earned for performing overtime
according to section 124 of this Act;

“person” includes an individual, partnership, company,
unincorporated organization, government, governmental
agency, trustee, executor, administrator or other legal
representative;

“rights dispute” means a labour dispute about a function,
right or entitlement created by this Act, a contract of
employment or a collective bargaining agreement;

“Royal Civil Service” means the Royal Civil Service created
under the Royal Charter of the Royal Civil Service
Commission 1982 or any other legal authority;

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“substance” means any natural or artificial substance,
whether in solid or liquid form or in the form of gas or vapour;

"wages" means remuneration or earnings that can be
expressed in terms of money and payable by an employer to
an employee by virtue of a contract of employment;

“worker” means an employee who is not a managerial or
supervisory employee at a workplace; and

“workplace” means any place, whether a building or
structure, open space, home, office or factory, where an
employee works.

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