Employment in Bulgaria

The right to labour is a fundamental right of citizens recognized in the Bulgarian Constitution. The state is under an obligation to facilitate the exercise of this right. The Labour Code is the principle source of law regulating the legal relationship between an employer and an employee. Some specific areas of employment law (e.g. health and safety at work, employment promotion, collective labour disputes etc.) are governed by specific legislation (for example Health and Safety at Work Act, Settlement of Collective Legal Disputes Act, etc.). Pursuant to the Labour Code, the Bulgarian labour legislation is applicable to all labour relationships between Bulgarian citizens, citizens of the EU and of the states parties to the Agreement of the European Economic Area or of the Confederation of Switzerland, and employers in the Republic of Bulgaria, as well as Bulgarian employers abroad, insofar as it is not provided otherwise in a law or a treaty to which Bulgaria is a party.

It is a fundamental principle of the Labour Code that the state must consult with employees, employers and their representative organisations before labour legislation is implemented. This concept is referred to as the “social dialogue” or the tripartite partnership. State control over the implementation of labour legislation is executed by the General Labour Inspectorate, the special executive agency to the Minister of Labour and Social Security Policy. Employment is a broad topic and only the most important issues will be covered in this section.

The standard statutory working time in Bulgaria is eight hours per day for a five-day working week.

Collective labour agreements are important part of the Bulgarian labour legislation. Such agreements regulate issues of the labour and social security relations of employees, which are not regulated by mandatory legal provisions.

Incentives

Before the detailed discussion of the applicable Bulgarian legislation, it may be important for an investor to know any benefits which the Legislator has provided for employers.

Incentives in the field of labour law are outlined in the Encouragement of Employment Act and the regulations on its application. Some of the incentives are payment of funds from the Employment Agency to employers who open new job positions, preservation of opened job positions in case of decrease of the working volume, hiring unemployed persons over the age of 50 years, engaging unemployed persons of decreased working ability, hiring unemployed mothers or single parents, employing permanently unemployed persons, etc.

Further, payment of installments for social security brings tax reliefs.

Work permits;

Bulgaria strictly applies the EU regulations pertaining to the free movement of people (free movement of workers and freedom of establishment). Citizens of the EU and EEA and the Swiss Confederation do not need a work permit to work in Bulgaria. They are allowed to enter freely into an employment relationship with a local employer; however, they will have to apply for a long-term residence permit. Other foreigners must follow the procedure prescribed by the Bulgarian Encouragement of Employment Act.

Contracts of Employment;

The Labour Code sets freedom of contract. A labour contract is concluded between an employee and employer before the commencement of the job. The employer must introduce the employee to his or her labour obligations. Contracts of employment establishing terms and conditions which are less favourable for employees than mandatory provisions of law or collective agreements are null and void. Generally, neither the employer nor the employee may unilaterally modify the employment relationship, although there are some exceptions provided for by the law. There is an explicit requirement for a contract of employment to be in a written form.

It is not possible to contract out of the statutory protection conferred on employees, and contracts of employment or clauses of such contracts that are contrary to mandatory statutory provisions or to collective agreements are null and void.

Working Hours and Rest. Remuneration;

A normal working day is eight hours as determined by the Labour Code. The normal work week is five days and the total week working hours are respectively forty hours. Work performed between 10 p.m. and 6 p.m. is considered as night work. The duration of the night working hours is 7 hours, with 35 hours night working per week. The work done out of the agreed working time is considered overtime.

There is a requirement for minimum one rest per day with a lunch break at least 30 minutes. In addition, there are various types of leaves provided in the Bulgarian legislation: paid annual leave and unpaid leave, maternity leave, leave for studies, leave in case of temporary disability. Currently the Bulgarian labour law provides for 410-day maternity leave, 45 days of which may be used before the childbirth. The father has also the right to use the rest of the maternity leave once the child is 6 months old, subject to the mother’s consent.

As of September 1, 2011, the minimum monthly wage is BGN 270 (approx. EUR 138.05) and the minimum hourly wage is approx. BGN 1.60 (for an eight-hour working day, five-day working week).

Collective agreements in some industrial and business sectors may also establish more generous minimum remuneration levels for the relevant industry sectors.

Fringe benefits, such as company cars and mobile phones are not mandatory, though such benefits are normally provided for the managerial staff.

Social Security;

Generally there are two groups of social security relations: relations regarding the state social security and relations regarding the supplementary social security.

The state social security covers the risks of general disease, labour accident, professional illness, maternity, unemployment, old age and death. There are respective funds collecting the resources allocated to each of them.

Security installments for state social security which are on the account of social insurers are deposited simultaneously with the payment of remunerations. Social security installments on the account of socially secured persons are to be deducted and deposited upon payment of the remuneration. Security installments for self secured persons and persons employed under no employment relationships are deposited by the tenth day of the month following the month they refer to, i.e. they have to be paid in advance calculated on the basis of the insurance income chosen between the minimum and the maximum amount of monthly income, determined with the Budget of the State Public Insurance Act for the corresponding year.

Supplementary social insurance in Bulgaria is organised by compulsory and voluntary supplementary social insurance. It is implemented through participation in supplementary, compulsory, universal and/or occupational pension funds, supplementary voluntary retirement insurance funds and/or funds for supplementary voluntary retirement insurance under occupational schemes. It is also implemented through supplementary voluntary unemployment or vocational-training insurance funds, which are incorporated and managed by insurance companies or by companies for supplementary voluntary insurance for unemployment and/or professional qualification licensed according to the procedure established by the Social Insurance Code.

Current Bulgarian legislation gives employers the opportunity to pay social insurance contributions for their employees to supplementary voluntary social insurance companies and funds and many employers do so. Employers are not, however, legally obliged to pay such contributions for the supplementary voluntary social insurance of their employees.

Termination of Employment;

Employment relationship starts with a contract in written form and ends also with a written document. The termination procedures and grounds for termination of labour contracts are specified in detail in the Labour Code.

Preliminary Protection and Protection against Wrongful Dismissal;

Certain categories of employees and workers are entitled to preliminary protection. The Labour Code provides a comprehensive list of the categories of employees and workers entitled to preliminary protection. For instance, such categories are mothers of children younger than 3 years; employees who have been reassigned due to reasons of health; employees who have commenced a period of permitted leave and others.

Termination of employment relationship is done only in writing on grounds provided for by the law. Where the termination of the employment agreement does not comply with the legal requirements, it can be challenged before the employer or a court.

Four types of claims are envisaged by the Labour Code: a claim for recognition of the dismissal as wrongful and respectively its repeal; a claim for reinstatement of the employee to her/his previous position; a claim for compensation for the period of unemployment due to the dismissal; a claim for revision of the grounds for dismissal, registered in her/his service record or other relevant documents.

For more information about doing business in Bulgaria, see the complete text of our Guide.