Employment 2019 Second Edition

Last Updated August 06, 2019

Bulgaria

Law and Practice

Authors



Boyanov & Co. is recognised as a top business law firm for doing business in South East Europe. Since 1990 the firm has advised on numerous landmark transactions in Bulgaria. Clients exceed 4,000 and include large local and foreign businesses and organisations, IFIs and governments. The firm draws on years of experience in a wide variety of areas of law, and on the excellence of its professionals. Boyanov & Co is the initiator and co-founder of SEE Legal – the largest and strongest regional legal service provider.

Bulgarian legislation is based on the civil law system. Employment is regulated predominantly by the Constitution of the Republic of Bulgaria, the international treaties to which Bulgaria is a signatory, the domestic legislation – including the Bulgarian Labour Code, last amended in November 2018 – as well as various special laws and a large number of regulations, collective labour agreements and the internal rules and orders of the employers. The Labour Code is based on the principle of setting the minimum standards for the relationship between the employer and the employee. The majority of its provisions (ie, regarding working hours, breaks, leave, labour discipline, duration, termination of the employment, etc) are mandatory in nature and may not be waived even with the consent of the employee. These provisions are equally applicable to employees irrespective of their seniority or hierarchy (ie, there is no statutory distinction between blue-collar and white-collar workers).

Statutory managers of companies (managers, executive directors, members of management board/board of directors) enter into management contracts, not employment contracts. They are not considered employees and they do not enjoy the general protection provided by the Labour Code to employees. Under Bulgarian legislation these are two different types of contracts and these are subjected to two different legal regimes. The management contracts are not governed by the Labour Code and its mandatory provisions regarding conclusion, working hours, termination grounds, notice periods, statutory compensations due in case of termination, protection against termination, etc, do not apply. The only area in which these two types of contracts are treated equally is the area of taxation and social security contributions.

There is a constant practice of the Bulgarian Supreme Court of Cassation that, even if a manager and a company have concluded an employment contract, such contract shall be considered valid and binding, but should be treated as a management contract subject to the provisions of the Commerce Act and the Obligations and Contracts Act.

Under Bulgarian legislation the employment relationship is governed through an employment contract concluded in writing and the Labour Code lists its mandatory contents:

  • the data of the parties – for employees: names, permanent address, unified civil number, type and degree of education; for employers: business name, seat and address of management, unified identification code, names and unified civil numbers of the contract signatories;
  • the place of work;
  • the name of the position and the description of the work;
  • the date of signing and the commencement date;
  • the term of the employment contract;
  • the duration of the basic and additional annual leave;
  • the notice period in case of termination (which should be equal for both parties);
  • the base monthly salary and the additional labour remuneration of a permanent nature as well as the periodicity of their payment;
  • the duration of the working day or the working week.

The employer has to notify the Bulgarian National Revenue Agency of the employment contract within three days as of its signing. The employer has to provide the employee with a copy of the employment contract and a copy of the notification to the National Revenue Agency before commencement of work.

The employment contract is deemed concluded for an indefinite term unless expressly agreed otherwise. An employment contract for a fixed term can be concluded only as an exception and on legal grounds explicitly and exhaustively listed by the law. The employment contract for a fixed term is converted into a contract of an indefinite period if the employee continues to work for five or more working days after expiry of the agreed period without a written objection of the employer and the position is vacant.

Fixed-term employees enjoy the same rights and obligations as permanent employees and may not be treated less favourably than comparable permanent employees engaged in the same or similar work at the enterprise solely because of the fixed-term nature of their employment relationship.

The employment contract could be concluded for full-time work or for part-time work. In case of part-time work, the parties need to specify the duration and allocation of the working time. Part-time employees may not be placed at a disadvantage solely due to their part-time status when compared to full-time employees who perform the same or similar work for the same employer. A part-time employment will be deemed to be a contract for normal working time if the labour authorities find that the employee actually works outside the working time fixed by the contract, without the existence of any circumstances requiring overtime work as permitted by law.

For day work (6am to 10pm), the normal working time is eight hours a day within a five-day working week. The maximum working week is 40 hours.

For night work (10pm to 6am), the normal working time is seven hours a day within a five-day working week. The maximum working week is 35 hours. Night work is not permitted for certain categories of employees listed by the Labour Code and is paid at an increased rate (the minimum increase for night work is BGN0.25 per hour)

For employees who perform work under specific conditions and where the risks to the life and health thereof cannot be eliminated or reduced regardless of the measures taken, and where reduction of the duration of working time mitigates against the risks to the health, the regular normal work day is six to seven hours, depending on the category.

The working time of employees younger than 18 years of age is 35 hours weekly and seven hours daily in a five-day working week.

The normal working time cannot be extended by the parties to the employment contract except as provided by the law in the following cases.

Prolongation of Working Time

For production reasons, the employer may, by a written order, extend the working time on some working days and compensate it on other working days accordingly after advance consultation with the trade union organisations' representatives and the employees' representatives. The duration of the extended working day may not exceed ten hours or, for employees at reduced working time, one hour in excess of their reduced working time. The working week may not exceed 48 hours and, for employees employed at a reduced working time, 40 hours. The employer has to keep a special book for recording the extension and compensation of this working time.

Extension of the working time is permissible for a period of up to 60 working days during one calendar year, but for not more than 20 successive working days.

Open-ended Working Hours

Due to the special nature of work, the employer, after consultation with the trade union organisations and employees' representatives, may establish open-ended working hours for certain positions. The employees on open-ended working hours need to, where necessary, continue the performance of their labour duties even after expiry of the normal working time; however, the aggregate duration of the working time may not interfere with the minimum uninterrupted daily and weekly rest period. The work in excess of the normal daily working time is compensated by additional paid annual leave (of no less than five business days), and any work on weekends and holidays shall be compensated by increased remuneration for overtime.

Overtime Work

This is the work done on the order of, or with the knowledge of and with no objection from, the employer or the respective superior, by an employee beyond the working time fixed for her/him. As a general principle, overtime work is forbidden, except in some exceptional cases, as exhaustively listed in the Labour Code: eg, for performance of work related to national defence, for performance of emergency repair on working premises, of machinery or of other equipment, for completion of work that cannot be performed within the normal working time, for performance of intensive seasonal work, etc.

Overtime work performed by an employee within any one calendar year may not exceed 150 hours. Further it may not exceed:

  • 30 hours of day work, or 20 hours of night work during one calendar month; or
  • six hours of day work, or four hours of night work during one calendar week; or
  • three hours of day work, or two hours of night work during two successive working days.

Overtime work is prohibited for employees younger than 18 years, pregnant female employees and female employees in an advanced stage of in vitro treatment, mothers of children below six years of age, and for some employees at reduced working time. 

The employer needs to keep a special book to account for overtime work. The overtime work performed is notified to the Labour Inspectorate by 31 January of the following year.

Overtime work is paid with an increase agreed between the employee and the employer but no less than:

  • 50% for work on working days or overtime work in case of summarised calculation of the working hours;
  • 75% for work on weekends;
  • 100% for work on public holidays.

Rest Breaks, etc

The employer shall provide each employee a rest break for a meal, which may not be shorter than 30 minutes. The rest breaks shall be not included in the working time. In continuous production processes and at enterprises where work is uninterrupted, the employer shall provide the employee with time for a meal during the working time.

Employees are entitled to an uninterrupted daily rest period of no less than 12 hours.

In case of a five-day working week, the employee is entitled to a weekly rest of two successive days, one of which shall in principle be Sunday, lasting at least 48 consecutive hours. In case of summarised calculation of the working hours, the uninterrupted weekly rest period shall be not less than 36 hours. In case of changes of shifts upon summarised calculation of the working hours, the uninterrupted weekly rest period may no less than 24 hours, provided this is required by the actual and technical work organisation at the enterprise. In case of overtime work performed during the two days of the weekly rest period, when calculating working time on a daily basis, employees are also entitled, in addition to an increased pay for overtime, to an uninterrupted weekly rest period of not less than 24 hours during the succeeding working week.

Working time shall be calculated in terms of working days (ie, on a daily basis). The employer may, however, provide for a summarised calculation of the working hours  and the period of such calculation can be a week, a month, or over another calendar period, which may not be longer than six months. The summarised calculation of working time means that on certain days the employee can work longer (eg, ten hours), and on the other days – less (eg, six hours), but at the end of the period (set by the employer), the average duration of his/her working day must meet the statutory requirements.

The summarised calculation allows flexibility of working time – the working day can be extended up to 12 hours and the working week up to 56 hours.  However, for employees working at a reduced normal working time, the daily extension of the working time can be up to one hour beyond their reduced working time.

The base salary can be based (i) on time or (ii) on the volume of produced items.

The Council of Ministers sets the minimum wage (time-based); as of 1 September 2019 it is BGN560 per month. 

The employees are also entitled to additional remuneration for length of service and professional experience, for night work, for on-call duty, for overtime, etc, remunerations (eg, for relevant length of service and professional experience).

The most common additional remuneration is for length of service and professional experience which minimum amount is 0.5% over the base monthly salary (as agreed in the employment contract) for each year of relevant professional experience. This means that for each year (i) with the employer or (ii) for holding identical or similar position at other employers in the past, the employee is entitled to 0.6% over his/her base salary. This remuneration is updated each year upon completing one full year's length of service and professional experience and is independent from any merit-based/inflation increases of the base salary.

Payment of bonuses or a 13th month salary is not mandatory, but could be additionally agreed upon.

Employers are required to make tax and social security withholdings from the employees’ salaries and pay them to the state budget on a monthly basis as follows:

  • the tax rate is 10% over the employee’s salary (after deduction of social security and health contributions);
  • the calculation of social security and health contributions is more complex –
    1. their amount depends on the category of labour performed by the employee; and
    2. they are shared between the employee and the employer.

There is a special Regulation on the Categorisation of Labour upon Retirement, which defines three categories of labour. The Regulation lists the type of work conditions and professions that fall within the first and second categories of labour, and the third category covers all the rest. The amount of the social contributions for the third category of labour (which is the most common one) is as follows:

  • employees born before 1 January 1960:
      1. pensions fund – 8.78%;
      2. common disease and maternity fund – 1.4%;
      3. unemployment fund – 0.4%;
      4. health insurance – 3.2%;
      5. aggregate payment – 13.78%;
    1. paid by the employer:
      1. pensions fund – 11.2%;        
      2. common disease and maternity fund – 2.1%;
      3. unemployment fund – 0.6%;
      4. industrial accidents and occupational diseases fund – 0.4%;
      5. health insurance – 4.8%;
      6. aggregate payment – 18.92%;
  • employees born after 1 January 1960:
      1. pensions fund – 6.58%;
      2. private pension fund – 2.2%       
      3. common disease and maternity fund – 1.4%;
      4. unemployment fund – 0.4%;
      5. health insurance – 3.2%;
      6. aggregate payment – 13.78%;
    1. paid by the employer:
      1. pensions fund – 8.22%;        
      2. private pensions fund – 2.8%
      3. common disease and maternity fund – 2.1%;
      4. unemployment fund – 0.6%;
      5. industrial accidents and occupational diseases fund – 0.4%;
      6. health insurance – 4.8%;
      7. aggregate payment – 18.92%;

The social security rate is 32.7%, of which 18.92% are paid at employer’s expense and 13.78% at the employee’s expenses (withheld from the employee’s gross salary)

The Bulgarian Parliament determines on a yearly basis (i) the amount of the minimum monthly insurance income depending on the specific business in which the employee works, and (ii) the maximum monthly insurance income (for 2019 it is BGN3,000, approximately EUR1,500). The exact amounts of the social contributions are calculated on the basis of the gross labour remuneration but the taxable base cannot be less the minimum social insurance income and more than the maximum within the limits of the minimum and the maximum insurance income on a monthly basis.

Basic Paid Annual Leave

The basic annual paid leave is 20 working days per year, not counting public holidays. The employees can use such leave if they have at least eight months of service (at any employer).

Certain categories of employees, depending on the special nature of work, are entitled to extended basic paid annual leave. The categories of such employees, and the minimum amount of such leave are determined in an ordinance by the Council of Ministers.

Some categories of employees are entitled to additional paid annual leave: (i) for work under specific conditions and life and health hazards – not less than five working days, and (ii) for work under open-ended working hours – not less than five working days.

The employee must take his or her paid annual leave during the calendar year for which it is due. However, the paid annual leave may be postponed and carried forward to the next calendar year:

  • by the employer, due to important production reasons and within a carry-over limit of ten working days;
  • at the employee's written request specifying important reasons, with the employer's consent and with no limitation of the days that may be carried forward;
  • in case the employee was not able to use his/her entire paid annual leave due to the use of pregnancy, maternity, adoption, taking care of a small child or temporary disability to work leave, as well as the use of another statutory leave during the same year, with no limitation of the days that may be carried forward.

The right to use the unused paid annual leave lapses in two years' term from the end of the year to which the paid annual leave pertains. Where the paid annual leave has been postponed due to the use of another statutory leave, the right of the employee to use the holiday shall lapse in two years from the end of the year in which the reason for the non-use of the holiday has ceased to exist.

Public Holidays in Bulgaria

  • 1 January – New Year;
  • 3 March – Day of the Liberation of Bulgaria, National Day;
  • 1 May – Labour and International Workers' Solidarity Day;
  • 6 May – St George's Day, Day of Valour and of the Bulgarian Armed Forces;
  • 24 May – Day of Bulgarian Education and Culture and of Slav Letters;
  • 6 September – Bulgaria-Rumelia Union Day;
  • 22 September – Bulgaria Independence Day;
  • 1 November – National Awakeners Day (only applies to educational establishments);
  • 24 December – Christmas Eve;
  • 25/26 December – Christmas;
  • Holy Friday, Holy Saturday and Easter – Sunday and Monday.

The Council of Ministers may also declare other days for one-time public holidays, or for the commemoration of certain professions. If the public holiday (except Easter) falls on a weekend day(s), then the next Monday or Monday and Tuesday will be non-working days.

Sick Leave

Employees are entitled to leave for temporary incapacity to work due to general sickness or occupational disease, employment injury, for sanatorial treatment or for urgent medical examination or tests, quarantine, suspension from work prescribed by the health authorities, attendance of a sick or quarantined member of the family, urgent need to accompany a sick member of the family to a medical examination, test or treatment, as well as for taking care of a healthy child dismissed from a children's establishment by reason of a quarantine imposed on the establishment or on the child.

Employees have the right to cash benefits instead of salary for the duration of these leaves, provided that they have at least six months of insured length of service. Employees are entitled to cash benefits for an industrial accident or occupational disease, and to benefits for occupational rehabilitation in such cases, regardless of the duration of their insured length of service. The cash benefits for temporary disability shall be paid from the first day of absence until working capacity is regained or until disablement is established. The cash benefit for the first three days of temporary disability leave are paid at the expense of the employer at 70% of the average daily gross salary for the month during which the disability occurred, but no less than 70% of the average daily agreed salary and for the remaining period, directly by the National Social Security Institute.

Temporary disability must be evidenced through a medical certificate. 

Maternity and Adoption Leaves

Female employees are entitled to pregnancy and childbirth leave of 410 days payable by the government for each child, 45 days of which must be used before birth. They have the right to cash benefits, provided that they have at least 12 months of insured length of service. 

Cash benefits are payable directly by the National Security Institute at 90% of the average daily gross wage or the average daily insurance income on which insurance contributions have been paid or are due for the period of 24 calendar months preceding the month in which the temporary incapacity has occurred. 

A female employee who adopts a child aged up to five years is entitled to an adoption leave in an amount of 365 days as of the day when the child was delivered for adoption, but not later than the child’s fifth birthday. When the child is adopted by spouses, with the consent of the mother (female adopter), the father (male adopter), if working under employment relationship, may use the leave upon expiry of six months as of the day when the child was delivered for adoption, but not later than child’s fifth birthday.

Where the mother and father are married or share a household, the father is entitled to a 15-day leave upon the birth of a child as from the date of discharge of the child from the medical-treatment facility.

After use of the pregnancy, childbirth or adoption leave, if the child has not been placed in a childcare establishment, the female employee is entitled to an additional childcare leave for a first, second, and third child until the child reaches two years, and six months for each additional child. With the consent of the mother (or female adopter), that leave can be granted to the father (or male adopter) or to one of their parents if they work under an employment relationship. The employees or their parents are entitled to childcare benefit in the amount determined by the Social Security Budget Act for the respective year, provided that they have at least 12 months of contributory service.

Other Leaves

Employees are also entitled to leave for performance of civic, public and other duties, educational leaves, etc, some of which are paid and others non-paid.

During employment, non-compete/non-solicitation obligations are part of the general duties of employees to be loyal to their employer. The breach of these obligations gives rise to disciplinary or civil liability for the defaulting employee and entitles the employer to terminate the employment contract without notice.

The employer is allowed to ban the employee from entering into an additional employment contract in the course of the main employment relationship, notwithstanding whether the additional work with such other employer qualifies as competitive with the activities performed by the employer.

In mid-2010 the Supreme Court of Cassation expressly ruled that a post-termination non-compete clause is invalid as violating the law. Under the Constitution each citizen has the right to freely chose his/her profession and place of work, therefore this constitutional right may not be validly waived or restricted through a private agreement (either through a separate agreement or a through a clause in an employment contract). It is inadmissible to waive one’s personal right to labour guaranteed by the Constitution. The constant court practice developed since 2010 is that any non-compete clause which prohibits an individual (irrespective whether this individual has the capacity of employee or a manager) to work for a competitive employer after the termination of his employment is null and void, irrespective of the geographic area, the duration of the non-compete period and irrespective whether the employer pays non-compete consideration or not.

Post-termination non-solicitation provisions are valid under Bulgarian law, but their enforceability is difficult.

The main framework of privacy law in Bulgaria is established in Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation). Any operations related to personal data of employees must comply with the general principles set out in the General Data Protection Regulation: lawfulness, fairness and transparency, purpose limitation, data minimisation, accuracy, storage limitation, integrity and confidentiality, and accountability of the controller.

In addition to this regulation, which is directly applicable within the entire European Union, Bulgaria has adopted a national Personal Data Protection Act which contains additional provisions, to the extent that derogations are permitted. The following provisions of the local law are often relevant in the context of employment:

  • controllers are forbidden from copying ID documents unless expressly required by law – Bulgarian employment law does not contain such requirements and employers are often in violation of this rule;
  • employers are obliged to adopt internal procedures and policies and duly inform their employees when implementing whistleblowing schemes, limitations on the usage of internal resources, or schemes for controlling access, working time and labour discipline – such internal rules cannot restrict the data privacy rights of the employees;
  • employers cannot retain job applicant personal data for more than six months without the applicant’s consent. To the extent that the General Data Protection Regulation provides that consent must be “freely given, specific, informed and unambiguous”, any processing relying on consent in the employment context must be carefully implemented in order to ensure its validity.

Non-EU Nationals

Citizens of countries outside the European Economic Area and Switzerland may work in Bulgaria after completion of certain work and residence authorisation procedures. There are different types of work and residence authorisation procedures depending on the duration of intended assignment in Bulgaria, payroll country, qualification of employees, etc.

Short-term assignment (up to three months)

In respect of Non-EU nationals who will be posted to Bulgaria for a term of up to three months, the following work and residence procedures need to be completed. 

Work-related procedures:

  • registration of the short-term assignment with the Bulgarian Employment Agency – to be completed by the Bulgarian host company before the start of the assignment;
  • notification for posted workers with the Bulgarian Labour Inspectorate – to be completed by the foreign employer;
  • notification for actual start date with the Bulgarian Labour Inspectorate – to be completed by the Bulgarian host company after the start of the assignment.

Residence-related procedures

The assignees will need to obtain a short-term Bulgarian visa in order to be able to enter and stay in Bulgaria for the duration of the assignment. This is not required for citizens of countries which are exempt from the requirement to possess short-term visas listed in Regulation (EU) 2018/1806 of the European Parliament and of the Council of 14 November 2018 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement (eg, USA, Australia, Japan, Brazil, etc). A short-term Bulgarian visa is also not required for holders of valid Schengen visas/residence permits.

Long-term assignment (over three months)

In respect of Non-EU nationals who will be hired by Bulgarian companies or posted to Bulgaria for term of more than three months, the following work and residence procedures need to be completed.

Work-related procedures:

  • issuance of work permit by the Bulgarian Employment Agency – to be completed by the Bulgarian host company before the start of the assignment. There are several types of work authorisations:
    1. combined work and residence permit, applicable to assignees who will work on Bulgarian payroll – a ratio requirement applies (certain number of Bulgarian or EU nationals to be employed by the Bulgarian host company), a preliminary market test has to be completed by the Bulgarian host company, and the maximum total duration of assignment is three years;
    2. EU Blue Card, applicable to highly qualified assignees (holding university degrees) who will work on Bulgarian payroll – higher minimum salary requirements are set, and there is no limitation in maximum total duration of the assignment;
    3. intercompany transfer work and residence permit, applicable to assignees posted to Bulgaria, where the foreign employer and the Bulgarian host company belong to the same corporate group – the maximum total duration of assignment is three years;
    4. secondment work permit, applicable to assignees posted to Bulgaria – the maximum total duration of assignment is one year;
  • notification for posted workers with the Bulgarian Labour Inspectorate – to be completed by the foreign employer (applicable only in cases of intercompany transfer and secondment permits);
  • notification for actual start date with the Bulgarian Labour Inspectorate – to be completed by the Bulgarian host company after the start of the assignment.

Residence-related procedures:

  • issuance of long-term Bulgarian visa by the Bulgarian Consular office in the home country of the assignee upon the request of the assignee;
  • issuance of residence authorisation by the migration authorities in Bulgaria upon the request of the assignee. 

The entire immigration process may take four to five months, as it develops in three main steps which are to be completed in the following sequence: (i) issuance of work authorisation, (ii) issuance of long-term visa and (iii) issuance of residence authorisation. All types of work and residence authorisations, except for the secondment work permit, constitute single work and residence permits, which means that only after the completion of all three main steps may the assignees start working in Bulgaria.

Exemptions

The Bulgarian law provides for certain exemptions regarding the work authorisation procedures, for example:

  • holders of Bulgarian permanent residence permits are exempt from the requirement to obtain work authorisations;
  • managers/directors of Bulgarian companies officially registered as such with the Bulgarian Commercial Register are exempt from the requirement to obtain work authorisations – in these cases only residence authorisation procedures will need to be completed;
  • family members of Bulgarian and EU nationals are exempt from the requirement to obtain work authorisations and the law requires only completion of facilitated procedure for declaring their employment with the Bulgarian Employment Agency – in these cases only residence authorisation procedures will need to be completed.

EU Nationals

Citizens of countries within the European Economic Area and Switzerland (EU nationals) do not need work authorisations in order to work in Bulgaria and work-related procedures are needed only in cases of posting.

EU nationals are entitled to enter and stay in Bulgaria for three months without the necessity to complete any residence procedures and their three-month period of permitted stay is renewed as of the date of each new entry into Bulgaria.

Work-related procedures are applicable only in cases of posting of EU nationals to Bulgaria.

Notification for posted workers with the Bulgarian Labour Inspectorate: this has to be completed by the foreign employer.

Residence-related procedures: EU nationals employed by Bulgarian companies or seconded to Bulgaria, who need to stay for more than three months in a row in the country, can obtain long-term residence certificates by the migration authorities in Bulgaria. The maximum term of validity of the residence certificate is five years and the procedure for the issuance of the certificate can be completed within one to two business days.

Please refer to 4.1 Non-EU Nationals, above.

The Constitution of the Republic of Bulgaria and the Bulgarian Labour Code guarantee the freedom of trade union association. Employees are entitled, with no prior permission, to freely form, by their own choice, trade union organisations and to join and leave them on a voluntary basis. Trade union organisations represent and protect employees' interests before state bodies and employers as to industrial and social security relations and living standards through collective bargaining, participation in tripartite co-operation, organisation of strikes and other actions within the law. Irrespective of how many employees are hired by one employer, the employees may form a trade union within the enterprise or become members of a broader trade union organisation.

There are two major trade unions with nationwide coverage: the Confederation of Independent Trade Unions and the Confederation of Labour (Podkrepa). Many other trade unions exist at industry level and within individual companies.

All employees within a company form the Employees' General Meeting, regardless of the headcount. Where a limited liability company or a joint stock company has hired more than 50 employees, their representatives are allowed to participate at the general meetings of shareholders without the right to vote.

The Bulgarian employment legislation does not recognise the concept of a work council. The closest to such a council are the employees’ representatives, elected by the Employees’ General Meeting. The Labour Code recognises the election of two types of employees’ representatives:

  • representatives of the common interests of all employees on issues of industrial and social security relations before the employers or before the state bodies (including in the cases where the law requires the conduct of information and consultation procedures in case of a change of the employer or collective redundancies) – Article 7 paragraph 2 of the Labour Code; such representatives may be elected regardless of the headcount; and
  • representatives of the common interests of all employees in all cases where the law requires the conduct of information and consultation procedures apart from the ones listed above – Article 7a of the Bulgarian Labour Code; such representatives may be elected in enterprises employing at least 50 employees, as well as in organisationally and economically self-contained divisions of enterprises employing at least 20 employees.

Employers and employees' representatives may establish the procedures for consultation and information through a Collective Bargaining Agreement or another separate agreement, unless the consultation and information procedural rules are provided by the law (for instance, in case of collective redundancies).

Collective bargaining agreements (CBAs) regulate the employment and social security relations of employees.

CBAs are concluded on (i) enterprise level, (ii) branch/industry level, and (iii) on municipal level.

CBAs at enterprise level are concluded between the management of the company and the trade unions in the company. The employers are obliged to negotiate the conclusion of CBA, but not to actually conclude it. The maximum duration of CBA can be two years, and the CBAs are registered in the Labour Inspectorate.

CBAs at branch/industry level are concluded between the respective employers’ representative organisation and the trade unions. Principally, they are obligatory only for the members of the employer’s organisation, but such CBA can apply to all enterprises in the respective sector, subject to the following conditions:

  • the CBA is executed by all trade union organisations and employers' representative organisations in the respective industry or branch-of-industry; and
  • an application with such request is filed by the parties to the Minister of Labour and Social Policy and the latter issues an order to such effect.

The procedure and grounds for the termination of an employment contract are not freely negotiable between the parties. The employer may terminate (with or without notice) an employment contract only on certain grounds exhaustively listed in the Bulgarian Labour Code and following a specific procedure. These procedures may differ depending on the chosen termination grounds. NB: the notice period itself is not recognised as a separate termination ground.

There follows a list of some of the most important termination grounds.

Termination at the Initiative of Either Party Without Notice

Such termination is carried out on the following grounds, among others:

  • by mutual written consent of the parties;
  • when the dismissal of an employee is found unlawful or he is reinstated to his previous job by a ruling of the court, but he does not report to work within the stipulated term;
  • upon expiry of the contractual term, until the completion of some specified work or upon return of the substituted employee to work (these grounds apply to fixed-term employment contracts);
  • upon the death of the employee.

Termination at the Initiative of the Employer against Offering Compensation to the Employee

This is a form of termination of the employment relationship by mutual consent, however, the initiative for the termination is provided solely to the employer. The amount offered by the employer must not be less than four times the amount of the employee’s latest monthly gross salary.

Unilateral Termination by the Employer, which Requires Notice

The employer may unilaterally terminate an employment contract by written notice on the following grounds, among others:

  • closure of the entire enterprise, a part thereof or downsizing of personnel (redundancy);
  • reduction of the volume of work;
  • suspension of work for more than 15 working days;
  • when the employee lacks the qualities for efficient work performance;
  • when the employee does not have the necessary education or vocational training for the assigned work;
  • when the position occupied by the employee is to be vacated for the reinstatement of an unlawfully dismissed employee who had previously occupied the same position;
  • when an employee has become eligible for full retirement pension in terms of length of service and age;
  • employees occupying managerial positions may also be dismissed with notice by reason of conclusion of a (new) contract for the management of the enterprise (the appointment of a new executive director, board of directors, management board, etc). The dismissal can be effected after the performance of the (new) management contract has started but within a period not exceeding nine months thereafter.

In the event of the partial closure of the enterprise or staff cuts, and reduction of the volume of work, the employer is entitled to make a selection and in the interest of production or business dismiss employees whose positions have not been made redundant in order to retain employees of higher qualifications and better performance. The selection must be performed by a commission appointed by the employer, which has to examine the qualifications and the performance of the employees to be dismissed.

However, if the employer dismisses some (but not all) employees who hold identical or very similar positions, the selection process among them is mandatory. The employer must retain the employees with higher qualifications and better performance, and let the others go.

The employee may terminate the employment contract with notice without stating any reasons.

Unilateral Termination by the Employer, which does not Require Notice

The employer may terminate an employment contract without notice if the following (among others) is the case:

  • the employee has been detained in custody for the execution of a sentence;
  • the employee has been deprived, by a court sentence or by an administrative order, of the right to practice a profession or to occupy the position to which he has been appointed;
  • the employee has been deprived of an academic degree if the employment contract has been concluded in view of his holding the respective degree;
  • the employee refuses to take a suitable job offered in case of medically proscribed reassignment;
  • the employee is dismissed for disciplinary reasons.

Unilateral termination by the Employee, which does not Require Notice

The employee may terminate an employment contract without notice if, among others:

  • he/she is unable to execute the work assigned by reason of illness and the employer fails to provide him/her with another suitable work conforming to the prescription of the health authorities;
  • the employer delays the payment of the salary/compensation under the Labour Code or under the state social security regulations;
  • the employer changes the place or nature of work or the agreed salary, except in the cases where the employer has the right to make such changes, as well as where the employer fails to fulfil other obligations agreed by the employment contract or by the collective agreement, or established by a statutory instrument;
  • as a result of a change of the employer due to a transfer of undertaking, the working conditions under the new employer deteriorate substantially;
  • he/she is reinstated to work according to the established procedure by reason of pronouncement of the dismissal as wrongful, in order to take the work whereto the said worker has been reinstated;

The statutory notice period is at least 30 days but not more than three months (as agreed) in the cases of indefinite term labour contracts and three months but not more than the remainder of the term in the cases of fixed-term employment contracts.

The party who has been given notice of termination may terminate the relationship even before the expiry of the notice period, in which case the said party shall owe the other party compensation amounting to the employee's gross labour remuneration for the unobserved notice period.

'Garden leave' is not recognised under Bulgarian law.

In each case of termination (irrespective of the termination grounds) the employee is entitled to compensation for his accumulated unused paid annual leave.

In case of termination due to closure of the enterprise or of a part thereof, redundancy, reduction in the volume of work, suspension of work for more than 15 working days, refusal of the employee to follow the enterprise or a division thereof, when it is relocated to another city, or when the position occupied by the employee must be vacated for reinstatement of a wrongfully dismissed employee who previously occupied the same position, terminated employees are entitled to compensation amounting to the employee's gross labour remuneration for the period of unemployment, but for not more than one month. If the employee begins work for lower remuneration during this period, he shall be entitled to the difference.

Upon termination of the employment relationship by reason of illness, the employee is entitled to compensation amounting to the employee's gross labour remuneration for a period of two months, provided that the employee has service of at least five years and has not received compensation on the same grounds during the last five years of employment service.

Upon termination of the employment relationship after the employee has acquired entitlement to a pension, irrespective of the grounds for the termination, the employee is entitled to compensation amounting to his gross labour remuneration for a period of two months; where the employee has worked for the same employer for the last ten years, the compensation shall amount to the employee's gross labour remuneration for a period of six months. Such compensation is payable only once.

Upon termination of the employment relationship by an employee without notice as permitted by law, the employer shall owe the employee compensation (i) amounting to the gross labour remuneration for the notice period in case of an employment contract of an indefinite duration, and (ii) amounting to the actual detriment in case of a fixed-term employment contract.

The culpable failure to fulfil labour duties constitutes a breach of work discipline and the employee-offender is subject to the disciplinary sanctions listed in the Labour Code without prejudice to the financial, administrative, or criminal liability that this employee may be subject to. Breaches of work discipline include the following:

  • coming late to work, leaving early, being absent from work, or failing to utilise working time efficiently;
  • coming to work in a state which prevents the employee from fulfilling the assigned tasks;
  • non-observance of the rules for health and safety at work;
  • non-execution of the lawful orders of the employer;
  • abusing the trust and damaging the reputation of the employer, as well as unauthorised disclosure of data which is confidential in respect of the employer;
  • non-fulfilment of other labour duties provided for by laws and other statutory instruments, by the Internal Labour Rules, etc.

Some breaches of the work discipline are considered so serious that they might constitute grounds for imposing the heaviest disciplinary sanction – disciplinary dismissal. Some of these breaches are:

  • employees coming to work late or leaving early on three occasions, each of which of not less than one hour, within one calendar month;
  • Employees being absent from work in the course of two consecutive working days;
  • systematic breaches of work discipline (on more than two occasions);
  • abuse of the employer's trust or disclosing data which is confidential in respect of the employer;
  • other grave breaches of the work discipline.

There are three statutory disciplinary sanctions: reprimand; warning of dismissal; and disciplinary dismissal.

When the employer determines the specific disciplinary sanction, it has to consider the gravity of the breach, the circumstances under which it has been perpetrated, as well as the overall conduct of the employee. The constant court practice has established that the disciplinary sanction must be proportionate to the gravity of the breach.

Disciplinary sanctions may be imposed within two months after establishment of the breach and not later than one year upon its commitment. The said time limits do not run during the time in which the employee is on statutory leave (sick leave included) or takes part in a strike.

Prior to imposing a disciplinary sanction, the employer must request and consider (if provided) the explanations of the employee-perpetrator; it is recommended that these explanations are in written form. Disciplinary dismissal is imposed through a motivated written order, specifying:

  • the employee – perpetrator;
  • the violation and the time when it was committed;
  • the sanction; and
  • the legal text (the specific article and item of the Labour Code) on the ground of which the sanction is imposed.

Such order must be served against the employee’s signature and the date of serving should also be indicated. If the order cannot be served personally, the employer should send it either by registered mail or a courier company, with a return receipt. In case the employee refuses to sign that the order has been served to him/her, the refusal should be evidenced with the signature of two witnesses.

Termination agreements are recommended to be signed (even though not legally required) only in the case of termination on the grounds of mutual consent, as their main purpose is to evidence the consent reached and also settle any financial relations between the parties.

Certain employees are entitled to "preliminary protection against dismissal", as follows:

  • a mother of a child who has not attained the age of three years;
  • an occupational-rehabilitee;
  • an employee suffering from a disease designated in an ordinance of the Minister of Health;
  • an employee who has commenced permitted leave;
  • an elected employee representative, during his/her term;
  • a member of a special negotiating body, a European Works Council or a representative body in a European Company or a European Co-operative Society, during his/her term;
  • a member of the trade union leadership at the enterprise, of a territorial, industrial or national elective trade union governing body, during his/her term and for six months thereafter;
  • a pregnant employee or in an advanced stage of in vitro treatment or employee on pregnancy or child-birth leave.

The preliminary protection is applicable only when the dismissal is due to certain cases exhaustively provided by the law. The preliminary protection rules impose the obligation on the employer to seek, prior to the dismissal, the opinion of a medical expert board for working capacity certification, or the Labour Inspectorate's permission, or the trade union's consent, as the case may be.

In certain cases, the protection is near absolute – eg, mothers who started leave for pregnancy and birth can be dismissed only upon closure of the enterprise.

The employee can attack his/her dismissal within two months before the court. If the court finds dismissal unlawful, the consequences for the employer could be:

  • annulment of the dismissal and its declaration as unlawful;
  • reinstatement of the employee to his/her position;
  • compensation for unemployment, but for not more than six months after the dismissal (ie, capped to six months' salary) – if within this time the employee has started working for a lower remuneration, the employer will have to pay him/her the difference between the new and the old remuneration, but for the same period of six months;
  • payment by the employer of the social security instalments (but only those due by the employer) for the entire period between the date of dismissal and the date of his/her reinstatement to work or the expiry of the 14-day period for reinstatement (if the employee does not come to work);
  • legal expenses under the case.

The Bulgarian Protection Against Discrimination Act rules that any direct or indirect discrimination on grounds of gender, race, nationality, ethnicity, human genome, citizenship, origin, religion or belief, education, convictions, political affiliation, personal or social status, disability, age, sexual orientation, marital status, property status, or on any other grounds established by law or by an international treaty to which the Republic of Bulgaria is a party, is forbidden.

Direct discrimination is defined as any less favourable treatment of a person fon the ground of a protected characteristic than the treatment which another person is receiving, received or would receive in comparable similar circumstances. Indirect discrimination is defined as placing a person with protected characteristics in a less favourable position when compared to other persons through an apparently neutral provision, criterion or practice, unless the said provision, criterion or practice is objectively justified in view of a legal aim and the means of achieving this aim are appropriate and necessary.

Harassment on the ground of a protected characteristic – sexual harassment, incitement to discrimination, persecution and racial segregation – is also considered discrimination.

Despite the above, some actions do not constitute discrimination and these include, inter alia:

  • treating persons differently on the basis of their citizenship or of persons without citizenship where this is provided for by a law or an international treaty to which the Republic of Bulgaria is a party;
  • setting requirements for minimum age, work experience or length of service in employment procedures or in granting certain job-related privileges, provided that this is objectively justified for attaining a legal aim and the means for attaining it do not exceed what is necessary;
  • treating differently persons with disabilities in conducting training and acquiring education for satisfying specific educational needs aimed at equalising their opportunities, etc.

In the event of discrimination or breach of rights and duties in an employment relationship, the employee or the job applicant has the right to file a claim before the Commission on the Protection against Discrimination requesting the termination of the breach and the remedy of the consequences thereof and compensation for any moral or cash damages incurred. On the basis of such a filed claim, the Commission initiates the proceedings and collects evidence with the assistance from the Ministry of Interior.

Employers violating their obligations under the Protection against Discrimination Act can be penalised with sanctions of an amount varying between BGN250 and BGN2,500 (approximately EUR125 to EUR1,250), while the managers of the employer who have allowed the commitment of the violation to occur will be penalised with a fine of BGN200 to BGN2,000 (approximately EUR100 to EUR1,000), unless they are liable to more severe punishment.

All employment claims are reviewed by the general courts and there are no specialised employment forums. Depending on the type of claim, they are reviewed in two or in three instances; the most common claims, which are for wrongful dismissal, are reviewed by three instances). The most important claims enjoy 'fast-track' proceedings, but still the average duration of employment litigation is from one to two years.

In employment litigation each party has the burden of proof for its own claims, but as a rule the employer must prove that his/her acts which affected the employee were lawful.

There are no limitations for class action in employment context; however, class action would be applicable if the affected employees cannot be identified (but are identifiable). This would rarely be the case in employment matters (ie, it would almost always be possible to identify the affected employees). Hence, class action does not seem to have any real application in an employment context.

Arbitration is not possible in employment disputes according to Article 19, paragraph 1 of the Civil Procedure Code. Hence, any pre-dispute or post-dispute arbitration agreements would be null and void.

In case of a court dispute the prevailing party may be awarded (if it has specifically requested the court) attorney's fees. However, upon objection of the other party, the court can decrease the requested fees if they do not correspond to the legal or factual complexity of the case – such decrease happens quite often, in practice.

Boyanov & Co.

82, Patriarch Evtimii Blvd.
1463 Sofia
Bulgaria

+359 2 8 055 055

+359 2 805 50 00

mail@boyanov.com www.boyanov.com
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Law and Practice

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Boyanov & Co. is recognised as a top business law firm for doing business in South East Europe. Since 1990 the firm has advised on numerous landmark transactions in Bulgaria. Clients exceed 4,000 and include large local and foreign businesses and organisations, IFIs and governments. The firm draws on years of experience in a wide variety of areas of law, and on the excellence of its professionals. Boyanov & Co is the initiator and co-founder of SEE Legal – the largest and strongest regional legal service provider.

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