START OF THE EMPLOYMENT RELATIONSHIP 

Who can work in Bulgaria?

Following the accession of Bulgaria as a member to the European Union, citizens of the Union are free to work in Bulgaria with no restrictions. Same applies for the countries from the European Economic Area (EEA) and Switzerland.

With some exceptions, non-EEA/Swiss nationals (foreign nationals) generally need a work permit for employment in Bulgaria. In most cases, it is issued in the form of a combined work and residence permit. The procedure for obtaining such “single permit” starts with the prospective employer in Bulgaria applying for approval for the issuing of such permit to the local office of the National Employment Agency.

In early 2016, the Bulgarian legislator adopted a new Labour Migration and Labour Mobility Act. This Act maintains the general procedure applicable to foreign nationals who want to work in Bulgaria. The Act also sets out a number of exceptions, which provide for a less complicated and time-consuming process for the establishment of an employment relationship with certain categories of foreign nationals.

A work permit is not required for foreign nationals assigned as managers and executive directors of a Bulgarian company, branch or commercial representatives.

Foreign nationals employed by a Bulgarian employer or working in Bulgaria for a certain period of time are subject to the applicable Bulgarian labour laws, unless a specific Bulgarian law or applicable international treaty provides otherwise. Regardless of the choice of law in the employment contract, the mandatory provisions of the Bulgarian labour law will apply if they are more favourable to the foreign employee working in Bulgaria.

The minimum age for employment in Bulgaria is generally 16 years. Nevertheless, there are some exceptions to this statutory rule:

• 15-year-olds may be employed in light work that is not hazardous or harmful to their health or their proper physical, mental or moral development, and is not detrimental to their regular attendance at school or in vocational guidance or training programs;
• under-15s may be employed in film, theatrical or similar productions, provided that this is under specially alleviated working conditions and does not prejudice their physical, mental or moral development; and
• girls aged at least 14 and boys aged at least 13 may be appointed to apprentice positions at circuses.

In any case, children under the age of 16 may be employed only (i) with a specific permission of the Labour Inspectorate; and (ii) after a thorough medical examination that concludes that they are fit to perform the work concerned and that this work will not impair their health or impede their proper physical or mental development.
Bulgarian law also provides for an additional protection for working minors such as: 

• lower minimum duration of the working time – the standard working time for minors under 18 years of age is up to 35 hours per week, five hours per day and five days per week;
• overtime and night work (defined in the case of under-16s as work performed between 8pm and 6am) are prohibited; 
• increased minimum paid annual leave entitlement of 26 working days. 

What are the main sorts of labour contract that exist in Bulgaria?

A written employment contract must be executed for the establishment of a valid employment relationship. The employer must notify the National Revenue Agency of the execution of the contract within three days. Employment can lawfully commence after the notification has been carried out.

A Bulgarian employment contract can be drafted in any language, as long as it contains the mandatory required content. However, the Bulgarian authorities controlling the working process of the respective employer can request a copy of the Bulgarian translation (if relevant). In the event of a dispute, the court will require the party referring to the contract first to make and present a translation of it.

Contracts for indefinite term and fixed-term employment contracts

An employment contract may be concluded on an indefinite or for a fixed term. Generally the employment contracts are deemed to be for indefinite duration, unless otherwise agreed. 
Fixed term contracts in Bulgaria are an exception and the parties can enter into such contracts only for a specific cause, such as: 

• temporary, seasonal or short-term work. In these cases, the term of the contract cannot exceed three years;
• completion of a specifically assigned work;
• temporary replacement of an employee;
• specific kinds of work in the field of plant-growing, which applies to registered farmers entering into one-day employment contracts only, etc.

As an exception, a fixed term contract for works not falling within the statutory criteria can be concluded with a minimal term of one year. It can be concluded only once for a shorter period on the explicit written request of the employee due to a specific economic, technological, financial or other objective reason.

Any failure to comply with the above requirements renders the fixed term contract a permanent one. The same applies if the employee continues working without the employer's written objection for five days after expiration of the fixed term. 
The applicable termination notice period for fixed term contracts is three months, unless the remaining term of the contract is less than three months.

The employees under fixed term employment contracts enjoy the same rights and benefits as permanent employees. Therefore, termination of a fixed term contract is not easier or cheaper than the termination of a permanent employment contract except for the available special termination ground (term expiration).

Non-employment contracts with independent contractors

Other individuals who provide services to an employer (in their capacity as a contractor, not an employer in the narrow sense of the word) are in a civil, and not an employment, relationship with the employer. These individuals, who can include the self-employed, freelancers, independent contractors, registered executives of the company, and so on, provide their services for a specific matter, and do not form part of the employer's formal labour force.

In view of this, the relationships with these service providers are governed by the general rules of civil and commercial law, and not by labour law.

As an exception, to secure the protection of dependent employees, Bulgarian labour law provides that if a contract with an independent service provider conceals an actual employment relationship, the contract will be classified as an employment relationship with all legal consequences for the parties in this regard.

The shareholders and registered managers of a Bulgarian legal entity are not employees and are therefore governed by the provisions of civil and commercial law.

Employment contracts with agency workers

Under Bulgarian law, an agency worker is an employee hired by a temporary work agency and sent to a user undertaking to either:

• execute a specific work; or
• temporarily replace an employee.

The employment relation arises between the agency worker and the temporary work agency. A separate agreement for the lease of personnel is executed between the agency and the user undertaking. 

Agency workers enjoy the same rights and benefits as permanent employees. In this respect, a number of restrictive mandatory provisions and requirements apply to the employment relations with agency workers, the activity of the temporary work agencies and the rights and obligations of the user undertakings.

The temporary work agencies must be officially registered. 
The total number of temporary agency workers assigned to work at a user undertaking must not exceed 30% of the total number of employees employed by the user undertaking.

Part-time contracts

The parties to an employment contract can agree to part-time work. There is no statutory minimum duration of part-time work. However, a minimum four-hour working day is recognised as the full day length of service.

The authorities consider a part-time employment contract as a full-time one if they find that the respective employee works more than the stipulated working hours (if the mandatory circumstances requiring overtime are not present).

Part-time workers enjoy the same rights and benefits as permanent employees, unless the law expressly provides otherwise.

What are the main features of each type of contract?

As a minimum, an employment contract must include details of the:

• parties;
• physical place (location) where employment will be performed (place of work performance);
• employment position and work description;
• date of signing and of expected commencement of work;
• duration of the employment;
• duration of the working day or week;
• basic and additional employment remuneration;
• terms and conditions of employment remuneration payment;
• basic, extended and additional annual paid leave;
• notice period for employment termination, which must be identical for both parties.

Number of additional features apply to specific employment relations explicitly regulated by the Labour Code such as agency work, tele-work, home-based work, seasonal agricultural work, etc. 

Employers must provide employees with written information about any changes in terms and conditions of employment within one month after the change takes effect. Such changes might include, for example, a wage increase or modifications in company policy or collectively agreed provisions that affect the employment contract.

What information should employees be given in Bulgaria?

The information that employees in Bulgaria should be given majorly overlaps with the content of the employment contract as described under question three above. Further, the employers should keep record of each employee keeping all documents issued in the course of the contract execution. Upon request of the employee, the employer is also obliged to provide any type of information and/or documents related to any aspect of the employment relationship during its term or after its termination.

Information procedures addressed to the employees’ representatives are also stipulated for certain cases outlined in Q1 below. 

 

DURING THE EMPLOYMENT RELATIONSHIP 

What are the main employment rights in Bulgaria?

The main employment rights in Bulgaria are:

• equal treatment of employees irrespective of the nature and duration of their employment contracts, this including prohibition of any type or form of discrimination (direct or indirect) and harassment;
• statutory minimum wage set at BGN 510 per month, or BGN 3.07 per hour as from 1 January 2018;
• sickness benefits for the entire period of absence until the employee returns to work in cases of illness or injury;
• holiday entitlement;
• maternity paid leave;
• parental paid leave - until the child's second birthday;
• paternity leave - An employee who is the father of a child and is married to or lives with the child's mother is entitled to 15 calendar days of paternity leave, to be taken immediately after the child comes home from the hospital.

What are the maximum permitted daily, weekly, monthly and annual working hours?

The standard working time is eight hours per day over a 40-hour (five-day) week. The law provides for some alternatives to this such as:

(a) Extended working time introduced by the employer for up to 48 hours per week but not exceeding 60 working days annually, 20 of which should not be consecutive.

(b) Reduced working time for certain categories of employees – such as reduced working time to six or seven hours per day for minors or employees working in specific conditions and under unavoidable life or health risks. The Council of Ministers determines at statutory level the positions to which a reduced working time applies.

(c) Open-ended working time for some job positions determined unilaterally by the employer.

(d) Shift work (which might be combined with summed calculation of the working time).

(e) Overtime (although in principle this is not allowed by law).

(f)  Part-time work – if it is unilaterally introduced by the employer in the course of the relation, the reduction must be by no more than half of the working time of the respective employee. The employer must also follow a statutory procedure and must sustain that its decision is based on one of the exhaustively listed grounds for working time reduction. Further, the employer must limit the duration of the reduced working time to not more than three months in one calendar year.

(g) Flexible working time (working time with variable limits). This means that the employee must be at the employer's premises for only a specific period of time of the working day (for example, from 9am until 1pm). The employee is entitled to decide whether and how to work off the remaining part of their working time outside of the mandatory on-premise time. The employee can work off this remaining part by allocating it to one or more days of the respective working week. A time-reporting procedure for this type of working time must be included in the internal labour rules of the employer. 

The working time can be less than the standard working time where this is agreed in a collective bargaining agreement.

An employee can opt out of the standard working time arrangements under an agreement with the employer (for example, for part-time work or working time with variable limits, if the nature of the work allows for this). 

The combined working time (that is, standard working time and extended working time) of employees below 18 years of age cannot exceed 40 hours per calendar week.
Employees are also generally entitled to:

(a) Daily break(s): not less than 30 minutes per day.

(b) A break between consecutive working days: not less than 12 hours.

(c) A weekend break: two consecutive days (at least 48 hours), one day of which generally must be Sunday, or at least:

• 36 hours in the case of summed calculation of the working time; or 
• 24 hours for summed calculation of the working time in the case of shift work.

Is there any minimum number of hours required?

Bulgarian law does not set strict rules and regulations regarding the minimum working hours required. However, for the purposes of length of service recognition, the employees must work at least four hours a day. This is particularly relevant for part-time employees for which there is no general requirement for minimum duration of the working day.

What is the minimum holiday entitlement?

The general minimum annual paid leave is 20 working days. Certain categories of employees benefit from a higher minimum allowance. For example, minors and employees with permanently reduced working capacity of at least 50% are entitled to a minimum of 26 working days of annual paid leave.

To be entitled to annual paid leave, the employee must have had worked at least eight months in total (irrespective of with which employer).

The employee must use his/her annual paid leave (at once or in parts) within the relevant calendar year. Where annual leave remains unused, the right to either use the leave or be compensated for it is limited to two years from the date the annual leave entitlement arose. The law allows monetary compensation of unused paid leave only in the case of termination of the employment relationship.

The law provides for different types of unpaid holiday entitlements. Usually, this entitlement depends on the employer's consent and usually only 30 working days in one calendar year of the general unpaid holiday entitlement are recognised by the state as length of service. This general rule does not apply to some special types of unpaid leave, such as parental and sabbatical leave, which are explicitly provided for by law. 

Can a contract be modified while still valid and in force? If so, under which circumstances?

There is a general prohibition on unilateral change of the employment terms and conditions by the employer, except for a number of cases exhaustively listed in the Labour Code, such as:

• change of the employee's working place within the same enterprise of the employer without changing the place of work, the position and the amount of basic remuneration;
• unilateral remuneration increase;
• temporary assignment to other work in compliance with the qualification and health status of the employee, in the same or another enterprise, in the event of production needs or work stoppage;
• allocation of work of a different character to the employee, regardless of its compliance with the qualification and health status of the employee, in the event of insurmountable reasons;
• sending employees on a business trip for not more than 30 consecutive calendar days, unless the employee is pregnant, in advanced IVF treatment or has a child of up to three years of age.

Are any particular employment relationships subject to special protection?

The following categories of employees are subject to special dismissal protection:

(a) Mothers of children under the age of three years.

(b) Employees who have been previously reassigned work within the undertaking due to medical reasons.

(c) Employees who suffer from certain diseases.

(d) Employees who have commenced a period of approved leave.

(e) Nominated representatives of employees and employees' representatives on health and safety matters, for the period of their nomination.

(f) Employees who, during their period of employment, are members of:

• special negotiation bodies;
• European works councils; 
• representative bodies with a European commercial or co-operative company. 

The employer can request any documents evidencing that the employee falls within any of the categories above and can ask the employee to sign a declaration confirming this. 
For any of the categories of employees listed above, the employer must obtain the Labour Inspections prior approval for dismissal on one of the following grounds:

• partial closure of the employer's undertaking;
• staff reduction based on changes in the employment grid;
• decrease in the volume of work;
• the employee's lack of ability to effectively perform the work;
• changes in a job position's requirements (provided that the employee does not meet the new requirements);
• disciplinary proceedings.

In addition:

For employees who have previously been reassigned work within the undertaking due to medical reasons and who suffer from certain diseases, an expert opinion of a specialised labour medical commission must be obtained before dismissal.

Members of a syndicate's management can only be dismissed on the above grounds with the syndicate's prior consent. This protection applies during the period the employee is part of the syndicate's management and for six months afterwards.

Pregnant employees and employees in an advanced IVF treatment stage can only be dismissed in a very limited number of objective circumstances (for example, on complete closure of the employer's undertaking or the employee's refusal to relocate their employment following the undertaking's relocation).

Employees on maternity leave can only be dismissed on a complete closure of the employer's undertaking.

Mandatory reduced working time (Q1 and Q6), additional leaves (Q8), prohibition for overtime and night work and other specific entitlements provided for by the Labour Code are also regarded as special protection for certain categories of employees. 

Are there any obligations to consult with a works council and/or to undertake collective bargaining?

The key issues on which the employer must inform and/or consult trade unions and/or employee representatives include:

• collective redundancies;
• transfers of undertaking;
• the adoption/amendment of the employer's internal work rules;
• the use of an "extended" or "open-ended" working hours scheme;
• the temporary introduction of part-time working for full-time employees because of a reduction in the volume of work available;
• the number of temporary agency workers used by the employer, or its intentions to make use of such workers; 
• potential substantial changes in the work organisation.

For each of the above cases specific procedure and statutory terms apply. Where an employer is contemplating collective redundancies, he/she must begin consultations with any trade union that has members among the employees concerned. The employer must make efforts to reach an agreement with the unions and/or employee representatives to avoid collective redundancies, or to reduce the number of workers affected and mitigate the consequences of the redundancies.

Before a planned transfer of an undertaking, as defined by law, both the transferor and the transferee must provide information to any trade union that has members among the employees concerned.

Trade unions’ representatives and/or employees’ representatives are required to pass on promptly to all other employees the information received from the employer, and to take into account the employees' views during consultations.

Collective bargaining

A collective employment agreement (collective bargaining agreement (CBA)) can be concluded between employers and employees on four levels:

the enterprise (for example, a specific factory or business);

• sub-industry;
• industry;
• municipality.

The employer and the trade union organisation of employees are parties to the CBA. If the CBA is being executed at sub-industry, industry or municipality level, the organisation of employers operating in the specific sub-industry, industry or municipality is a party to the agreement.

The CBA is applicable to employees who accepted it explicitly (that is, through a trade union or personally, on execution of the CBA or afterwards).

If a CBA is executed at industry or sub-industry level by all the representative organisations of employers and employees operating in the specific industry or sub-industry, the Minister of Labour and Social Policy can extend the applicability of the CBA, or of specific clauses of the CBA, to the entire respective industry or sub-industry, on request of the representative organisations.

CBAs regulate certain terms of employment relations and employees' social protection that are not explicitly regulated by the law for a maximum period of two years, such as:

• social expenses;
• minimum employment remuneration;
• higher amount of annual paid leave allowance;
• additional social benefits.

A CBA cannot stipulate terms and conditions of employment that are less favourable for the employees than the mandatory legal requirements.

END OF THE EMPLOYMENT RELATIONSHIP 

When and how can an employer terminate an employment relationship?

An employer may not terminate an employment contract without cause and must follow certain formal procedural requirements differing for each available cause for termination.

If an employer initiates the termination of an employment contract, there must be strong and indisputable documentary evidence to support the termination on one of the grounds listed above.

An employer cannot end the employment contract without a cause. The Bulgarian labour law establishes specific causes for termination with prior written notice by the employer, such as:
(a) complete or partial closure of the employer's enterprise;
(b) staff reduction based on changes in the employment grid;
(c) decrease in the volume of work;
(d) suspension of the employer's business activity for more than 15 working days;
(e) the employee's lack of ability to effectively perform the work;
(f) the employee's lack of educational background or professional qualification required for the respective job position;
(g) changes in a job position's requirements (provided that the employee does not meet the new requirements);
(h) the employee acquired right of pension for age and length of service. However, the employee is not obliged to exercise this right.

Each of the parties can terminate the employment contract without complying with the notice period, provided that he/she has paid compensation to the other party in lieu of the non-observed notice period. Compensation can be requested by any of the parties, regardless of whether the requesting party is initiating the termination.

In certain circumstances, no prior notice must be served by the employer (for example, on a disciplinary dismissal or during the probation period).

As an alternative to the above causes for termination and applicable procedures, the law provides for two options for termination by mutual consent:
(a) General mutual consent termination without payment of termination compensation.
(b) Agreement on termination against compensation amounting to not less than four months' wages (based on the employee's last monthly remuneration).

Regardless of the cause for termination, the employer must notify the territorial direction of the National Revenue Agency within seven days of the effective termination date. The notification is made by filing a standard form, which requires specific information about the end of the employment. If the employer fails to submit the required notification within seven days, he/she will be subject to a fine of between BGN1,500 and BGN15,000. 

If the procedural requirements for the termination of the contract applicable to the chosen cause for dismissal are not met, the employee can file a court claim for unlawful dismissal. If the court finds the dismissal to be unlawful, the employer must reinstate the employee and pay him/her compensation for the period of unemployment (capped at six months).

When and how can an employee terminate an employment relationship?

An employee can terminate the employment relationship without a cause at any time, by giving the applicable notice to the employer. Notice is not required during the probation period, if it is agreed in favour of the employee.

The employee can also terminate the employment contract without complying with the notice period, provided that he/she has paid compensation to the employer in lieu of the non-observed notice period. Compensation can be paid by the employer also, regardless of whether he/she is initiating the termination.

Further, an employee is entitled to terminate the employment contract without notice, in specific cases exhaustively listed by law, such as:

• the employer delays the payment of remuneration or of a benefit required by law or social security rules;
• the employer changes the place or nature of the work or the agreed remuneration, except in cases where the employer has a right to make such changes, or fails to fulfil other obligations set out in the employment contract, an applicable collective agreement or statute;
• as a result of the transfer of an undertaking, the employee's terms and conditions have significantly deteriorated under the new employer;
• the employee is unable to perform his or her assigned work because of illness and the employer fails to provide the employee with other suitable work in line with an order by the medical authorities;
• the employer discontinues its operations;
• the employer has placed the employee on unpaid leave without the employee's consent;
• the employee becomes eligible for old-age pension, etc.

The employee must notify the employer of the resignation without notice in writing, and the termination takes effect immediately when the employer receives this written notification.

What are the economic consequences in each case?

The statutory compensation for termination of the employment agreement varies depending on:

• the ground on which the agreement is terminated;
• the observance of the notice period;
• in some cases, the duration of the employment.

Statutory compensation generally varies from one to seven months' gross remuneration (due in the last month prior to the termination).

Severance payment always includes a separate payment for due (unused) annual paid leave (where the two-year limitation period has not yet expired).

The parties can contractually agree to exceed these statutory requirements.

Are there any situations in which an employment relationship would terminate automatically and without the need for action by either party? If so, what are they?

An employment relationship would terminate automatically without the need for action by either party through expiration date of a fixed-term contract and through employee`s death. However, in case the employee continues to work after expiration of the fixed term of his/her contract for five or more working days and the employer does not object, the employment relation is deemed transformed to a permanent one.

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This information was compiled by Dinova Rusev & Partners.