Bulgaria: Legal Regime Governing Labour

1 Overview of Legal and Regulatory Regime Governing Labour Activities

Labour relations in Bulgaria are governed by the provisions of the Bulgarian Labour Code¹ (hereinafter referred to as the "LC") and various Regulations on its implementation. The LC establishes the minimum standards and requirements that must be observed by either party to a labour agreement. It should be noted that Bulgarian labour legislation contains many mandatory provisions aiming to protect the interests of the employees, concerning duration of working time, remuneration, duration of breaks and annual paid leaves, health and safety working conditions, termination of the labour agreement, etc. Furthermore, if the provisions of an individual labour contract are less favourable for employees than the provisions of the LC, the latter shall apply by virtue of law.

Under Bulgarian law a labour contract should be executed in writing and should expressly specify, as a minimum (i) the place of performance of the employee's labour duties, (ii) the position title and the nature of labour duties; (iii) the execution date of the contract and its starting date; (iv) the duration of the labour contract (unlimited or for a definite term); (v) the duration of the basic and if applicable, the extended annual paid leave, as well as of the additional annual paid leave; (vi) one and the same notification period for termination of the employment contract by either of the parties; (vii) the amount of the basic labour remuneration and of the permanentobligatory statutory additional labour remuneration (e.g. additional payments for length of service), as well as the terms of payment thereof; and (viii) the duration of the working day or week, respectively. Parties to the contract are free to agree on any other matters deemed to be important. However, they may not stipulate conditions that are less favourable to the employee than those provided for in the LC.

Social security relations in Bulgaria are governed by the provisions of the Code on Social Security² (hereinafter referred to as the "CSS").

The existence of an employment relationship creates an obligation of the employer to make social security payments to any or all of the following funds: (i) the State and Private Pension Security Funds; (ii) the Labour Accident and Occupational Disease Fund; (iii) the General Disease and Maternity Leave Fund; and (iv) the Unemployment Benefit Fund. In addition, under the CSS employees born after 31 December 1959 must also pay the socalled "additional obligatory social security contributions". It should be mentioned that the level of social security contributions is not affected by the nature of the labour duties, terms of payment of the remuneration or source of financing. Further, the Law on Health Security³ (hereinafter referred to as the "LHS") provides for an obligation for the employer to pay health security contributions for any and all of its employees.

The amounts due as social and health security contributions are determined as a percentage of the total "social security income" of the individual⁴.

The monthly social security contribution rate for employees working normal hours, i.e. eight hours a day, five days a week, is 36.7% of their gross monthly remuneration. Specific portions of this total contribution go to the different social security funds listed in 1.5(i). Currently, the payment levy for contributions to the State Pension Fund, the Private Pension Funds, the Maternity Leave and General Disease Fund and the Unemployment Benefit Fund is distributed between the employer and the employee: 75% is borne by the employer and 25% by the employee. The distribution of the payment levy will change gradually during the following years as follows: (i) in the year 2005 70% for the account of the employer and 30% for the account of the employee; (ii) in the year 2006 65% for the account of the employer and 35% for the account of the employee; (iii) in the year 2007 60% for the account of the employer and 40% for the account of the employee; (iv) in the year 2008 55% for the account of the employer and 45% for the account of the employee and (v) in the year 2009 it will be distributed evenly between the employer and employee, at a ratio of 50 to 50 percent. Contributions to the Labour Accident and Occupational Disease Fund are entirely for the account of the employer.

The obligatory additional social security was introduced with regard to all individuals born after 31 December 1959, provided that they are secured under the rules of state social security. This type of security is designed to procure the socalled "additional pension for retirement" for the aforementioned individuals.⁵

The payment levy is distributed between the employer and the employee in the same way as the one for basic social security contributions.

Health insurance contributions are payable to the National Health Security Fund by all Bulgarian citizens who are not, at the same time, citizens of other countries, or who are also citizens of other countries but permanently reside on the territory of the Republic of Bulgaria.

The health security contributions amount to 6% of the employee's social security income. The levy for payment of health security contributions is distributed and will change in the same way as the one for social security contributions.

Under Bulgarian law a foreigner may legally work under a labour agreement in the Republic of Bulgaria after the respective foreigner has been issued a Work Permit by the Employment Agency with the Bulgarian Ministry of Labour and Social Policy. Further, issuance of a Work Permit constitutes ground on which the foreigner may apply for the issuance of a LongTerm Residence Visa and LongTerm Residence Permit in Republic of Bulgaria. The terms and conditions and the procedure for issuance of a Work Permit to foreigners in Bulgaria are provided hereinbelow.

Foreign citizens might be granted Work Permits in respect of work positions for which no Bulgarian citizenship is required under the law. In addition the following circumstances shall also be taken into consideration for successful application for Work Permit:

1. the status, development and society interest on national labour market;
2. the total number of foreigners employed by the local employer in the previous twelve (12) months should not exceed 10 per cent of the average number of all Bulgarians and foreign citizens;
3. working and salary conditions should not be less favourable than those for Bulgarian citizens for similar labour category;
4. the salary should provide the necessary funds for living in the country as set out by Council of Ministers.

In addition to the above stated requirements, in order a Work Permit to be granted, the following conditions should be fulfilled:

1. The employer has to prove that it has been actively seeking for the needed specialist for a period of minimum onemonth before the application for Work Permit to be submitted. This search should be performed via advertisements in the national and local media as well as via database of Labour Office at Employment Agency.
2. The foreign citizen applying for Work Permit holds minimum a special high school education, or any higher degree and/or possess special professional qualifications and experience required by the objective needs for the respective job position and performed activity;
3. no Bulgarian citizen or permanent resident foreigners, refugees or foreigners with humanitarian status having the required profession, specialty and/or qualification are available as well as there is no in due time opportunity to train the needed specialist according to a survey of labour market in respect of objective requirements to take the position.

However conditions under item (i) and (iii) shall not apply to high level management of companies established in Bulgaria by foreign legal entities. The Work Permit is issued for term of one (1) year. In general it cannot be extended for more than three (3) years in total. However in respect of high level management of companies established in Bulgaria by foreign legal entities the Work Permit might be extended for more than three (3) years.

For the issuance of the Work Permit the employer shall pay a fee of BGN 600 (six hundred) within a week as form notification that such is being granted.

Usually the procedure for granting of a Longterm Residence Permit lasts 10 up to 15 business days after submission of the application along with all required documents. However, due to the administrative nature of the procedure and the number of institutions involved, this term might be longer. Another point that shall be considered is that the person applying for a Longterm

Residence Permit must appear before the respective authorities each time when documents in regard to the permit need to be submitted or received. The ID card being the final document allowing legal residence of the foreigner in Bulgaria for term of up to 1 (one) year shall be ready within seven business days as of submission of the above states application.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.