For employers venturing into Bulgaria, it's essential to understand the prerequisites for licenses and work permits, create legally compliant employment agreements, and ensure adherence to payroll and tax regulations. Partnering with an Employer of Record (EOR) is advantageous when you expand into Bulgaria. An EOR in Argentina helps you adhere to the legal and administrative aspects of employment, allowing your company to hire and grow within the country while adhering to local regulations. This includes handling payroll, and taxes, and ensuring compliance with Bulgaria's labor laws. Although your company will still oversee your employees' daily tasks, the EOR is the official employer, significantly reducing your administrative burden.

Incorrect Worker Classification pertains to the incorrect labelling of workers, such as designating them as independent contractors or exempting from specific regulations when they should legally be considered employees with rights. Engaging a PEO/EOR effectively mitigates these risks. EORs guarantees adherence to labor laws, precise worker classification, streamlined payroll management, and employee benefit provisions, enabling employers to focus on their core business activities.

Labor laws in Bulgaria are primarily governed by the Labour Code of the Republic of Bulgaria. This comprehensive legislative act encompasses a wide range of employment-related issues, including but not limited to employment contracts, working hours, rest periods, annual leave, maternity and paternity leave, termination of employment, health and safety standards, and labor disputes.

In addition to its national labor laws, Bulgaria also strives to align with European Union’s directives and regulations. 

Employment contract

Under Bulgarian employment law, employers are required to establish written contracts to establish a legally valid employment relationship. Additionally, employers must inform the National Revenue Agency (NRA) within three days of contract negotiation.

These employment contracts can be drafted in either English or Bulgarian but should encompass the following details:

1. Identity of both parties
2. Work location and terms
3. Job title and description
4. Employment duration
5. Working hours
6. Work conditions
7. Termination/dismissal terms
8. Notice period for ending employment
9. Leave entitlements, salary specifics, payment schedule, and additional benefits.

Working time

In Bulgaria, the regular work schedule consists of 8 hours per day and 40 hours per week.

Overtime

Extra work beyond the regular 40-hour workweek is classified as overtime and is governed by employment contracts or collective agreements. Typically, the maximum overtime limits are:

• 3 hours per day (across two consecutive days),
• 6 hours per week, 
• 30 hours per month, and 
• 150 hours per year

Public Holidays

There are 14 public holidays in total. 

Minimum Wage

The minimum wage in Bulgaria is 933 BGN per month.

Annual Leave

Bulgarian employment regulations stipulate a minimum of 20 working days of paid annual leave. Employers can grant these annual leave benefits to employees with a minimum of four months of service.  Employees can carry forward unused annual leave for up to two years. Notably, Bulgarian labor laws do not require employers to provide monetary compensation for any unused annual leave while an employee is still employed.

Paid Sick Leaves

* For work-related sick leave, this rate applies if the employee has at least six months of service.

Employees can claim up to 18 months of paid sick leave but must provide a medical certificate within 48 hours of getting sick.

Maternity leaves

Female employees are entitled to 410 days of paid maternity leave. Employees can take leave 45 days before the due date, and the rest after the birth. After the sixth month of leave, the mother can transfer the remaining days to the father.

For maternity leave, workers with at least 12 months of insurance contributions receive 90% of their average daily gross wage from the National Social Insurance Institution.

Following the 410 days of maternity leave, any additional paid leave can be taken by the mother or transferred to the father until the child turns 2. This applies to the first, second, and third child only and is paid at a rate of 780 BGN per month unless the child is in childcare, in which case the benefit is not paid.

Paternity leave

Fathers are eligible for 15 days of Paternity Leave, paid at 90% of their regular salary rate, starting from the child's birth. This entitlement is accessible after completing one year of employment. When the child reaches six months of age, the mother can transfer her unused maternity leave days to the father.

Additionally, fathers can access an extra 2 months of leave, paid by the National Social Security Institute, to care for a child under 8 years old. This is available as long as the father hasn't already used similar leave for a child under two and hasn't used maternity leave transferred from the mother. The employer should be informed at least 10 days before utilizing the start of the leave.

Tax and Social Security contribution:

Employer Payroll Contribution 

Employee Payroll Contribution 

Employee Income tax

A flat tax rate of 10.00% for employee income tax.

Termination 

Terminating employment in Bulgaria follows a standard process outlined in Bulgarian Labor Law. However, notice may not be required if an employer can demonstrate justifiable cause for immediate dismissal (such as misconduct).

Termination notices must be written and submitted to the relevant government authorities.

Severance Pay

In Bulgaria, severance pay is obligatory when it is applicable. The exact amount varies depending on the circumstances of termination, such as termination by the employee, mutual agreement, termination without cause, or with cause in indefinite and fixed-term agreements. 

Typically, severance pay is calculated at a minimum of four months' gross salary and should be disbursed within a maximum of seven days after termination.

In cases of company downsizing, redundancy payments are generally equivalent to one month's salary as severance unless the employment contract specifies a different arrangement.

Notice Period

The legal minimum notice period in Bulgaria is 30 days, but it is customary to provide 90 days' notice.

Probation period

For regular employees, the probation period usually lasts three months, with a maximum extension of up to 6 months.

Growing your team in Bulgaria requires making the right hiring decisions. We understand that expanding in Bulgaria comes with its own set of challenges, including compliance, payroll, tax, and benefits management. Gloroots’ Bulgaria Employer of Record (EoR) service can alleviate these complexities and ensure compliance and you can focus on screening the right talent and growing your business. Partner with us to simplify the process and succeed in the dynamic Bulgaria market.