SummaryThe obligations every GMC employer of non-Bhutanese staff must meet:
- Employing a foreign employee without a valid work pass is an offence with a fine of at least $5,000 and up to $30,000, or up to 12 months' imprisonment, or both (Employment of Foreign Workforce Act 2025, s. 5(6)). Not knowing the person was a foreigner is no defence unless you checked their passport or travel document (s. 5(4) and (5)).
- The employer applies to the Controller of Work Passes (s. 7), keeps a register of foreign employees (s. 8), and must act within 7 days on suspension, revocation or cancellation of a pass (ss. 9, 13(3)).
- Pass categories, durations, criteria, conditions and fees are prescribed by regulations under s. 29; any levy is set by Gazette order under s. 11.
- Taking money from a foreign employee as a condition of employment is an offence with a fine up to $30,000 or 2 years' imprisonment (s. 22A); obtaining a pass for a non-existent job carries a minimum 6 months' imprisonment (s. 22B).
- Lesser breaches are "prescribed infringements" dealt with by the Controller through financial penalties of up to $10,000 or $20,000 and directions (Part 5), with an appeal to the Appeal Board within 14 days (s. 25G).
- Officers are personally liable for breaches committed with their consent or through their neglect, which is presumed for the officer primarily responsible (ss. 20, 25E).
The framework
The Employment of Foreign Workforce Act 2025 took effect on 26 December 2024 (s. 1) and is administered by a Controller of Work Passes and employment inspectors appointed by the designated officer (s. 3). A "foreigner" is anyone who is not a citizen of the Kingdom of Bhutan; a "foreign employee" is any foreigner, other than a self-employed foreigner, who seeks or is offered employment in GMC (s. 2). "Employ" covers work or training "whether under a contract of service or otherwise, and with or without salary" (s. 2), so interns and volunteers are caught. "$" means United States dollars (s. 2AA). The designated officer may exempt persons or classes by Gazette notification (s. 4); check for exemptions but do not assume one.
The core prohibitions
Section 5: no employment without a pass
A person must not employ a foreign employee without a valid work pass (s. 5(1)); a foreign employee must not be in employment without one (s. 5(2)); and a person must not employ a foreign employee "otherwise than in accordance with the conditions of the foreign employee's work pass" (s. 5(3)). A pass is valid only for the employer, the employee and the occupation or sector specified or applied for (s. 12(1)), so redeploying a pass holder without the Controller's approval is a breach.
Not knowing the employee was a foreigner is no defence unless the employer proves due diligence, which requires having "checked the passport, document of identity or other travel document" (s. 5(4) and (5)).
A first conviction under s. 5(1) carries a fine of $5,000 to $30,000, or up to 12 months' imprisonment, or both. On a second conviction an individual faces a fine of $10,000 to $30,000 plus mandatory imprisonment of one to 12 months; a company faces $20,000 to $60,000 (s. 5(6)). Employing outside pass conditions carries up to $10,000 (s. 5(8)); the employee's own breach carries up to $20,000 or 2 years (s. 5(7)).
Sections 6 and 6A: presumptions
"Where a foreigner is found at any premises, the occupier of the premises is presumed, until the contrary is proved, to have employed the foreigner" (s. 6), so keep records showing who employs contractors' staff. On construction sites, the principal contractor as "occupier" must not permit a foreigner without a valid pass to enter or remain (s. 6A(1)); access control, permission and knowledge are presumed (s. 6A(2)), rebuttable only by proof of due diligence including checking the original pass and taking prescribed measures (s. 6A(3)–(5)). Penalties reach $15,000 or 12 months, doubling on a subsequent conviction (s. 6A(6)).
Applying for a pass (s. 7)
The application is made by the person prescribed for the category of pass, with the prescribed fee and "such information, statements and documents as the Controller may require" (s. 7(1)). The applicant bears the burden of proving the truth of its contents (s. 15).
The Controller may issue an in-principle approval subject to conditions (s. 7(3)), then issue the pass if the fee is paid and the person is not a "prohibited immigrant" under the Second Schedule (s. 7(2)(a)), or may refuse (s. 7(2)(b)). Conditions may bind employer and employee, during and after the employment (s. 7(6)), and may be varied at any time within the limits of the regulations (s. 7(5)(a), (7)). Breaching an ordinary condition is a criminal offence (s. 22(1)(a)); breaching a "regulatory condition" is a prescribed infringement handled by the Controller (s. 25(2)).
Renewal is on payment of the prescribed fee for a period the Controller determines (s. 7(4)). The Controller may suspend, revoke or reinstate a pass, or "debar any person from applying for or being issued with a work pass for any fixed period" (s. 7(5)), including associates of a debarred person (s. 7(8) and (9)). Appeals go to the designated officer, "whose decision is final" (s. 7(10)); judicial review is excluded except on procedure (s. 7(11)).
Self-employed foreigners (s. 10)
A foreigner engaging in any trade, vocation, profession or gainful activity in GMC otherwise than under a contract of service must hold a work pass (s. 10(1)), valid only for the activity specified (s. 12(2)). Confirm that foreign contractors hold one; s. 6 presumes employment.
During employment
The register (s. 8). An employer "must keep a register of foreign employees to whom work passes have been issued", in the Controller's form, open to inspection. Failing to produce it is deemed obstruction (s. 16(5)), an offence carrying up to $10,000 or 12 months (s. 22(1)(c)).
Custody of the pass (s. 13). A pass holder must not let anyone else possess the pass (s. 13(1)); employers must not hold passes as security. If the Controller requires, the employee hands over the pass on the last day and the employer returns it within 7 days (s. 13(2) and (3)). Loss must be reported within 7 days (s. 14(1)).
The levy (s. 11). The designated officer "may, by order in the Gazette, provide for the imposition of a levy" on employers in respect of foreign employees (s. 11(1)). A levy runs until the pass expires, is suspended or revoked, or is cancelled on the employer's application (s. 11(2)); late payment attracts a daily penalty capped at 30% of the outstanding levy (s. 11(4) and (5)). Cancel passes promptly; the levy does not stop because the person has left.
Employer-borne costs (s. 25(6)). Unless the Controller permits otherwise, the employer bears pass fees (other than those prescribed as recoverable from the employee), security, required medical insurance and examinations, required training, and "costs associated with repatriating the foreign employee at any time". Shifting these to the employee is a prescribed infringement (s. 25(4)).
Ending employment (s. 9)
If the Controller suspends or revokes a pass, the employer "must, within 7 days of receiving the notification, terminate the employment" (s. 9(1)); failure is a prescribed infringement with a penalty up to $10,000 (s. 9(3)), and the termination cannot be made a trade dispute (s. 9(5)). If the employer itself ends the arrangement, it must apply to cancel the pass and, if required, return it within 7 days (s. 9(2)); failure is an offence with a fine up to $10,000 (s. 9(4)).
Tax clearance also bites on exit. No final salary or other sum may be paid to a departing employee without the permission of the relevant tax officer, and the employer must immediately notify the termination (Employment Act 2025, s. 24). The Comptroller may also direct the authorities to stop a person leaving GMC with assessed tax unpaid (Income Tax Act 2025, s. 86).
The serious offences
Kickbacks (s. 22A). No person may deduct from a foreign employee's salary, or demand or receive from them "whether in GMC or elsewhere", any sum or benefit as consideration or a condition for employment, or as a financial guarantee related to it (s. 22A(1)). The penalty is up to $30,000 or 2 years or both (s. 22A(2)). Any deduction outside the listed lawful categories, such as authorised deductions under ss. 26 to 32 of the Employment Act 2025, "is presumed, until the contrary is proved" to be consideration for employment (s. 22A(3)), and the court must order repayment (s. 23A(1)(a)).
Phantom jobs (s. 22B). Obtaining a pass "for a trade or business that does not exist, that is not in operation or that does not require the employment of such a foreign employee" and failing to employ the person carries a presumptive minimum of 6 months' imprisonment, up to 2 years, plus a fine up to $6,000 (s. 22B(1)) and disgorgement (s. 23A(1)(b)).
False statements (s. 22). A statement to the Controller that the person "knows, or ought reasonably to know, is false in any material particular" carries up to $20,000 or 2 years or both, as does forging or transferring a pass (s. 22(1)(d)–(f), (i)). Knowingly staying silent about another's false statement is a separate offence (s. 22(2) and (4)).
Inspection (ss. 16, 21, 27). Inspectors may enter premises, search "by day or by night", require documents and examine persons (s. 16(1)); arrest without warrant applies to the major offences (s. 21(1)); the Controller may compound an offence for up to the lower of half the maximum fine and $5,000 (s. 27).
Prescribed infringements and the Appeal Board (Part 5)
A "prescribed infringement" is a contravention of s. 9(1), s. 25(1)–(4) or s. 25A(2), or a regulation so designated (s. 2). The Controller, not a court, determines them.
| Infringement | Section | Maximum penalty |
|---|---|---|
| Inflating the employer's "foreign employee entitlement" (the number of foreign employees it may employ under criteria set by the designated officer or Controller) | s. 25(1), (5) | $20,000 |
| Breach of a regulatory condition | s. 25(2) | $10,000 |
| Inadvertent inaccurate statement to the Controller | s. 25(3) | $20,000 |
| Making the employee bear employer-borne costs | s. 25(4) | $20,000 |
| Failure to comply with prescribed duties, including post-expiry duties | s. 25A | $10,000 |
| Failure to terminate within 7 days of suspension or revocation | s. 9(1), (3) | $10,000 |
The Controller may also give remedial directions (s. 25B(1)); non-compliance is a criminal offence (s. 25B(2)). Proceedings are private, decided on the balance of probabilities, and "no party may be represented by an advocate or solicitor or a paid agent" (s. 25C(3) and (4)).
A person aggrieved may ask the Controller to vary or set aside the determination (s. 25C(7)) or appeal to the Appeal Board, "whose decision is final" (s. 25C(8)), "within 14 days after the receipt of the determination or direction" (s. 25G(1)). An appeal suspends the determination only where it concerns a financial penalty (s. 25G(3)). The Board, independent and with at least three members, may confirm, vary, reverse or remit (ss. 25G(6), 25H). Unpaid penalties carry interest and are recoverable as a debt due to the GMCA (s. 25D). Since lawyers cannot appear before the Controller, legal input goes into the written response and the appeal.
Personal liability of officers
Where a body corporate commits an offence with the consent or connivance of an officer, or through the officer's neglect, "the officer as well as the body corporate shall be guilty" (s. 20(1)). Neglect is presumed for the officer who "is primarily responsible for the act or omission" and "has failed to exercise reasonable supervision or oversight" (s. 20(5)). Section 25E applies the same to prescribed infringements, and an occupier cannot escape abetment by showing it told a contractor not to employ unlicensed foreigners (s. 23(2)). Boards should assign work pass compliance to a named officer and document the oversight.
Practical checklist
- Check and copy the passport or travel document of every hire before work starts (s. 5(5)).
- Confirm current pass categories, criteria, fees and any levy order before applying (ss. 11, 29).
- Verify every statement in the application; the applicant bears the burden of proof (s. 15).
- Keep the register of foreign employees current (s. 8), and never take money or guarantees from foreign employees or pass on employer-borne costs (ss. 22A, 25(4), (6)).
- Track pass conditions and occupations; redeployment needs the Controller's approval (ss. 5(3), 12).
- On suspension, revocation or your own termination, act within 7 days (ss. 9, 13(3)) and obtain tax clearance before paying final sums (Employment Act 2025, s. 24).
- Diarise 14 days for any Appeal Board appeal (s. 25G(1)).
- Direct pass queries to GMCA's immigration division and tax clearance queries to the GMC tax administration.
Frequently asked questions
What is the penalty for employing a foreigner without a GMC work pass?
A first conviction carries a fine of $5,000 to $30,000, or up to 12 months' imprisonment, or both (s. 5(6)(a)). Repeat offenders face mandatory imprisonment for individuals and fines of $20,000 to $60,000 for companies.
How much is the GMC foreign worker levy?
Section 11 allows the designated officer to impose a levy by Gazette order, and pass categories and fees are prescribed by regulations under s. 29. Basnet Law can confirm current figures.
Can I appeal a refused work pass application?
Yes, to the designated officer, whose decision is final (s. 7(10)); judicial review is excluded except on procedure (s. 7(11)). Prescribed infringement determinations go to the Appeal Board within 14 days (s. 25G).
Key takeaways
- A valid work pass, in the right category and for the right occupation, is a precondition to every foreign hire in GMC.
- The employer applies, keeps the register, bears the prescribed costs, and must act within 7 days on suspension, revocation or cancellation.
- Kickbacks and phantom jobs are serious offences with mandatory disgorgement; lesser breaches go through the Controller under Part 5, with a 14-day appeal to the Appeal Board.
- Pass categories, fees and levy amounts are set in regulations and Gazette orders.
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer–client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
References
- Employment of Foreign Workforce Act 2025 (Law No. 4 of 2025), ss. 1, 2, 2AA, 3, 4, 5, 6, 6A, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 20, 21, 22, 22A, 22B, 23, 23A, 25, 25A, 25B, 25C, 25D, 25E, 25G, 25H, 27, 29; Second Schedule
- Employment Act 2025 (Law No. 3 of 2025), ss. 24, 26–32
- Income Tax Act 2025 (Law No. 6 of 2025), s. 86
- GCRO FAQ for GMCA Entities (3 June 2026, v0.2), Gelephu Corporate Registration Office
