This hub collects our guides for employers and HR leaders in the Gelephu Mindfulness City Special Administrative Region (GMC). Two statutes govern the employment relationship: the Employment Act 2025 (Law No. 3 of 2025), which sets the floor of terms for contracts of service, and the Employment of Foreign Workforce Act 2025 (Law No. 4 of 2025), which governs the hiring of foreign employees. Both are deemed in force from 26 December 2024. Every "$" in both Acts means United States dollars (Employment Act 2025, s. 2AA; Employment of Foreign Workforce Act 2025, s. 2AA).

What this guide covers

The Employment Act 2025 works by setting minimum conditions and voiding anything below them: every term of a contract of service that is less favourable than a condition prescribed by the Act "is illegal and void to the extent that it is so less favourable" (s. 8). Either party may terminate on notice, and the notice period must be the same for both sides (s. 10(1)–(2)). Where the contract is silent, the statutory minimum runs from one day's notice for service under 26 weeks to four weeks' notice for five years or more (s. 10(3)). An employer may, after due inquiry, dismiss without notice for misconduct, or instead downgrade or suspend without pay for up to one week (s. 14(1)).

On pay, salary must be paid within 7 days after the end of the salary period (s. 21(1)), sums due on dismissal must be paid on the day of dismissal or within 3 days (s. 22), and no deduction may be made except as the Act authorises (s. 26). No termination payment may be made without tax clearance from the relevant officer, and the employer must immediately notify that officer of the termination (s. 24). Hours are capped at 8 a day and 44 a week, with no more than 6 consecutive hours without a break (s. 38(1)). Retrenchment benefit requires at least 2 years' continuous service (s. 45) and retirement benefit at least 5 years (s. 46).

The series articles

• Hiring in GMC: The Employment Act 2025 From Offer Letter to Termination — illegal terms (s. 8), termination and notice (ss. 9–11), dismissal (s. 14), transfer of employment on a business sale (s. 18A), hours and rest days (ss. 36–38), retrenchment and retirement benefits (ss. 45–46), permitted deductions (ss. 26–32) and the tax clearance step (s. 24).
• GMC Work Passes: The Complete Employer's Guide to the Employment of Foreign Workforce Act 2025 — the prohibition on employing a foreign employee without a valid work pass (s. 5), the due diligence defence that requires checking the passport (s. 5(4)–(5)), the employer's register of foreign employees (s. 8), termination within 7 days of revocation (s. 9) and the levy (s. 11).
• Employer Criminal Exposure in GMC: Proscribed Workforce Practices, Kickbacks and the Prescribed Infringement Regime — restrictions on deductions and receipt of moneys in connection with employing a foreign employee (s. 22A), proscribed workforce-related practices (s. 22B), offences by bodies corporate (s. 20) and the Part 5 prescribed infringement regime with its Appeal Board.
• Group Relief, Amalgamations and R&D Incentives — the employee equity-based remuneration deductions (Income Tax Act 2025, ss. 14L, 14M, 14MA) for employers offering share plans.
• The GMC Tax Regime in Full — 0% for non-citizen employees on chargeable income derived on or before 31 December 2030 (s. 43(1)(ba)), and the employer's deduction-at-source duty (s. 44B).

Employer checklist drawn from the Acts

1. Confirm nationality from the passport before any hire (Foreign Workforce Act, s. 5(5)).
2. Obtain the work pass before the start date (s. 5(1)); keep the register under s. 8 current.
3. Draft the contract at or above the Employment Act floor (s. 8), with equal notice periods (s. 10(2)).
4. Pay salary within 7 days of the period end (s. 21(1)) and through the channels the Act permits.
5. On termination, seek tax clearance before paying final sums (s. 24) and, for foreign employees, apply to cancel the pass (Foreign Workforce Act, s. 9(2)).

Frequently asked questions

Can we agree a longer notice period than the statute?

Yes. The Act sets minimums, and the contractual period governs where one is stated, provided it is the same for employer and employee (s. 10(2)). A shorter period for one side would be void to that extent under s. 8.

Is there a national minimum wage in GMC?

The Employment Act 2025 includes a provision headed "Workers to be paid at least the national minimum wage" (s. 21A), but the Act itself does not state the amount. The figure is a matter for the designated officer; we confirm the current position on request.

Do we need tax clearance before paying a leaver?

Yes. Section 24(1) prohibits payment of salary or other sums due on termination without the permission of the relevant tax officer, and s. 24(2) requires the employer to notify the termination immediately.

How much can we deduct from salary?

Only deductions the Act authorises (ss. 26–31), subject to the prescribed limit in s. 32. Deductions from a foreign employee's salary as consideration for employment are separately prohibited (Foreign Workforce Act, s. 22A).

Are directors covered by the Employment Act?

The Act applies to employees under a contract of service. Whether a particular director is also an employee depends on the terms of engagement; the foreign director will in any event need a work pass under s. 5 or s. 10 of the Foreign Workforce Act.

You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.

References

• Employment Act 2025, ss. 2AA, 8, 9, 10, 11, 14, 18A, 21, 21A, 22, 24, 26–32, 36–38, 45, 46
• Employment of Foreign Workforce Act 2025, ss. 2AA, 5, 8, 9, 10, 11, 20, 22A, 22B, Part 5
• Income Tax Act 2025, ss. 14L, 14M, 14MA, 43(1)(ba), 44B