- 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
As the pace of employment law change continues to accelerate, it is more important than ever for businesses to have a solid understanding of their legal compliance obligations, risks, and resources to help them navigate the maze when expanding globally. Employment laws affect businesses of all sizes, but small and medium businesses, in particular, have limited human capital and financial resources. For these companies, the risk of non-compliance can be particularly acute because they are often at a competitive disadvantage compared with larger, better-equipped competitors.
Legal compliance efforts can seem daunting for many small and medium businesses, given their lack of resources. In addition to familiarizing themselves with the laws affecting their business, they must also find and implement the right processes and technology solutions that deliver the desired outcomes while remaining practical and cost-effective—and do so while maintaining their focus on delivering value to customers.
This is where Acumen International comes in with a comprehensive suite of Global Employment Solutions. Whether a small business or a large enterprise, we provide Employer of Record (EOR) and Professional Employer Organization (PEO) services designed to help you understand your legal compliance obligations when hiring an international workforce. From onboarding through ongoing management and administration, our suite of global employment solutions helps employers streamline critical compliance tasks such as payroll tax filing, training management, and policy creation and management—all from one integrated platform.
Non-Compliance Risk in Bulgaria. How It Affects Your HR Operations
HR professionals must comply with local employment and tax requirements when bringing international employees into their workforce. When global firms enter new markets, they must consider whether they will hire locally or bring in foreign workers. In many cases, companies choose the latter option for its flexibility regarding staffing availability and the ability to use specialized skills that may not be available locally. Global employment can be a more cost-effective option for employers. Still, it also means taking on additional responsibilities that impact an organization’s ability to thrive as a global business.
Compliance with local labor regulations is challenging for many international employers, especially in jurisdictions where those rules are more stringent than what might be required back home. Foreign employees are often subject to different tax and social security obligations than those they are accustomed to in their home country, which can create challenges and complications if they aren’t aware of them. Some countries impose strict penalties on employers who fail to comply with applicable regulations (or even require an employer to repatriate an employee). The complexity of this issue makes it important for companies operating globally to understand each market’s specific regulations and work with professionals who have experience navigating them successfully.
HR Compliance Risks to Global Employers
- Complex in-country tax and social security regulations
- Ubiquitous and highly demanding trade unions
- Labor laws favoring the rights of employees over employers
- Employee misclassification risk
- Reputational damage risk.
When expanding your business internationally, it is important to take precautions to avoid any negative consequences. Thorough due diligence and partnering with a reputable global Employer of Record (EOR) or Professional Employment Organisation (PEO) in Bulgaria can help reduce potential risks of non-compliance with local laws. All parties involved in the global employment processes can better understand their responsibilities and avoid potential problems by taking these measures.
Employee Misclassification Risk Prevention in Bulgaria
Compliance with complex, rapidly evolving employment laws can be a significant challenge for businesses of all sizes. Due to the regulatory burden, some employers may choose to break the law or bend it to keep their company afloat and competitive in their field. But companies that violate employment laws could face substantial fines and negative publicity that could affect their bottom line.
Preventing employee misclassification is the responsibility of you and your organization. Understood more broadly as worker classification, misclassification occurs when an employee is mistakenly classified as an independent contractor. Non-compliance with worker classification laws can cost your business several ways, from fines and penalties to tax liability. Employee misclassification also impacts your ability to effectively compete for talent since it creates barriers that make it harder for you to retain quality employees or find new ones.
You’ll be on the right track to avoiding employee misclassification risk if you follow the guidelines created by Bulgaria government bodies, labor organizations, and tax authorities. These guidelines are made up of regulations, which lay out how your workforce should be classified, and guidelines that provide specific suggestions for how you can help protect your organization from misclassification.
Achieving HR Compliance with Global PEO and EOR Solutions in Bulgaria
If your company is looking to expand its workforce into Bulgaria or any other European country, it’s important to be aware of the risk of employee misclassification. An Employer of Record (EOR) or a Professional Employment Organisation (PEO) can help streamline your HR compliance and avoid legal consequences. Acumen International PEO and EOR solutions allow global companies to employ seamlessly, onboard, and payroll globally distributed teams of professionals; you will save time, money, and effort.
Global EOR and PEO Solution: The Best Way to Achieve 100% HR Compliance in Bulgaria
Acumen International is a leading provider of global EOR and PEO services, offering fully compliant and cost-effective solutions for businesses that need to manage international payroll, HR & benefits administration across 190 countries. The team of Acumen PEO provides strategic guidance and a wide array of high-quality, cost-effective services tailored to your specific requirements that can help your company grow and scale up safely. Here are some of them.
- Processing Immigration requirements
- Business visa applications & extensions
- Work permit sponsorships
- Streamline onboarding, benefits, payroll, PTO
- Local labor law compliance across 190 countries
- Audit-proof compliance requirements
- Employee benefits management
- Handling employment contracts, terminations, and compensation
- Processing medical insurances and benefits
- Payroll, including year-end tax statements
- Relocation services & housing
- Benefits administration
- Special needs or requirements
- Multi-country employment without limitations
- Handling contract worker and ex-pat workforce management
- Compliant employment or termination within 72 hours.
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 it, regardless of time zones. We can create tailored global employment solutions for you to deploy in Bulgaria that are managed legally and in full compliance with the employment laws, tax, social security, and immigration requirements in Bulgaria.
Difference between an EOR and a PEO. Employment Risk Mitigation in Bulgaria
The most important difference between EOR and PEO is how each model handles the legal risks associated with employing workers, including finance, legal & compliance, and safety risks. An EOR is a company that takes on the legal risks of employing your workers, including finance, legal & compliance, and safety risks, saving you from any potential problems down the line. This means that all of the responsibilities that come with being an employer are shifted to them — from tax reporting to handling any injuries or issues on the job. You’ll have none of these hassles but will take responsibility for managing your employees’ tasks and performance.
Global Employment Cost Prediction
As your company grows and expands its operations globally, it becomes increasingly important to have a global employment cost prediction that can give you visibility into your worldwide workforce expenses. Global Payroll Calculator can do that by providing you with predictive analytics on global employment costs and employer and employee tax analysis capabilities. This allows you to budget more effectively for your expansion plans and manage your international workforce. Having global employment costs at your fingertips helps you stay ahead of the competition and maintain a healthy bottom line.
The Global Payroll Calculator leverages unique up-to-date data collected by Acumen’s expert in-house team research of over 1500 official government sources and validated with local lawyers, compliance experts, and accountants.
Global Payroll Calculator helps companies minimize labor costs while providing up-to-date information on hiring, compensation, and tax requirements across 190 countries. The Global Payroll Calculator is also ideal for rapid global employment as it provides accurate estimates of an organization’s international intake, accounting for relevant factors such as salary levels, taxation rules, hiring requirements, and other legal standards across multiple jurisdictions.
HR Compliance Guide: Hiring and Firing Workforce in Bulgaria
Employment Agreements in Bulgaria
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. An employment contract must be written in writing to be valid and legally binding. 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, salary, and daily work hours.
Fixed-term employment contracts
Temporary employment contracts are concluded for a limited period and 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 work 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
An employee can end the employment contract without cause by giving the applicable notice.
The Bulgarian labor law outlines 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 is 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.
Unlawful Dismissal in Bulgaria
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 not exceed 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. This special group includes pregnant women, mothers having children of up to six, trade union leaders, and disabled persons. 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 three months.
Notice Period in Bulgaria
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 it must not exceed three months in all cases.
The termination notice period for fixed-term contracts is three months unless the remaining term 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.
Severance Payments in Bulgaria
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 before 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 in Bulgaria
Mandatory benefits required by law to be provided by an employer are public holidays entitlement, annual leave, sick leave, maternity leave, and paternity leave.
Non-mandatory benefits offered by an employer are food vouchers, private health insurance, and annual bonuses.
Probationary Period in Bulgaria
This contract is concluded to check the employee’s skills. From the employee’s perspective, such a contract could allow him to test if this work is suitable for him. The probation may not exceed 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 the trial period, the party in whose favor the 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 is determined unilaterally by the employer.
- Shift work.
- Overtime (although, in principle, this is not allowed by law).
- Part-time work. In this case, there is no general requirement for the minimum duration of the working day.
- Flexible working time (working time with variable limits). This means that the employee must be at the employer’s premises for only a specific 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 required time on the premises. The employee can work off this remaining part by allocating it to one or more days of the respective working week. The employer must include the method for time-reporting in the internal labor rules.
Annual Leave in Bulgaria
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 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). Employees 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 for unused paid leave only in the case of termination of the employment relationship.
Sick Leave in Bulgaria
The employer pays the employee 70% of their average daily gross wage for the first three days of absence. 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, a professional illness, or if employees are under 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 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.
Parental Leave in Bulgaria
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 state’s expense). 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 24 months preceding the maternity leave. The minimum amount of the payment is the minimum daily wage for Bulgaria. Pregnant 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 child’s discharge 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.