Employment in Bulgaria

1. Hiring

1.1. Contracting

In Bulgaria, there are no legal provisions or guidelines regarding the background check of job candidates. However, the relevant GDPR rules must be considered when implementing such a check. Personal data or medical history cannot be collected without the employee’s consent.

Ordinance No. 4 dated May 11, 1993, provides the necessary documents for the conclusion of an employment contract, where apart from the obligatory documents (ID document and a permit by the Labor Inspectorate, if the person is under 18 years of age), other types of documents must be provided only if there is a specific legal requirement or if they are relevant to the employee’s specific work or position. A medical examination document must be provided at the initial start of employment and in the case of interruption in the employment activity for more than three months. A certificate of conviction must be provided only when the criminal record must be certified based on the provisions of a legal act (e.g., when the employee’s activities would involve accountability for assets). Documents evidencing acquired education, specialization, qualification, capacity, scientific title or degree, as well as professional experience in the field, must be provided where such are required for the respective work or position by law or the employer’s internal requirements.

There are no specific restrictions on foreign entities hiring employees in Bulgaria and a local legal entity does not need to be established. The only requirement is to obtain a tax identification number from the National Revenue Agency in order to pay social security and health insurance premiums and the personal income tax of the hired employee.

A typical employment contract is an employment contract for an indefinite term. The most common fixed-term contracts are the following types: (i) for a definite period, which may not be longer than three years unless otherwise provided by law; (ii) for the execution of casual, seasonal, or short-term work and activities, as well as with newly hired employees in enterprises that have been declared bankrupt or put into liquidation; (iii) for a period of not less than one year, for work and activities that are not of a casual, seasonal or short-term nature, as an exception, consisting of specific economic, technological, financial, market, and other objective reasons justifying the fixed term (such an employment contract may also be concluded for a shorter period upon request in writing by the worker or employee); (iv) upon completion of specific work; and (v) to temporarily replace an employee who is absent from work.

Apart from the differentiation of the employment contracts based on their term, there are other types of employment contracts, depending on the specifics of the case. 

An employment contract for additional work can be concluded with (i) the same employer for the performance of work beyond the scope of the employee’s employment duties, outside their fixed working time, as well as with (ii) another employer, for work outside the working time fixed under the principal employment contract, unless the latter contains a prohibition for the purpose of protecting trade secrets and/or preventing conflicts of interest.

A separate type of employment contract is one for work on particular days of the month.

When the relations between the parties include the necessity to train the employee, they can conclude an on-the-job training employment contract, through which the employer trains the employee in the process of working in a specific occupation or field. If the employee is under 29 years of age and is a high school or university graduate with no work or professional experience in their attained profession or field, an internship employment contract can be concluded with them for a term between six and 12 months.

Various types of employment contracts may be differentiated based on whether they provide for a probation period or not.

Other atypical employment contracts exist depending on the economic sector, e.g., with groups of persons (in the construction business), for one day (in seasonal farm work), etc. 

An employment contract must contain the following mandatory elements: (i) the place of work; (ii) the position title (in accordance with the National Classification of Professions and Positions, endorsed by the Minister of Labor and Social Policy) and the nature of work; (iii) the date of its conclusion and the starting date of its performance; (iv) the term of the employment contract; (v) the amount of the basic and extended paid annual leave and of additional paid annual leaves; (vi) equal termination notice period for both parties; (vii) the basic and supplementary remunerations of a permanent nature, as well as the frequency of their payment; (viii) the duration of the working day or week.

Apart from the basic particulars of the parties (names, personal identification number, or business number), it is explicitly provided that a permanent address/headquarters and management address must be provided, personal identification number(s) of the employer’s representative(s), if the latter is a legal entity, as well as the type and degree of educational attainment of the employee if related to the work they perform.

Bulgarian legislation explicitly provides that the employment contract must be in written form and, therefore, all actions in relation to the conclusion, amendment, or termination of the employment contract must be in written form as well. The same applies to all actions having an impact on the employment relationship, despite not being explicitly agreed upon in the employment contract, e.g., orders by the employer, requests by the employee, etc. The written form is necessary to evidence the diligent implementation of the employer’s obligations in case of inspection by the authorities or in case of an employment dispute with the employee. However, the day-to-day assignments of the employee within the scope of their job description do not have to be in written form.

Pursuant to the Ordinance on the type and the requirements for the creation and filing of electronic documents in the employment file of workers and employees, the employer and the employee may agree in the employment contract (or separately) that statements concerning facts and circumstances related to the employment relationship will be in electronic form.

The employer must use an information system for the creation and filing of such electronic statements that meet the legal requirements and through which date, time, and entry numbers are automatically certified.

Electronic statements must be handed over through an electronic registered mail service.

The documents must always be signed by the employer with a qualified electronic signature. The employee must sign the documents with an electronic signature, as determined by the legal provisions and agreed with the employer, i.e., with a simple electronic signature, advanced electronic signature, or qualified electronic signature. If the employee uses a qualified electronic signature, the employer must ensure a mechanism for signing on behalf of the employee for their own account.

The employer must not refuse to receive hard copy documents from the employee in any case, despite the implementation of the electronic documents system.

There is no explicit requirement for employment contracts and documents to also exist in the Bulgarian language. Nevertheless, in the case of inspection by the public authorities, all documents must be presented in Bulgarian. Moreover, since employees must be informed of all relevant facts regarding the employment relationship, in the event of a disciplinary procedure, court dispute, or the like, it may be argued that the employee does not understand the relevant documents if they are only in a foreign language.

Where the work requires the employee’s ability to perform it to be tested, their final appointment may be preceded by a contract providing for a probation period. Such a contract may also be concluded where the employee wishes to verify whether the work is suitable for them. The employment contract must specify the party to whose benefit the probation period is agreed. Otherwise, the probation period will be presumed to be agreed to the benefit of both parties.

During the probation period, the parties will have all rights and duties as under a final employment contract.

The provided probation period will be up to six months, and when the work is for a fixed term shorter than one year, the probation period will be up to one month. The probation period will not include the time during which the employee has been on statutory leave or has not performed the work for which the contract has been concluded for other valid reasons.

An employment contract for a probation period may be concluded with one and the same employee for one and the same type of work at one and the same enterprise only once.

Until the expiry of the probation period, the party to whose benefit it has been agreed may terminate the contract without notice. The employment contract will be presumed finally concluded if it is not terminated prior to the expiry of the probation period.

Bulgarian legislation does not strictly differentiate between an executive and an ordinary employee, apart from the fact that the executive employee is explicitly assigned by the employer to manage the employment process in the enterprise or part of it. Whether an employee is an executive does not depend on their position, but rather on the explicit authorization by the employer to manage the employment process. Depending on the granted powers, the executive employee may be entitled to impose disciplinary penalties, including disciplinary dismissal. The executive employee may be subject to a personal penalty imposed by the Labor Inspectorate, separate from the penalty of the employer if they contributed with their actions or inactions to the violation of the employment legislation.

1.2. Employees Versus Independent Contractors

The main difference between employees and independent contractors is the nature of the relationship with the employer or the assignor, respectively.

The subject of the contractor agreement is the provision of a result, whereas the employment contract is focused on the provision of the workforce and the working process itself. The other main differences are that the employment contract provides for a set working time and annual leave, and can be terminated based on specific grounds, all of which are not applicable to the contractor agreement. The contractor is not subordinated to the disciplinary authority of the employer.

If the provisions of the contractor agreement indicate that the actual relationship between the parties is an employment one (e.g., the subject suggests the provision of workforce instead of a service or a product, a set working time is defined, etc.), the Labor Inspectorate can declare the agreement to be an employment contract.

The reverse situation – categorizing someone as a contractor instead of as an employee, in case of a concluded employment contract, may be applicable if the employment contract is in conflict with the law or with a collective bargaining agreement, or circumvents them, and thus is void. The employment contract will be declared void by the court. Nullity will not be declared in case the defect of the employment contract lapses or is remedied. Where an employment contract is declared void and the employee has acted in good faith upon conclusion of the said contract, the relations between the parties to the contract up to the time it was declared null will be regulated in the same manner as a valid employment contract. If the employee was not acting in good faith, the relations should be regulated by the civil legislation applicable to contractual relations. That would mean that some rights specific to the employment relationship will not apply, e.g., the relevant period would not be regarded as employment service, but only as pensionable service.

1.3. Foreign Employees

During their residence in Bulgaria, EEA nationals and their family members have all rights and obligations according to the Bulgarian legislation and the international agreements to which Bulgaria is a party, except those for which Bulgarian citizenship is required (e.g., to vote, to run for elected office, etc.). EEA nationals can be employed without any restrictions provided they obtain a long-term residence permit. There are no other formalities, such as work permits. The procedure for obtaining a long-term residence permit is simple and fast, as the EEA national must only provide evidence of the grounds for their stay in the country.

Non-EEA nationals can be employed in the country only if they have a residence and work permit. The general rule is that non-EEA nationals can be granted access to the labor market when applying for positions for which no Bulgarian nationality is required when the following prerequisites are met: (i) the total number of non-EEA nationals with long-term residence permits having worked for a local employer in the preceding 12 months does not exceed 20% of the average size of the workforce hired on an employment contract during that time, or 35% in the case of small or medium-sized businesses; (ii) the existing conditions of work and compensation are not less favorable than those for Bulgarian nationals for the respective category of labor; (iii) the third-country national possesses the specialized knowledge, skills, and professional experience necessary for the relevant position.

There are different types of residence and work permits. The basic type is the Single Residence and Work Permit. It is granted by the Ministry of the Interior subject to a prior written endorsement by the Executive Director of the Employment Agency. All prerequisites listed above must be met, where the employer must substantiate their decision to employ a non-EEA national instead of a Bulgarian citizen or an EEA national and must provide evidence that they could not find an eligible employee on the local labor market.

The second type of residence and work permit is the EU Blue Card, which can be granted to highly qualified non-EEA nationals.

The employee should have the skills required for the job: a degree in higher education evidenced by a diploma, certificate, or other document issued by a competent authority following a course of study with a duration of no less than three years provided by an educational institution recognized as a school of higher learning by the relevant country. The gross compensation indicated in the employment contract of the employee should be at least 1.5 times higher than the average wage in Bulgaria according to the official data available for the past 12 months preceding the signing of the employment contract. The term of the employment contract must not be less than 12 months.

The requirement to observe the ratio between non-EEA nationals and Bulgarian citizens and EEA nationals (20:80 or 35:65 respectively) employed by the employer does not apply when applying for an EU Blue Card. The employer must substantiate their decision to employ a non-EEA national instead of a Bulgarian citizen or an EEA national, but there is no requirement to provide evidence that they could not find an eligible employee on the local labor market.

Apart from the two main types of residence and work permits indicated above, there are several other types, determined by the specific situation.

The first specific situation is an intra-corporate transfer. An intra-corporate transfer is a temporary relocation, for work or training, of a non-EEA national from an enterprise having its seat and registered address outside the territory of Bulgaria to an affiliate of that enterprise or to an enterprise controlled by the same group of enterprises, having its seat and registered address within the territory of Bulgaria.

The relocated employee can apply for an intra-corporate transfer permit solely for an enterprise within the receiving group of enterprises and solely in the positions of manager, specialist, or intern, provided that they have been employed by the foreign enterprise for at least 12 months as a manager or specialist, or six months as an intern. The requirement to observe the ratio between non-EEA employees and the rest of the staff does not apply. The employer must substantiate the grounds for the transfer.

Furthermore, seasonal workers can apply for a continuous residence permit, the term of which cannot be less than 90 days and more than nine months within each 12-month period. The permit may be extended once within a period of nine months if the employment contract with the same employer is extended or if the employer is changed. Seasonal work for up to 90 days without interruption within each 12-month period is subject to registration with the Employment Agency based upon a declaration submitted by the employer.

The Minister of Labor and Social Policy approves a List of Economic Sectors, which includes activities whose performance depends on the change of seasons.

Employees posted to Bulgaria by their foreign employer can work in the country if they have a work permit and a separate residence permit. If the posting is for up to three months out of every 12-month period, the employee may perform certain duties without a work permit, based on a one-time registration with the Employment Agency.

1.4. Home Office

An employment contract may provide that work obligations related to the manufacture of products and/or provision of services may be performed at the employee’s home or at other premises of their choice outside the employer’s workplace, using their own and/or the employer’s equipment, materials, and other tools. Along with other terms, the employment contract will regulate the workplace location, the procedure of work assignment and reporting, the manner of materials supply and delivery of ready products, as well as the running costs of the workplace and the payment thereof.

Employees working from home will be free to choose the start and end time and the distribution of their working hours, subject to the observance of statutory working time rules. They will be free to choose the periods of rest within a working day, between working days, and within a week. For both circumstances, the employee must inform the employer within seven days of the conclusion of the employment contract.

There is no possibility to establish open-ended working hours or overtime terms and conditions for employees working from home.

Apart from working from home, Bulgarian legislation allows for the possibility of remote work, where the basic difference is that the work is outsourced from the employer’s premises and may be performed from a place other than the employee’s home through the use of information technology.

Each party can propose to the other to switch from working at the employer’s premises to working remotely. The procedure for assigning and reporting remote work, as well as the content, volume, results, and other characteristics of the work important in accounting for the work done, must be agreed upon in the employment contract. An employee working remotely must designate a specific area in their home or in other premises chosen by them outside the employer’s premises to serve as a workplace. Issues related to the operational, technical, and other equipment at the workplace, and the obligations and costs pertaining to its maintenance must be agreed upon in the employment contract.

The employer must provide the following at its own expense: (i) the equipment needed to perform the remote work, as well as the supplies needed for its operation; (ii) the software needed; (iii) preventive maintenance and technical support; (iv) devices intended for communication with the employee working remotely, including internet connectivity; (v) data protection; (vi) information on and requirements for operating the equipment and keeping it in good repair, and the legal requirements and rules, including those of the enterprise in the field of data protection for data to be used in the course of the remote work; (vii) a surveillance system, where it is necessary to install one at the workplace and the employee’s written consent thereto has been obtained; in such cases, their right to personal space should be respected; (viii) other technical or documentary means in accordance with the individual employment contract and/or the collective bargaining agreement. It may be agreed that the employee will use their own equipment.

Employees working remotely will enjoy the same rights related to occupational health and safety as those employees working at the employer’s premises. The employer will be responsible for ensuring safe and healthy conditions at the workplaces of employees working remotely, and must inform them of the occupational health and safety requirements in accordance with the legal regulations and the employer’s applicable internal rules. The application and observance of the requirements and standards on occupational health and safety will be subject to inspection, including through visits to the employee’s workplace.

The working time of an employee working remotely will be established in the employment contract, where the employee will organize their own working time in such a way as to be available and to work at the time when the employer and its business partners communicate with each other. The workload and performance standards for an employee working remotely will be the same as those for employees working at the employer’s premises. The actual time worked will be recorded on a monthly basis in a standard-form document endorsed by the employer. Employees working remotely will be responsible for the authenticity of the data.

Subject to the current legislation and as agreed between the parties, employees working remotely will determine their own rest periods within their working time.

Issues related to salary, additional remuneration, and social benefits from the enterprise are regulated in the same way as for employees working on-site. The same applies to labor and trade union rights and access to training and career development opportunities.

The employer must provide opportunities for preventing the isolation of workers and employees working remotely from the rest of the workers and employees working at the employer’s premises by (i) creating conditions for periodic work or social meetings at the employer’s premises/offices, (ii) creating a corporate virtual space – a chat room, forum, or other kinds of media, through which employees working at the employer’s premises and those working remotely can freely communicate, if possible, (iii) access to corporate and professional information of the enterprise related to performing the remote work, (iv) participation of the workers and employees working remotely in the organizational and social life of the trade union of which they are members.

Employees working remotely will be entitled to appropriate training in conformity with the technical equipment provided to them and with the characteristics of this form of work organization.

No allowances are provided either for work from home or for remote work.

2. Contract Modification

According to Article 119 of the Labor Code, an employment relationship may be modified by written consent of the parties. The provision is not subject to broader interpretations and the modifications must not be made through e-mail or implicit acceptance by conduct.

Under Article 118 of the Labor Code, neither the employer nor the employee may unilaterally modify the content of the employment relationship, except in the cases and according to the procedure established by law. The employer may unilaterally increase the employee’s remuneration. The transfer of an employee to another workplace (e.g., office) within the same enterprise, without changing the specified place of work (e.g., Sofia), the position, and the amount of the basic wage of the worker or employee, will not be treated as a modification of the employment relationship.

According to Article 120 of the Labor Code, where production so requires, as well as in the case of a work stoppage, the employer may order the employee, without their consent, to temporarily perform other work in the same or in another enterprise, but in the same location or locality, for up to 45 calendar days within one calendar year, and in the case of a work stoppage, for the duration of the stoppage. The change will be done in accordance with the qualifications and the health condition of the worker or employee. The employer may assign the worker or employee work of a different nature, even though it does not correspond to their qualifications, where this is necessary due to compelling reasons.

In relation to the COVID-19 situation, there are specific provisions applicable when a state of emergency or a pandemic has been declared, namely: (i) the employer may assign work from home or remote work without the employee’s consent – in such a case, only the place of work will be changed, without modifying the rest of the conditions under the employment contract; (ii) the employer may issue an order discontinuing the work of the enterprise, of part of the enterprise or of individual employees for the entire period or for part of it until the state of emergency is lifted.

The employee’s tasks are described in the job description, which is an inseparable part of the employment contract. The day-to-day tasks may differ if they fall within the description of the employee’s position and the nature of the work. If the changes are outside the scope of the employee’s responsibilities pursuant to the employment contract and job description, the absence of written modification would be a problem in the event of an employment dispute concerning the said tasks, as it cannot be evidenced that they were assigned to the employee. In such a situation, the dismissal of the employee due to non-performance of these tasks would be considered unlawful.

The employer is obliged to ensure that all employees are familiar with the modifications of the employer’s policies and internal regulations, this being evidenced in written form and certified by the employee’s signature.

In some cases, when the modifications concern the activities, economic situation, and work organization in the enterprise, the employer may adopt the modifications after holding advance consultations with the worker and employee representatives.

Trade unions are entitled to participate in the preparation of all internal policies and regulations and will be duly invited by the employer to do so. The same applies to amendments to the enterprise’s internal acts.

3. Termination

3.1. Termination types

An employment contract may be terminated only on the grounds explicitly provided in the Labor Code.

Until the expiry of the probation period, the party in whose favor the probation period is agreed can terminate the employment contract without prior notice. The other party can terminate the contract upon observing the prior notice period agreed therein.

After the expiry of the probation period, the employment contract can be terminated on the grounds listed below.

The employment contract will be terminated without notice being due by either party on the following general grounds: (i) by mutual consent of the parties expressed in writing, where there are two possibilities – by initiative of either party, with or without compensation, and by initiative of the employer against compensation of four gross monthly salaries; (ii) when the dismissal of the employee is found to be unlawful or the employee is reinstated in their former job by the court and fails to appear within two weeks; (iii) upon the expiry of the agreed term; (iv) upon completion of the assigned work; (v) due to the return of the employee being replaced; (vi) when the position is designated for a pregnant employee or an employee with special health requirements and there is a candidate who is entitled to occupy it; (vii) with the start of work of the employee who has been elected or who has won a competitive selection procedure; (viii) in case the inability of the employee to perform the assigned work due to sickness led to permanently decreased working capacity, or due to health concerns based on a statement of the labor-expert medical committee; (ix) upon the death of the person with whom the employee has concluded the employment contract with regard to his personality; (x) upon the death of the employee; (xi) due to position being designated for a public servant; (xii) in case of a fixed-term agreement for the term of the long-term service under the Diplomatic Service Act.

The employee can terminate the employment contract by giving prior written notice to the employer. The notice period starts to run from the day following the day of receipt of the notice. The notice period is 30 days unless agreed otherwise in the employment contract, but not more than three months in the case of an employment contract for an unlimited term. In the case of a fixed-term employment contract, the notice period is three months, but not more than the remaining term of the contract.

The employee can terminate the employment contract in writing without prior notice when (i) the employee is unable to perform the assigned work because of illness and the employer fails to provide them with other suitable work in accordance with the prescription of the health authorities, (ii) the employer delays the payment of salary or compensation under the Labor Code or related to social security, (iii) the employer changes the place or the nature of the work or the agreed remuneration, except where it is entitled to make such changes, and when it fails to fulfil other obligations agreed in the employment contract or in a collective bargaining agreement or established by a normative act, (iv) as a result of a change of the employer, the work conditions with the new employer significantly deteriorate, (v) the employee moves to a paid elective position or starts scientific work based on a selection procedure, (vi) the employee continues their education or starts a PhD in a regular form, (vii) the employee works under a fixed-term employment contract for a defined term or to replace an absent employee and moves to another job for an indefinite term, (viii) the employee works under an employment contract with a temporary staffing agency and enters into an employment contract with another employer that is not a temporary staffing agency, (ix) the employee has been reinstated due to their dismissal being declared unlawful to take their previous job, (x) the employee starts work at a state authority, (xi) the employer ceases its activity, (xii) the employer has granted the employee unpaid leave without their consent, or (xiii) the employee has acquired the right to retire.

The employer can terminate the employment contract with prior notice on the following grounds: (i) if the company closes down; (ii) if part of the company is closed down or in case of staff reduction; (iii) in case of a decrease in work volume; (iv) in case of a stoppage of the work for more than 15 working days; (v) in case the employee lacks the qualities to perform the work effectively; (vi) when the employee does not have the necessary education or professional qualification for the performed work; (vii) in case the employee refuses to follow the company or its department when it moves to another city or location; (viii) when the position of the employee has to be released to reinstate an unlawfully dismissed employee; (ix) if the right to retirement is acquired; (x) when the employee is granted a decreased pension due to early retirement; (xi) when the employment relationship has started after the employee has acquired and exercised their right to retirement; (xii) when the employment relationship has started after the employee has been granted a decreased pension; (xiii) in case of a change in the requirements for the position if the employee does not meet them; (xiv) in case of the objective impossibility to perform the employment contract; (xv) for management – management employees may be released from work with prior notice also due to the conclusion of a management agreement in the company. Termination can take place within nine months of the start of the management agreement.

The employer can terminate the employment contract without prior notice on the following grounds: (i) when the employee is detained for the execution of a sentence; (ii) when the employee is prohibited by a sentence or administrative procedure from exercising their profession or occupying their position; (iii) when the employee’s science degree has been revoked if the employment contract was entered into by virtue of such a degree; (iv) when the employee refuses to take the recommended appropriate position in case of special medical requirement; (v) when the employee is disciplinarily dismissed; (vi) when a conflict of interests under the Counter-Corruption and Unlawfully Acquired Assets Forfeiture Act has been established with an effective legal act; (vii) when the employee does not pass the vetting process required under the Counter-Corruption and Unlawfully Acquired Assets Forfeiture Act established with an effective legal act.

Some of the termination grounds may require additional actions to be undertaken by the employer in advance (e.g., conducting selection procedures, and obtaining permission from a labor or health authority).

The consequences of the termination of the employment contract are determined by the reasons for termination and the specific legal ground.

The party entitled to terminate the employment relationship with notice may terminate the relationship even before the expiry of the notice period, in which case that party will owe the other party compensation amounting to the employee’s gross remuneration for the unobserved notice period.

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

Upon termination of the employment relationship by an employee without notice in the cases of a delayed payment of salary or compensation, change of the place or the nature of the work or the agreed remuneration or deterioration of the work conditions (in case of a change of the employer), the employer will owe the employee compensation amounting to the gross remuneration for the notice period in case of an employment relationship of indefinite duration, and amounting to the actual detriment in case of a fixed-term employment relationship.

Upon dismissal for breach of discipline, the employee will owe the employer compensation amounting to the employee’s gross remuneration for the notice period in case of an employment relationship of indefinite duration and amounting to the actual detriment in case of a fixed-term employment relationship. The same applies in case the employee is dismissed due to conviction for a criminal offense, which also constitutes a breach of labor duties.

The actual detriment will be calculated on the basis of the gross remuneration of the employee for the period during which the employee was unemployed, or the employer has been left without an employee for the same work, but not more than the remainder of the term of the employment relationship.

Upon dismissal due to closure of the enterprise or of a part thereof, staff cuts, reduction in the volume of work, stoppage of work for more than 15 working days, refusal of the employee to follow the enterprise or a division thereof in which the employee works when the enterprise or division relocates to another populated area or locale, or where the position occupied by the employee must be vacated to reinstate a wrongfully dismissed employee who previously occupied the same position, the employee will be entitled to compensation from the employer. The compensation will amount to the employee’s gross remuneration for the period of unemployment but not more than one month. Compensation for a longer period may be provided for by an act of the Council of Ministers, by a collective bargaining agreement, or by the employment contract. If the employee begins work for which they are paid a lower remuneration during the said period, the employee will be entitled to the difference for the said period.

Upon termination of the employment relationship due to illness, the employee will be entitled to compensation from the employer amounting to the employee’s gross remuneration for a period of two months, provided that the employee has worked for the employer for 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 contributory service and retirement-age pension, irrespective of the grounds for termination, the employee will be entitled to compensation from the employer amounting to the employee’s gross remuneration for a period of two months, and where the employee has worked with the same employer or in the same group of undertakings for 10 years during the past 20 years, the compensation will amount to the employee’s gross remuneration for a period of six months. Such compensation will be payable on a single occasion only.

Upon termination of the employment relationship, the employee will be entitled to cash compensation for any unused paid annual leave for the current calendar year in proportion to the time recognized as employment service and for any unused leave deferred, the right to which has not lapsed by prescription

Unemployed persons whose employment relationships have been terminated on their own initiative or with their consent, or due to their culpable behavior, will receive the minimum amount of the cash unemployment benefit (which currently is BGN 18) for a period of four months, which is the shortest term provided in the legislation.

The Labor Code provides two possibilities to terminate the employment relationship. The first one is the provision of Article 325 (1) (1) of the Labor Code, pursuant to which either the employer or the employee can make an offer to the other party for termination of the employment contract by mutual consent. The party who has been approached with the offer must respond within seven days after receipt of the offer. If they do not, it will be assumed that the offer was rejected. In this case, the mandatory elements are the offer and the written acceptance of its terms. In practice, the parties sign an agreement for termination of the employment contract by mutual consent on the basis of Article 325 (1) (1) of the Labor Code instead of (or together with) the employee’s written consent to the offer.

Another possibility for termination of the employment contract by mutual consent is provided in Article 331 of the Labor Code, under which the employer may offer the employee termination of the employment contract in consideration of compensation. Again, the employee must confirm the acceptance of the offer in writing within seven days, otherwise, the offer will be presumed rejected. In practice, the parties sign an explicit agreement for termination of the employment contract by mutual consent based on Article 331 of the Labor Code, instead of (or together with) the employee’s written consent to the offer.

The minimum amount of the compensation is statutorily determined at quadruple the gross monthly remuneration as last received by the employee. The compensation will be paid to the employee within one month after the date of termination of the employment contract, otherwise, the grounds for termination of the said contract are presumed lapsed. This means that the mandatory elements of the termination under Article 331 of the Labor Code are the offer, the acceptance of the offer and/or the mutual agreement, and the payment of the compensation within the provided term and in the provided minimum amount or the higher amount agreed between the parties.

Based on Article 111 of the Labor Code, the employee may conclude an additional employment contract with other employers for work outside their fixed working time under their principal employment contract, unless a prohibition is provided for in the latter, for the purpose of protecting trade secrets and/or preventing conflicts of interest.

The court practice is that employers are not entitled to restrict the employee’s activity after the termination of the employment relationship, irrespective of whether consideration has been paid or would be paid, as such restrictions infringe the right to work and the right to free business activity under the Bulgarian Constitution. Such a restriction can be provided in the employment contract or in a separate agreement, but if the employee breaches it, the employer does not have the tools to stop the breach or to collect the penalty, as in a potential lawsuit the provision would be declared null and void.

3.2. Collective Dismissal

The criteria for defining dismissals as collective is their number compared to the number of people employed during the month preceding the termination of the employment contracts, at the initiative of the employer, namely: (i) at least 10 over a period of 30 days in enterprises employing more than 20 and less than 100 employees during the month preceding the collective dismissals; (ii) at least 10% of the number of the employees in enterprises employing at least 100 but less than 300 employees during the month preceding the collective dismissals over a period of 30 days.

If the employer has dismissed five workers or employees over a one-month period and decides to terminate the employment contracts of other people in the following month, the employer must check whether the collective dismissals criteria are met and then follow the relevant statutory procedures.

When calculating the total number of the employees affected by the collective dismissals, it must not include those employees whose contracts are going to be terminated for reasons other than the decision of the employer or for reasons related to the individual person concerned, e.g., termination by mutual consent (with or without compensation), unilateral termination within the probation period agreed to the employer’s benefit, disciplinary dismissals, etc.

Where the employer is contemplating collective dismissals, it must provide written information to the representatives of the workers and employees and to the trade union representatives.

The information provided by the employer must specify (i) the reasons for the projected dismissals, (ii) the number of employees that will be dismissed and the main economic activities, groups of professions, or occupations to which they are referred, (iii) the number of employees employed in the basic economic activities, groups of professions, and positions in the enterprise, (iv) the specific indicators for applying the selection criteria to the people to be dismissed, (v) the period over which the projected dismissals are to be effectuated, and (vi) the dismissal compensations due.

The information on the period over which the projected dismissals are to be effectuated includes the time when the dismissal process will start and when it will end, whether the dismissals will be effectuated simultaneously or in stages, or how many and at what intervals, when the notices of dismissal will be served, whether the period after serving them will be considered a working period or whether compensation for non-observed notice period will be paid, etc. The specific legal grounds for termination of the employment contracts must be indicated as well.

The reason for this obligation is to ensure that the employee representatives and trade union representatives will be aware of the main issues of the collective dismissals and the underlying situation in the enterprise and to provide an opportunity for them to take part in the following consultation procedure.

Within three working days, the employer will send a copy of the information to the relevant subdivision of the Employment Agency (Labor Office Directorate).

After the obligation to provide the information is fulfilled, the employer may begin consultations with the employee representatives and the trade union representatives. The consultations should start not later than 45 days prior to the date on which the dismissals are to be effectuated. These consultations are essentially discussions or negotiations intended for the parties to reach an agreement to avoid or reduce the collective dismissals and to mitigate their effects (e.g., a reduction of the number of employees affected by the dismissals, increased dismissal payments, organization of training and retraining courses, etc.). The employer’s obligation to conduct consultations is deemed to be fulfilled even when the participants in these consultations fail to reach an agreement.

The dismissals will be effectuated not earlier than 30 days after the notification of the Labor Office Directorate and not earlier than 45 days after the start of the consultations, i.e., a period of 45 days after the opening of the dismissal process has to elapse for the purpose of observing both statutory time limits. In the event of breaches, the employer would pay a monetary penalty or a fine and the relevant executive employees would be punished with a fine.

The failure to carry out the notification and consultation procedure does not constitute grounds to revoke the dismissal as unlawful in a potential court case, i.e., the only legal effect is the administrative liability of the employer and the imposition of a monetary penalty. The amount of the monetary penalty for the company is between BGN 1,500 and BGN 5,000 and the amount of the fine for the responsible executive employee is between BGN 250 and BGN 1,000, both applicable for each separate breach.

Parallel to the procedure outlined above, the employer has to meet the requirements laid down in the Employment Promotion Act by sending a written notification to the relevant subdivision of the Employment Agency on the projected collective dismissals, no later than 30 days prior to the date on which they are to be effectuated. The content of the notification is almost identical to that indicated above (required under the Labor Code), with the addition that the notification should include information on the outcome of the preliminary consultations held with the employee representatives and trade union representatives. The employer will send the latter a copy of the notification within three working days.

After the notification is received, a team will be set up with a representative of the employer, employee representatives, trade union representatives, a representative of the Employment Agency, and a representative of the municipal administration to draft the relevant measures to provide employment to the employees concerned. For failing to follow this procedure, the employer would be punished with a monetary penalty of BGN 200 for each dismissed employee.

3.3. Unlawful Termination

The employee will be entitled to contest the legality of the dismissal before the employer or before the court and to claim (i) the dismissal to be pronounced unlawful and be revoked, (ii) reinstatement to their previous job, and (iii) compensation for the period of unemployment due to the dismissal.

Upon an unlawful dismissal, the employee will be entitled to compensation from the employer amounting to the employee’s gross remuneration for the period of unemployment caused by the dismissal, but for not more than six months, unless a higher amount is determined in the employment contract or the collective bargaining agreement. If the employee has worked in a lower-paid job during this period, the employee will be entitled to the difference between the two remunerations.

Where the unlawfully dismissed employee is reinstated to work and after reporting to the enterprise is not admitted to performing the said work, the employer and the culpable executive employee will be jointly liable to the employee for payment of an amount equal to the employee’s gross remuneration from the day of reporting to the day of actual admission to work.

The gross remuneration as a basis for calculation of the compensation for unlawful dismissal will be the gross remuneration received by the employee for the month preceding the month in which the grounds for the relevant compensation occurred or the last monthly gross remuneration received by the employee.

Pursuant to the Ordinance on the structure and organization of the salary, the gross remuneration consists of the base salary, additional remunerations determined by the relevant legislation (such as the additional remuneration for employment service and professional experience), and other remunerations determined in the employment contract. The type of additional remunerations that will be included in the gross remuneration when determining the amount of the compensation for unlawful dismissal will be determined case-by-case, as the principle is that only additional remunerations with a permanent nature will be considered in the calculation. If the employee receives a bonus that does not depend on their ad hoc performance, it will be included in the calculation of the gross remuneration. Whether an additional remuneration has a permanent nature will be determined not only based on the provisions of the employment contract and the employer’s internal acts but also based on the actual practice of the parties, i.e., if the employer pays the employee a certain amount of money on top of the base salary each month, this will be regarded as an additional remuneration with a permanent nature and will be included in the calculation, even if it is not agreed in the employment contract.

According to Article 24 (1) of the Personal Income Tax Act, the taxable income accruing from employment relationships will comprise the remuneration and all other payments in cash and/or in-kind from an employer or for the account of an employer, except for explicitly listed incomes. The compensation for unlawful dismissal is not listed and, therefore, it is taxable income, where the tax rate is 10%.

An employee is entitled to contest the legality of dismissal before the employer or before the court and to seek that it be pronounced unlawful and revoked. The employer, acting on its own initiative, may revoke the dismissal order before the employee brings legal action before the court.

Article 333 of the Labor Code provides protection to certain categories of employees in the case of termination of the employment contract by the initiative of the employer on some of the legal grounds for unilateral termination.

The protection can be determined as absolute or relative, based on whether there are possibilities for it to be overcome or not.

The categories of employees entitled to relative prior protection are (i) a female employee who is the mother of an infant up to three years of age, (ii) an employee re-assigned to a suitable job/position on account of a disability, (iii) an employee suffering from a medical condition as defined by an ordinance of the Minister of Health, namely: ischemic heart disease, active tuberculosis, any oncological disease, any occupational disease, any mental disorder, and diabetes, (iv) an employee on a statutory leave of absence (which includes any type of leave, including sick leave), (v) an employee who is an elected representative of the workforce, for the duration of their term in such capacity, (vi) an employee who is a representative of the workforce on matters of occupational health and safety, elected by the general workers’ meeting or the assembly of workers’ representatives, for the duration of their term in such capacity, (vii) an employee who is a member of a special negotiating body, a European Works Council or a representative body in a European commercial or cooperative entity, for the duration of their term in such capacity, (viii) an employee who is a member of the trade union leadership body of the enterprise, or an elected territorial, sectoral or national trade union leadership body, for the duration of their term in such capacity and up to six months following their stepping down from said leadership position.

The grounds for unilateral termination of an employment relationship by the employer to which prior protection under Article 333 of the Labor Code applies are as follows: (i) partial closure of the enterprise or staff cuts; (ii) a decrease in work volume; (iii) the employee lacks the qualities necessary to properly do their job; (iv) changes in job requirements that the employee is unable to meet; and (v) disciplinary dismissal of the employee.

With respect to the categories of employees listed above, protection against unilateral termination by the employer amounts to the requirement for the employer to seek and obtain prior authorization from the Labor Inspectorate for each individual case.

In cases of a proposed termination of the employment contract of an employee who has been reassigned to a job/position on account of a disability or who suffers from any of the medical conditions listed above, in addition to prior authorization from the Labor Inspectorate, the employer must also seek an opinion from the Territorial Expert Medical Commission.

The legality of the dismissal of an employee who is a member of a trade union leadership body is contingent upon the employer obtaining the prior consent of a union body identified by a decision of the central leadership of the respective trade union.

In cases of concluded collective bargaining agreements, it may provide that the dismissal of employees in the enterprise (falling in the above categories or not) on the grounds of staff cuts or a decrease in work volume must be preceded by the prior consent of the relevant trade union body in the enterprise.

A pregnant female worker or employee and a female worker or employee in an advanced stage of in vitro treatment may be dismissed only on the following grounds: (i) closure of the enterprise; (ii) in case the employee declines to follow the enterprise or the division thereof where she currently works if it is being relocated to another populated area or locale; (iii) where the job or position held by the employee must be vacated to reinstate an unlawfully dismissed employee who held the job or position prior to the appointment of the employee; (iv) in case it is objectively impossible for the employment contract to be performed; (v) in case the employee is incarcerated for the purposes of serving a court-imposed sentence; (vi) disciplinary dismissal.

In the case of disciplinary dismissal, the prior permission of the Labor Inspectorate must be obtained.

An employee on maternity leave may be dismissed only on the grounds of closure of the enterprise.

The dismissal protection applies at the time the dismissal order is served.

Where the dismissal requires the prior consent of the Labor Inspectorate or of a trade union body and such consent has not been requested or has not been granted before the dismissal, the court will revoke the order of dismissal as unlawful on these grounds only, without examining the labor dispute on the merits.

Only one disciplinary sanction may be imposed for the same breach of discipline.

4. Wage And Hour

4.1. Wage

The minimum wage in Bulgaria is determined annually by the Council of Ministers. Currently, it is BGN 710 per month. The minimum hourly wage is BGN 4.29. Both are expected to increase as of July 1, 2023. The minimum monthly wage and minimum hourly wage are not industry dependent and are the same for all business sectors.

There are no explicit provisions on whether wages must be paid in Bulgarian currency or in another currency. Therefore, it is not forbidden to pay wages in foreign currency. However, the manner in which the currency exchange rate is determined must be indicated in the employment contract, since if it varies, this will cause differences in the amounts received. In addition, the taxes, social security, and health insurance payments deducted from the gross wage must be paid in Bulgarian currency.

There are different types of allowances that must or can be included in the base monthly salary. The Labor Code and the Ordinance on the structure and organization of the salary determine the additional remunerations which must be paid to the employee if the indicated specific circumstances are present.

The obligatory additional remunerations are as follows: (i) for acquired employment service or professional experience; (ii) for overtime work; (iii) for work at night; (iv) for standby time; (v) for the academic degrees Doctor and Doctor of Sciences.

The additional remuneration for employment service or professional experience is due regarding the acquired employment service and professional experience within the enterprise, including in different positions, as well as within different enterprises when it concerns the same or similar work or work of the same nature. The minimum amount of the additional remuneration is determined by the Council of Ministers, where currently the amount is 0.6% for every year of acquired employment service and professional experience. Higher amounts may be provided in the employment contract, the collective bargaining agreement, and the internal salary rules.

Overtime work performed will be paid with an increase agreed upon between the employee and the employer but not less than (i) 50% for work on working days; (ii) 75% for work on weekends; (iii) 100% for work on public holidays; (iv) 50% for work at working times calculated on a weekly or longer basis. The calculation will be based on the base salary of the employee and additional remunerations with a permanent nature.

For each night hour or part thereof worked between 10:00 p.m. and 6:00 a.m., additional remuneration for night work will be paid to the employee in a minimum amount of 0.15% of the minimum monthly wage, but not less than BGN 1. A higher amount may be provided in the employment contract, the collective bargaining agreement, or the internal salary rules.

The minimum remuneration for standby time is BGN 0.10 per hour and it is due for the time when the employee is outside the enterprise but is on call to the employer if needed. A higher amount may be provided in the employment contract, the collective bargaining agreement, or the internal salary rules.

The remuneration for the academic degrees of Doctor and Doctor of Sciences is due when the respective degree is related to the work performed by the employee. The minimum amount is BGN 15 for Doctor and BGN 50 for a Doctor of Sciences. A higher amount may be provided in the employment contract, the collective bargaining agreement, or the internal salary rules.

Apart from the obligatory additional remunerations, other types of additional remunerations, as well as their amounts and the terms of their payment, may be determined in the collective bargaining agreement, the internal salary rules, and/or the employment contract, including, but not limited to (i) performance bonus – yearly, currently, or for other periods, (ii) temporary changes in the labor conditions which lead to additional stress and psychological changes as all as changes in other conditions that harm the employee’s health, and (iii) participation in the profit.

4.2. Working Time

The normal workweek will consist of five days, with a normal duration of weekly working time of up to 40 hours. The normal duration of the working time during the day will be up to eight hours.

There are no minimum daily working hours. The maximum daily working hours can be 12 hours, in case of open-ended working hours and aggregate calculation of the working time, since the minimum daily break of 12 hours must be observed in any case.

The working time will be allocated in accordance with the internal work rules of the enterprise. The lunch break is not included in the working time and is not paid unless the parties agree on a lunch allowance.

The duration of overtime work performed by one employee within any calendar year may not exceed 150 hours. A longer duration of overtime work may be agreed in the collective bargaining agreement, but may not be longer than 300 hours in one calendar year.

Bulgarian legislation does not contain provisions on time banking.

Each worker or employee will be entitled to paid annual leave. For newly hired employees, the employee may use their paid annual leave after at least four months of employment. The amount of basic paid annual leave must not be less than 20 working days. Certain categories of employees, depending on the special nature of the work, will be entitled to extended paid annual leave. The categories of employees and the applicable minimum amount are determined by the Council of Ministers. Part-time employees have the right to paid annual leave in proportion to the time recognized as employment service.

Employees will be entitled to not less than five working days additional paid annual leave (i) for work under specific conditions and life and health hazards that cannot be eliminated, restricted, or reduced regardless of the measures taken, and (ii) for work in open-ended working hours.

Longer amounts of basic and additional paid annual leave may be agreed upon in the collective bargaining agreement, as well as between the parties to an employment relationship.

The paid annual leave will be approved by the employer based on a written request by the employee. It can be granted to the employee in whole or in part.

The employer will be entitled to grant the paid annual leave to the employee even without the employee’s written request or consent during a work stoppage of more than five working days, where all employees use leave simultaneously, as well as where the employee, following an invitation by the employer, would have failed to request leave by the end of the calendar year for which it is due.

The employee must use their leave by the end of the calendar year for which it is due. The employer is obliged to approve the use of the employee’s paid annual leave by the end of the respective calendar year unless the use of the said leave has been deferred in accordance with the procedure described below. In such a case, an opportunity will be ensured for the employee to use not less than one-half of the paid annual leave to which they are entitled in the respective calendar year.

The use of the paid annual leave may be postponed for the following calendar year by (i) the employer – for important operational reasons, and (ii) the employee – by using an alternative type of leave or upon their request with the employer’s consent.

If the leave was postponed or was not used by the end of the calendar year to which it relates, the employer will be obliged to ensure its use in the next calendar year, but not later than six months as of the end of the calendar year for which the leave is due. If the employer would not have authorized the use of the leave in the cases and within the terms specified above, the employee would be entitled to themselves determine the time of its use by notifying the employer thereof in writing at least 14 days in advance.

Where the paid annual leave or part thereof is not used until the expiry of two years after the end of the year for which the said leave is due, regardless of the reasons, the entitlement to use such leave will be extinguished by prescription.

If the paid annual leave would be postponed under the terms and procedure described above, the employee’s right to use it will expire upon the expiry of two years as of the end of the year in which the reason not to use it would have ceased to exist.

For the time of paid annual leave, the employer will pay the employee remuneration calculated based on the average daily gross remuneration charged at the same employer for the last calendar month preceding the use of the leave, during which the employee has worked at least ten working days. Where the employee has not worked at least ten working days for the same employer during any month, the remuneration will be determined based on the base salary and additional remunerations of a permanent nature as agreed in the employment contract.

It is prohibited to compensate the paid annual leave in cash, except upon termination of the employment relationship.

Sick leave will be permitted by the competent health authorities.

Persons insured in respect of common diseases will have the right to cash benefits instead of remuneration for the duration of the leave of absence due to temporary incapacity to work, provided they have at least six months of insured length of service, in the course of which they have been insured in respect of such risk.

The employer, in its capacity of insurer, will pay out to the employee, in its capacity of an insured person, for the first three business days of the temporary incapacity to work, 70% of the average daily gross remuneration for the month in which the temporary incapacity to work occurred, but not less than 70% of the average daily remuneration that was agreed upon.

The remaining part of the period of temporary incapacity to work will be covered by state funds. The daily cash benefit for temporary incapacity to work due to a common disease will be calculated at the rate of 80% of the average daily gross remuneration or the average daily contributory income on which social insurance contributions have been remitted or are due, for the period of 18 calendar months preceding the month of occurrence of the disability. The daily cash benefit for temporary disability due to a common disease may not exceed the average daily net remuneration for the period based on which the benefit is calculated.

5. Collective Labor Law

5.1. Trade Unions

Employees are free to associate, without preliminary approval. A trade union in the enterprise can be established by a meeting of its founders (the number of which varies depending on the statute of the respective national trade union and is most commonly three to five people). Minutes of the founding meeting must be drafted and signed, where among other things, the following resolutions must be adopted: (i) establishment of the trade union; (ii) adoption of its statute; (iii) election of management bodies (a president and a secretary); and (iv) determination of membership in a national trade union.

The trade union will acquire the status of a legal person upon registration in a register maintained by the relevant District Court having jurisdiction over their registered office. The acquisition of the status of a legal entity is not an obligatory precondition to becoming a trade union. Any division of a duly registered organization must acquire the status of a legal person according to its statute.

To be recognized as a representative at a national level by the Council of Ministers, a trade union must meet the following requirements: (i) have at least 50,000 members; (ii) have organizations of employees in more than one-fourth of the industries designated by a code up to the second digit in the Classification of Economic Activities endorsed by the National Statistical Institute, with at least 5% of the people engaged in each economic activity being members therein, or at least 50 organizations with at least five members in each economic activity; (iii) have local bodies in more than one-fourth of the municipalities in Bulgaria and a national governing body; (iv) possess the capacity of a legal person, at least two years prior to the submission of the request for recognition of representativity.

In Bulgaria, there are two trade unions recognized as representatives at a national level: the Confederation of the Independent Trade Unions in Bulgaria (KNSB) and the Confederation of Labor Podkrepa.

The bodies of the trade union in the enterprise will be entitled to participate in the drafting of all internal rules and regulations which pertain to industrial relations, and the employer will mandatorily invite them to do so.

The trade unions participate in the negotiations with the employer, group of employers, and their organizations for the conclusion of collective bargaining agreements. The employers are obliged to negotiate with the trade unions on the conclusion of a collective bargaining agreement and to make available to them (i) the concluded collective bargaining agreements that bind the parties on the basis of industry, territorial, or organizational affiliation, as well as (ii) timely, true, and comprehensible information on their economic and financial status relevant to the conclusion of the collective bargaining agreement.

The trade unions participate in the information and consultations procedure in the enterprise, when such will be conducted, pursuant to the provisions of the Labor Code, e.g., regarding working time issues (extension or reduction of the working time, establishment of open-ended working hours), change of the employer due to reorganizations, transfer of the enterprise or part thereof, collective dismissals, etc.

The trade unions and their divisions will be entitled, upon the request of employees, to represent them as authorized representatives before the court. They may not conclude settlements, acknowledge legal actions, waive, withdraw or reduce the demands of the employees, or collect any amounts on behalf of the persons represented unless they have been expressly authorized to do so.

The state bodies, local government bodies local authorities, and employers will create conditions for, and cooperate with, the trade union in the pursuit of their activities. The said bodies and employers will make available to the said organization, for gratuitous use, movable and immovable property, buildings, premises, and other facilities required for the performance of their functions.

The collective bargaining agreement will regulate issues of industrial and social-security relations of employees not regulated by mandatory provisions of the law. The collective bargaining agreement may not contain provisions that are less favorable to the employees than the provisions of the law or of a collective bargaining agreement that is binding on the employer. The collective bargaining agreement will have an effect with regard to the employees who are members of the trade union which is a party to the agreement. The employees who are not members of a trade union that is a party to a collective bargaining agreement may accede to a collective bargaining agreement concluded by their employer by applications in writing submitted to the employer or to the leadership of the trade union which has concluded the agreement.

Within an enterprise, the collective bargaining agreement will be concluded between the employer and a trade union. A collective bargaining agreement by industry and branch will be concluded between the respective trade union and representative organizations of the employers. Upon mutual request of the parties to the collective bargaining agreement executed on an industry or branch level, the Minister of Labor and Social Policy may extend the application of the agreement or of individual clauses thereof to all enterprises of that industry or branch. The extended collective bargaining agreement or individual clauses thereof will apply to employees working in enterprises covered by the relevant industry or branch.

5.2. Works Councils

There are various types of representatives of workers and employees.

The first type is representatives for participation in the enterprise’s management.

The workers and employees will participate, through representatives elected by the General Meeting of workers and employees, in the discussion and addressing of enterprise management issues only in the cases provided for by law.

The workers and employees may elect at a General Meeting their representatives, who will represent their common interests on issues of industrial and social-security relations before the employers or before the State bodies.

The second type is representatives for participation in the information and consultation procedures provided in the Labor Code.

In enterprises employing at least 50 workers and employees, including in enterprises providing temporary employment, as well as in organizationally and economically self-contained divisions of enterprises employing at least 20 workers and employees, the General Meeting will elect from among its composition worker and employee representatives for exercising the right to information and consultation. The General Meeting may delegate these functions to representatives designated by the management of the trade union or to the worker and employee representatives for participation in the enterprise management. The number of representatives depends on the average monthly number of workers and employees employed during the previous 12 months.

The election of both types of representatives is within the power of the General Meeting of workers and employees. The employer will not be sanctioned if such representatives have not been elected in the enterprise. On the other hand, the lack of such representatives would hinder the information and consultation procedures, where such are necessary, as they would be carried out with all employees in the enterprise.

A separate type is representatives for occupational safety and health. They participate, together with representatives of the employer, in committees or groups on working conditions. A committee on working conditions is to be set up in bigger enterprises (with more than 50 employees), while a group on working conditions is to be set up in smaller enterprises (with more than five and less than 50 employees).

The worker and employee representatives participate in the same information and consultation procedure in the enterprise as the trade unions, including in case of changes in the activity, economic status, and labor organization. Additionally, they have the right to receive information from the employer, to have access to all workplaces in the enterprise or division, etc.

A collective bargaining agreement or a separate agreement with the employer may provide that the worker and employee representatives, where this is necessary considering their obligations, may enjoy entitlement to reduced working time, additional leave, and other such benefits.

In addition to the above, the worker and employee representatives enjoy protection against dismissal, as noted in Section 3.3.

The worker and employee representatives are obliged to inform the employees of the information received and of the results of the consultations and meetings held, as well as to observe the necessary confidentiality obligations.

The employer will be obliged to cooperate with the worker and employee representatives in the discharge of their functions and to create conditions for the implementation of their activities.

6. Transfer Of Undertakings

The employment relationship with the employee will not be terminated in the event of a change of employer as a result of the reorganization of an enterprise (including mergers, spin-offs, etc.) by the formation of a new enterprise, the transfer of a self-contained part of one enterprise to another, the change of the legal form of the business organization, the change of ownership of the enterprise or of a self-contained part thereof, the cession or transfer of activity from one enterprise to another, including transfer of tangible assets, or the lease or usufructuary lease of the enterprise or of a self-contained part thereof.

The rights and obligations of the transferor/lessor employer arising from the employment relationships existing on the date of the change will be transferred to the new transferee employer.

Before carrying out the change, the transferor employer and the transferee employer will be obliged to inform the trade union’s representatives and the worker and employee representatives at the enterprises of (i) the projected change and the date the change will be carried out, (ii) the reasons for the change, (iii) the possible legal, economic, and social implications of the change for the employees, and (iv) the measures envisaged in relation to the workers and employees.

The transferor employer is obliged to provide the information within two months before the change is carried out. The transferee employer will be obliged to provide the said information in good time, and in any event within two months before the employees are directly affected by the change as regards their conditions of work and employment.

Where any of the employers envisages measures in relation to the employees of the enterprise, the employer will be obliged to consult the trade union representatives and the worker and employee representatives in good time on such measures and to make efforts to reach an agreement with them.

If there are no trade unions or worker and employee representatives at the enterprise, the employer must provide the information to the relevant employees.

If the employer fails to fulfill these obligations, the trade union representatives and the worker and employee representatives or the workers and employees themselves will have the right to alert the General Labor Inspectorate Executive Agency of a non-observance of labor legislation.

In considering a failure to fulfill the obligation, any defense on the part of the employer on the grounds that another entity has taken the decision regarding the change will not be taken into account.

The obligation of the employer is considered fulfilled even if an agreement with the trade union representatives and the worker and employee representatives has not been reached.

These structures or the employees cannot block the change of the employer if they are not satisfied with the outcome of the negotiation procedure. They are only entitled to terminate their employment contracts, without notice, if the working conditions at the new employer deteriorate substantially after the change.

7. Labor Investigation

There is no blacklist of the most significant employment law violations. There are provisions in various legal acts which regulate the consequences of specific employment law violations, e.g., the Public Procurement Act provides that this is a ground for the exclusion of public procurement.

The fines for breaches of the employment legislation differ depending on the nature of the violation and the person who has committed it, i.e., whether an employee, the employer (and whether the employer is a natural person or a legal entity) or an executive employee assigned by the employer to manage the employment process. In addition, the fines differ depending on whether it is the first violation or a repeated violation of the respective obligation. For repeated violations, the fines are higher.

Generally, the smallest fine imposed on an employer is BGN 1,500, the smallest fine for an executive employee is BGN 250 and the smallest fine for an employee is BGN 100.

For any violation that can be eliminated immediately after it has been ascertained and that has not adversely affected any employees (minor violations), the employer will be liable for a fine of BGN 100 or higher, but not exceeding BGN 300, and the culpable executive employee will be liable for a fine of BGN 50 or higher, but not exceeding BGN 100.

The highest single fine imposed on an employer is BGN 20,000, on an executive employee BGN 10,000, and on an employee BGN 500, if the violation is not qualified as a repeated violation. For systematic violations of certain employment obligations, the fine imposed on the employer can reach BGN 30,000 and the fine imposed on an executive employee can reach BGN 20,000.