What Are the Compensation Rules for Staff Working on Bhutanese Public Holidays?

Public holidays are an important consideration for employers managing payroll and employee schedules in Bhutan. Employees are generally entitled to public holidays as paid leave, but employees who are required to work on a public holiday receive additional compensation.

The main provisions are found in Sections 108–110 of the Labour and Employment Act of Bhutan 2007, with the detailed working-hours and payment provisions reinforced by Section 166 of the Regulation on Working Conditions 2022. The Department of Labour currently lists both the Act and the 2022 Working Conditions Regulation among its labour regulations.

How Many Public Holidays Are Employees Entitled To?

Under Section 108 of the Labour and Employment Act 2007, an employee is entitled to a minimum of 9 public holidays each year.

These holidays are to be taken as paid leave at the employee's normal rate of pay. The statutory minimum includes the birth anniversary of His Majesty the King and National Day.

Employers should therefore include public holidays when preparing annual work calendars and payroll schedules.

What Happens When an Employee Works on a Public Holiday?

If an employer requires an employee to work on a public holiday, the employee is entitled to an additional 50% of their normal rate of pay.

Section 110 of the Labour and Employment Act states this requirement, and Section 166 of the Regulation on Working Conditions 2022 repeats the 50% additional-payment rule.

In simple terms:

Public-Holiday Work Rate = Normal Rate + 50% Additional Payment

or:

Public-Holiday Rate = Normal Rate × 1.5

Example

Suppose an employee's normal hourly rate is: Nu. 200

The additional 50% is: Nu. 200 × 50% = Nu. 100

Therefore, the rate for qualifying public-holiday work is: Nu. 200 + Nu. 100 = Nu. 300 per hour

If the employee works 8 hours: Nu. 300 × 8 = Nu. 2,400

The public-holiday work payment at the 1.5x rate would therefore be Nu. 2,400, assuming the hours qualify under the applicable rules.

Is Public-Holiday Work the Same as Ordinary Overtime?

Not necessarily.

The Regulation on Working Conditions 2022 separately addresses overtime and public-holiday work:

• Ordinary overtime must be paid at not less than the normal rate.
• Overtime is subject to a maximum of 12 hours per week.
• Qualifying night overtime receives an additional 50%.
• Work performed on a public holiday receives an additional 50%.

Therefore, payroll should identify public-holiday hours separately rather than automatically treating every additional working hour as ordinary overtime.

How to Calculate Public-Holiday Pay

A simple calculation is:

Normal Hourly Rate × 1.5 × Public-Holiday Hours

Example 1: 4 Hours

Normal hourly rate: Nu. 150

Public-holiday hours: 4

Calculation: Nu. 150 × 1.5 × 4 = Nu. 900

Example 2: 8 Hours

Normal hourly rate: Nu. 250

Public-holiday hours: 8

Calculation: Nu. 250 × 1.5 × 8 = Nu. 3,000

The employer should retain the underlying attendance and payroll records supporting the calculation.

Are Public Holidays Normally Paid?

Yes. Section 108 provides that statutory public holidays are to be taken as leave with pay based on the employee's normal rate of pay from the most recent pay period.

This creates two different payroll situations:

Situation	General treatment
Employee does not work on public holiday	Paid public holiday at normal rate
Employee is required to work on public holiday	Additional 50% of normal rate
Qualifying night work	Additional 50% under applicable rule
Ordinary overtime	At least normal rate under Section 162

The exact payroll treatment should be determined according to the employee's working arrangement and the applicable regulations.

Can an Employer Substitute a Public Holiday?

Yes. Section 109 of the Labour and Employment Act allows an employer to agree with employees to substitute a public holiday with another public holiday.

Employers using substituted holidays should maintain clear records showing:

• Original public holiday
• Substitute holiday
• Employee agreement
• Work performed, if any
• Applicable payment

This helps prevent confusion when calculating attendance and payroll.

Example of a Public-Holiday Payroll Calculation

Consider an employee with:

• Monthly salary: Nu. 41,600
• Normal hourly rate used by payroll: Nu. 200
• Public-holiday work: 6 hours

Step 1: Calculate additional 50%

Nu. 200 × 50% = Nu. 100

Step 2: Calculate public-holiday hourly rate

Nu. 200 + Nu. 100 = Nu. 300

Step 3: Calculate payment for 6 hours

Nu. 300 × 6 = Nu. 1,800

The applicable normal rate should be established consistently under the employer's payroll methodology and the employee's terms of employment.

What If Public-Holiday Work Is Also Night Work?

An employee could potentially work during hours that fall under more than one special working-time provision.

The Regulation provides a separate additional 50% for qualifying work between 10:00 PM and 8:00 AM in addition to the employee's normal day shift, while Section 166 provides an additional 50% for public-holiday work.

Payroll should therefore not automatically assume that the two 50% additions can simply be combined. The employer should check the applicable provisions and current Department of Labour guidance for the particular working arrangement.

Public Holidays and Overtime Tracking

Employers should maintain accurate records of employees who work on public holidays.

Important records include:

• Employee name
• Public-holiday date
• Scheduled working hours
• Actual working hours
• Public-holiday hours
• Overtime hours, where applicable
• Normal hourly rate
• Additional 50% payment
• Approval or scheduling record
• Payroll amount paid

This is particularly useful for businesses that operate throughout public holidays, including:

• Hotels
• Restaurants
• Hospitals
• Security services
• Retail businesses
• Manufacturing
• Transportation
• Construction
• Essential services

Public-Holiday Pay Example for a Shift Employee

Suppose an employee normally works 8 hours per day and is scheduled to work on a public holiday.

Normal hourly rate: Nu. 180

Public-holiday shift: 8 hours

Calculation: Nu. 180 × 1.5 = Nu. 270 per hour

Total: Nu. 270 × 8 = Nu. 2,160

The payroll system should record the 8 hours as public-holiday work and apply the applicable additional payment.

Common Payroll Mistakes

1. Paying the normal rate only

If an employee is required to work on a public holiday, the Labour and Employment Act requires an additional 50% of the normal rate.

2. Treating the holiday as an unpaid day

Statutory public holidays are paid leave under Section 108 for eligible employees.

3. Automatically applying ordinary overtime rules

Public-holiday work has a specific additional-payment provision under Section 166 of the 2022 Regulation.

4. Not recording public-holiday hours

Without accurate attendance records, it becomes difficult to calculate the correct additional payment.

5. Forgetting substituted holidays

Where a public holiday is substituted, HR should maintain documentation showing the agreed replacement date.

How Payroll Software Can Help

Payroll software can simplify public-holiday calculations by connecting the employee calendar, attendance system and payroll.

A typical process is:

Holiday Calendar → Employee Schedule → Attendance → Public-Holiday Hours → 50% Additional Payment → Payroll

The system can automatically identify employees who work on designated public holidays and calculate the additional payment based on their configured normal rate.

For example:

• Normal rate: Nu. 200/hour
• Public-holiday hours: 5
• Applicable rate: Nu. 200 × 1.5 = Nu. 300
• Payment: Nu. 300 × 5 = Nu. 1,500

Employer Compliance Checklist

Employers can use the following checklist:

• Maintain an annual public-holiday calendar.
• Provide statutory public holidays as paid leave.
• Record employees required to work on public holidays.
• Calculate the additional 50% payment.
• Maintain accurate attendance records.
• Distinguish public-holiday work from ordinary working hours.
• Review whether additional overtime or night-work rules also apply.
• Document substituted public holidays where applicable.
• Include public-holiday payments correctly in payroll.
• Retain supporting payroll and attendance records.

The Department of Labour currently lists the Labour and Employment Act 2007 and Regulation on Working Conditions 2022 among its published labour legislation.

Conclusion

Bhutanese labour law provides a clear compensation framework for public holidays. Employees are entitled to a minimum of 9 paid public holidays each year, while an employee who is required to work on a public holiday must receive an additional 50% of the normal rate of pay.

For payroll purposes, the basic public-holiday calculation is:

Public-Holiday Rate = Normal Rate × 1.5

Employers should also distinguish public-holiday work from ordinary overtime and qualifying night work, maintain accurate attendance records and apply the relevant provisions of the Labour and Employment Act 2007 and Regulation on Working Conditions 2022.

This article is for general HR and payroll information and is not legal advice. Employers should verify the latest Bhutanese legislation, regulations and Department of Labour notifications when implementing public-holiday payroll policies.