Summary
- The Employment of Foreign Workforce Act 2025 (Law No. 4 of 2025) creates three tiers of employer exposure: criminal offences tried in court (Part 4), "prescribed infringements" decided by the Controller of Work Passes with financial penalties and a final appeal to an Appeal Board (Part 5), and levy debts (s. 11).
- Employing a foreigner without a valid work pass carries a fine of $5,000 to $30,000 or up to 12 months' imprisonment; a second conviction of an individual carries a mandatory minimum of one month in prison (s. 5(6)).
- Taking any sum or benefit from a foreign employee as a condition of employment is punishable by a fine up to $30,000 or 2 years' imprisonment (s. 22A(2)), plus a mandatory order to repay the amount (s. 23A).
- Obtaining a work pass for a business that "does not exist" or does not need the worker carries a presumptive minimum of 6 months' imprisonment (s. 22B(1)).
- Officers are personally guilty where an offence is committed with their consent or connivance or through their neglect, and neglect is presumed against the officer primarily responsible (s. 20(5)). The Employment Act 2025 mirrors this (s. 113A).
- All "$" amounts are United States dollars (s. 2AA).
Why this is a board-level issue
The Employment of Foreign Workforce Act 2025 ("the Act") assumes that the employer, not the worker, is best placed to prevent abuse. It places the burden of proof on the employer, presumes the responsibility of company officers, and reaches conduct "whether in GMC or elsewhere". Board members are within its reach.
The Act is deemed to have come into operation on 26 December 2024 (s. 1(1)) and re-enacts, with amendments, the Employment of Foreign Manpower Act 1990 previously applied under Schedule A to the Application of Laws Act 2024 (s. 1(2)). It is administered by the Controller of Work Passes (s. 3(1)), supported by employment inspectors (s. 3(3)). Work pass categories, duration, criteria and conditions are left to regulations under s. 29(2)(c); the Act does not name them.
Definitions that widen the net
"Employ" means to engage or use a person's service for "any work" or "any training", "whether under a contract of service or otherwise, and with or without salary" (s. 2); an unpaid intern is "employed". "Foreigner" means any person who is not a citizen of the Kingdom of Bhutan. "Employer" includes anyone who "purports to have the intention" to employ a foreign employee. "Occupier" includes the person with "charge, management or control" of any part of premises.
Tier one: the core offences
Employing without a valid work pass (s. 5)
A person must not employ a foreign employee without a valid work pass (s. 5(1)) or otherwise than in accordance with its conditions (s. 5(3)). The penalty for s. 5(1) is a fine of $5,000 to $30,000, or up to 12 months' imprisonment, or both (s. 5(6)(a)). On a second conviction an individual "shall be punished" with a fine of $10,000 to $30,000 and imprisonment of one to 12 months; a company faces $20,000 to $60,000 (s. 5(6)(b)). Breach of conditions carries a fine up to $10,000 (s. 5(8)). Ignorance of nationality is no defence unless the employer proves due diligence, which is not made out unless it "had checked the passport, document of identity or other travel document of the employee" (s. 5(4), (5)).
Presumptions against occupiers (ss. 6, 6A)
Where a foreigner is found at any premises, the occupier "is presumed, until the contrary is proved, to have employed the foreigner" (s. 6). For construction and other prescribed work places, the occupier with control of access must not permit a foreigner without a valid pass to enter or remain (s. 6A(1)); control, permission and knowledge are presumed (s. 6A(2)) and rebutted only by proof of "all reasonable measures" (s. 6A(3), (4)). The penalty is up to $15,000 or 12 months, rising to $30,000 or 2 years on a repeat (s. 6A(6)). An occupier charged with abetting cannot rely on having instructed a contractor not to employ foreigners (s. 23(2)).
General offences (s. 22)
| Conduct | Maximum penalty |
|---|---|
| Contravening a condition (other than a "regulatory condition") of a pass or in-principle approval (s. 22(1)(a)) | $10,000 or 12 months |
| Statement or information the person "knows, or ought reasonably to know, is false in any material particular" or misleading by omission (s. 22(1)(d)) | $20,000 or 2 years |
| Selling, forging, transferring or misusing a pass (s. 22(1)(e), (f)) | $20,000 or 2 years |
An employer or agent who knows of a false statement in an application, or a worker's false qualifications, and "intentionally omits" to inform the Controller commits a separate offence (s. 22(2), (4)). An applicant is presumed to know the contents of an application and must prove them true (s. 15).
Tier one, aggravated: kickbacks and phantom jobs
Restrictions on receipt of moneys (s. 22A)
No person may deduct from a foreign employee's salary, or demand or receive from a foreign employee "directly or indirectly and whether in GMC or elsewhere", any sum or benefit as consideration or a condition for employment or continued employment, or "as a financial guarantee related, in any way, to the employment" (s. 22A(1)). The penalty is a fine up to $30,000 or 2 years' imprisonment or both (s. 22A(2)).
The presumption in s. 22A(3) is what catches well-meaning employers. Any deduction or receipt outside five permitted categories is "presumed, until the contrary is proved" to be consideration for employment. The categories are: costs the employer must bear under s. 25(6) (which cannot be recovered at all); fees prescribed as recoverable; deductions authorised by ss. 26–32 of the Employment Act 2025 where those sections apply; deductions under the employment terms where they do not; and fees a licensed employment agency may lawfully charge. A "deposit" from a new hire, a "training bond", or a recruitment fee routed through an overseas affiliate can each fall within s. 22A.
Proscribed workforce-related practices (s. 22B)
Any person who obtains a work 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 fails to employ the worker, "shall on conviction be punished with imprisonment for a presumptive minimum term of not less than 6 months and not more than 2 years" plus a fine up to $6,000 (s. 22B(1)). Six or more convictions at one trial add a further fine up to $10,000 (s. 22B(2)). The provision targets pass-selling, but also catches a genuine company that obtains passes for a project that never starts.
Disgorgement, abetment and arrest
On conviction under s. 22A(2) or s. 22B(1), the court "shall" order payment of a sum equal to the benefit received (s. 23A(1)), enforced like a fine (s. 23A(3)). Abettors face the same punishment as principals (s. 23(1)). Inspectors may arrest without warrant for the main offences (s. 21(1)), and an officer liable under s. 20 "shall be treated as having committed that offence" for that purpose (s. 21(2)).
Tier two: prescribed infringements
Part 5 operates without a criminal trial. A "prescribed infringement" is a contravention of s. 9(1), s. 25(1)–(4) or s. 25A(2), any regulation so prescribed, or abetment of any of these (s. 2).
| Infringement | Maximum penalty |
|---|---|
| Failing to terminate a foreign employee within 7 days of notice that the pass is suspended or revoked (s. 9(1), (3)) | $10,000 |
| Inflating the employer's "foreign employee entitlement", the number of foreign employees it may employ, as determined by the designated officer or Controller (s. 25(1), (5)) | $20,000 |
| Failing to comply with a "regulatory condition" of an in-principle approval or pass (s. 25(2)) | $10,000 |
| Giving inaccurate information "inadvertently, or without intent to mislead or defraud" (s. 25(3)) | $20,000 |
| Deducting, demanding, receiving or causing the worker to bear any cost the employer must bear under s. 25(6) (s. 25(4)) | $20,000 |
| Failing to comply with prescribed duties after an in-principle approval, including after the pass ends (s. 25A) | $10,000 |
Section 25(6) lists the costs the employer bears unless the Controller permits otherwise: pass application, issuance, renewal and reinstatement fees (other than those prescribed as recoverable); security required by the Controller; medical insurance and examinations required by the Controller; training required by the employer or Controller; repatriation "at any time"; and any prescribed amount. Passing any of these to the worker is a s. 25(4) infringement and, if a condition of employment, a s. 22A offence.
The Controller decides infringements in private, on the balance of probabilities, and "no party may be represented by an advocate or solicitor or a paid agent" (s. 25C(3), (4)). Unpaid penalties carry interest at the judgment debt rate and are a debt due to the GMCA (s. 25D). Abettors face the same maximum (s. 25F).
Directions. Instead of or as well as a penalty, the Controller may direct a person to end the infringement and take remedial action (s. 25B(1)). Non-compliance without reasonable excuse is a criminal offence: up to $10,000 or 12 months (s. 25B(2)). An administrative matter becomes a criminal one if a direction is ignored.
Appeals. A person aggrieved may ask the Controller to vary or set aside the determination (s. 25C(7)) and may appeal to the Appeal Board, "whose decision is final" (s. 25C(8)), within 14 days of receipt (s. 25G(1)). An appeal suspends only the imposition or amount of a financial penalty, not a direction (s. 25G(3)). The Board, established by the designated officer with at least three members and chaired by a designated officer, sets its own procedure and "must be independent in the performance of its functions" (s. 25H). By contrast, decisions on the grant, variation or revocation of a pass and on debarment are appealable only to the designated officer, whose decision is final, and judicial review is excluded except on procedural compliance (s. 7(10)–(12)).
Tier three: the levy
The designated officer may impose a levy on employers by Gazette order (s. 11(1)); the Act sets no rate. The levy remains payable until the pass expires, is suspended or revoked, or is cancelled on the employer's application (s. 11(2)), so failing to cancel a departed worker's pass keeps the meter running. Late payment attracts a daily penalty capped at 30% of the outstanding levy, recoverable as a debt due to the GMCA (s. 11(5), (7)).
Personal liability of officers (s. 20)
Where an offence is committed by a body corporate with the consent or connivance of an officer, or is "attributable to any neglect on the officer's part", the officer as well as the company is guilty (s. 20(1)). "Officer" means any director, partner, chief executive, manager, secretary or similar officer (s. 20(6)). Under s. 20(5) it is "presumed, until the contrary is proved" that the offence is attributable to the neglect of the officer who "is primarily responsible for the act or omission" and "has failed to exercise reasonable supervision or oversight". The same presumption applies to prescribed infringements (s. 25E(5)). The Employment Act 2025 contains an identical structure for salary, hours and leave offences (s. 113A(1), (5)), and its inspecting officers may arrest an officer suspected of negligently causing a salary-payment offence (Employment Act s. 105(2)).
Inspection powers (s. 16)
Authorised officers and employment inspectors may enter and inspect at any reasonable time premises where a foreign employee is believed to be employed or accommodated (s. 16(1)(a)); enter and search "by day or by night" where evidence of an infringement or offence is believed to be present (s. 16(1)(b)); require and retain documents, examine any person and take signed statements (s. 16(1)(c)–(e)); and require an employer "to produce all or any of his or her employees" (s. 16(1)(i)). Where entry is refused, an inspector may enter by force (s. 16(4)). Withholding documents or concealing who the occupier or employer is amounts to obstruction (s. 16(5)). The Controller may compound any offence for the lower of half the maximum fine or $5,000 (s. 27(1)). "Court" means the judicial body the Druk Gyalpo designates (s. 2) (see our guide to dispute resolution in GMC).
A board-level compliance programme
The Act's presumptions reward employers who can prove a system.
- Allocate responsibility in writing. Name the officer responsible and minute the board's oversight; documented supervision is the rebuttal to s. 20(5).
- Passport check before any work or training. Because "employ" includes unpaid training (s. 2) and due diligence requires a check of the original travel document (s. 5(5)), nothing starts until the document is inspected and copied.
- Audit every deduction against s. 22A(3). Deposits, bonds and "administrative fees" need legal sign-off.
- Never pass on s. 25(6) costs: pass fees, security, medical insurance and examinations, required training and repatriation are the employer's.
- Match passes to real roles. Confirm the project exists and the role is live before applying (s. 22B).
- Diary the seven-day deadlines: terminate within 7 days of a suspension or revocation notice (s. 9(1)); return a cancelled or handed-over pass within 7 days (ss. 9(2), 13(3)); report a lost pass within 7 days (s. 14(1)); cancel promptly to stop the levy (s. 11(2)).
- Escalate Controller correspondence. A s. 25B direction has a criminal sanction; an Appeal Board appeal must be lodged within 14 days (s. 25G(1)).
Frequently asked questions
Can a director be prosecuted personally for an unlicensed hire made by HR?
Yes. Under s. 20(1) an officer is guilty where the offence was committed with his or her consent or connivance or through neglect, and s. 20(5) presumes neglect against the officer primarily responsible who failed to exercise reasonable supervision. The officer must rebut that presumption.
Is a training bond or security deposit from a foreign employee lawful?
Section 22A(1)(c) prohibits any sum or benefit taken "as a financial guarantee related, in any way, to the employment", and s. 22A(3) presumes any receipt outside the permitted categories is consideration for employment. The penalty is up to $30,000 or 2 years, plus mandatory repayment under s. 23A.
What is the difference between a prescribed infringement and an offence?
An offence is tried in court and can lead to imprisonment. A prescribed infringement is determined by the Controller in private, on the balance of probabilities, without lawyers, and results in a financial penalty (up to $20,000 under s. 25) or directions, with a final appeal to the Appeal Board within 14 days. Ignoring a direction converts the matter into an offence (s. 25B(2)).
Key takeaways
- Exposure runs on three tracks: court offences, Controller-determined infringements with a 14-day Appeal Board deadline, and levy debts.
- Kickbacks and financial guarantees from foreign employees are presumed unlawful (s. 22A(3)) and trigger mandatory disgorgement (s. 23A).
- Passes for non-existent or unnecessary roles carry a presumptive minimum of 6 months' imprisonment (s. 22B(1)).
- Officers are presumed negligent unless they prove reasonable supervision (s. 20(5); Employment Act s. 113A(5)).
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, 5, 6, 6A, 7, 9, 11, 13, 14, 15, 16, 20, 21, 22, 22A, 22B, 23, 23A, 25, 25A, 25B, 25C, 25D, 25E, 25F, 25G, 25H, 27, 29
- Employment Act 2025 (Law No. 3 of 2025), ss. 26–32, 105, 113A
- Application of Laws Act 2024 (Law No. 1 of 2024), Schedule A
