- Overview: Bulgaria
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Bulgaria
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Bulgaria Guide below will help you understand the nuances of labor legislation in the country.
There are two main reasons for companies hiring foreign workforce:
- Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
- Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.
After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.
If you need to hire foreign workforce in Bulgaria so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.
With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.
We are experts in global workforce employment in Bulgaria, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Bulgaria.
Hiring and Firing Workforce in Bulgaria Guide
# Employment Agreements
Permanent employment contracts
Permanent employment contracts have no expiration date. A trial period usually precedes a permanent employment contract. This trial period has a maximum duration of six months, and the rights and obligations of both parties are the same as in the case of a permanent contract. In order to be valid and legally binding, an employment contract must be done in writing. It should be concluded before the employee begins his/her work and it should contain information such as: identification details for the employer and employee, job title and description, type of contract, length of the trial period, the salary and daily work hours.
Fixed-term employment contracts
Temporary employment contracts are concluded for a limited period of time, and they are usually used for seasonal, temporary or short-term activities. This type of contract cannot last for more than three years. The employee has the same rights and obligations as in the case of a permanent employment contract. Temporary employment contracts/fixed-term contracts are used:
- For jobs that are temporary.
- To replace a permanent worker that is on maternity or sick leave.
- For seasonal work or for a certain mandate.
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)
#Employment Termination and Severance Pay (Dismissal)
An employee can end the employment contract without a cause at any time, by giving the applicable notice.
The Bulgarian labor law establishes specific causes for termination with prior notice by the employer, such as:
- Complete or partial closure of the employer’s enterprise.
- Staff reduction based on changes in the employment grid.
- Decrease in the volume of work.
- Suspension of the employer’s business activity for more than 15 working days.
- The employee’s lack of ability to effectively perform the work.
- The employee’s lack of educational background or professional qualification required for the respective job position.
- Changes in a job position’s requirements (provided that the employee does not meet the new requirements).
- The employee acquired the right of pension for age and length of service. However, the employee is not obliged to exercise this right.
#It is prohibited to dismiss
An employer cannot end the employment contract without a cause. In case of an employee dismissal in Bulgaria, specific items have to be mentioned, such as if the management is changed, or if termination of the contract implies an agreed compensation that should amount not less than four months’ salary. In addition, there are special groups of employees under protection, and in this case, the dismissal requires consent from the labor inspectorate. Pregnant women, mothers having children of the age up to 6, trade union leaders and disabled persons are part of this special group. The minimum period of notice that an employer has to give to an employee is 30 days, if it has not been agreed otherwise, but it cannot be longer than 3 months.
Notice periods depend on the type of contract.
Indefinite term contract
A 30-day termination notice period applies unless otherwise agreed by the parties, but in all cases, it must not exceed three months.
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). 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 labor remuneration for the unobserved notice period. ‘Garden leave’ is not recognized under Bulgarian law.
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 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.
#Employee Benefits and Contributions
Mandatory benefits required by law to be provided by an employer are public holidays entitlement, annual leave, sick leave, maternity leave, paternity leave.
Non-mandatory benefits that are offered by an employer are food vouchers, private health insurance, annual bonus.
# Probationary period
This contract is concluded to check the employee’s skills. From the perspective of the employee – such a contract could provide him with the opportunity to test if this work is suitable for him. The probation may not exceed a period of 6 months. The contract must indicate in whose favor the probation is agreed. If the employment contract does not contain this agreement, it is assumed that the period is in favor of both parties. During the probation period, both parties are entitled to the same rights and subject to the same obligations as parties that concluded an unlimited employment contract. The employment contract on probation may be concluded only once regarding the same employee in the same company for the same position. Until the expiration of trial period, the party in whose favor the time period has been concluded may terminate the contract without a notice of termination. If the contract has not been canceled within this period, the fixed-term employment relationship transforms into an employment relationship for an unlimited time.
Overtime cannot exceed: – 140 hours annually – 30 hours monthly (or 20-night hours) – 6 hours daily (or 4 night hours)
The standard working time is eight hours per day over a 40-hour (five-day) week. Some alternatives include the following:
- Extended working time up to 48 hours per week but not exceeding 60 working days annually, 20 of which should not be consecutive.
- 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.
- Open-ended working time for some job positions determined unilaterally by the employer.
- Shift work.
- Overtime (although in principle this is not allowed by law).
- Part-time work. There is no general requirement for the minimum duration of the working day in this case.
- 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 9 am until 1 pm). The employee is entitled to decide whether and how to work off the remaining part of their working time outside the mandatorily required time on the working premises. The employee can work off this remaining part by allocating it to one or more days of the respective working week. The method for time-reporting must be included in the internal labor rules by the employer.
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 a 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 work for a minimum of eight months (irrespective of the employer). The employee must use their 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.
For the first three working days of absence, the employer pays the employee 70% of their average daily gross wage. The National Social Security Institute pays for the remaining time covered under a sickness certificate (indemnity payments). The amount paid by the employer is not recoverable from the state. An employee must have at least six months’ working experience recognized for social security purposes (that is, six months’ social security insurance history) to be eligible for these payments. This period of experience is not required if the payment is related to a labor accident or a professional illness or if employees are under the age of 18.
Entitlement to unpaid time off
Employees can take time off for illness and injury under medical sickness certificates. The relevant medical institution or the employee’s personal physician issues these certificates. The employer is not entitled to recover from the state the costs of providing sick pay to the employee for their first three working days of absence due to sickness.
Pregnant employees are entitled to 45 calendar days’ paid leave before delivery and maternity leave of 410 calendar days for each delivered child (who is not sent for adoption or to a specialized institution at the expense of the state). Employees on maternity leave receive indemnity payments from the National Social Security Fund, if they have acquired 12 months’ working experience recognized for social security purposes and have paid social security contributions covering this social security risk. Maternity leave payments amount to 90% of the employee’s average wage on which social security contributions have been calculated and paid for the period of 24 months preceding the maternity leave. The minimum amount of the payment is the minimum daily wage for Bulgaria. Pregnant women, women on maternity leave and women with children of up to three years of age enjoy specific protection in relation to dismissal under the Labour Code.
If the father is married to the mother or is sharing with her one household, he is entitled to paid leave of 15 calendar days after the discharge of the child from the hospital, if he has acquired 12 months’ working experience. Once the child has reached six months, the father can use the remaining maternity leave, with the mother’s consent. In this case, the father is entitled to the same benefits as the mother if she had used her maternity leave. If the father is unknown, the paid leave can be used by one of the mother’s parents. If the father is deceased, the paid leave can be used by any of the parents of the mother or the father. After the expiry of maternity leave, an employee who is a mother, father, adoptive mother or adoptive father is entitled to paid parental leave until the child reaches the age of two. The mother or father of either of the parents can use the parental leave instead of the mother, with the latter’s consent.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Bulgaria by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.