G-P provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Bulgaria. Your candidate is hired via G-P’ Bulgaria PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Our solution enables customers to run payroll in Bulgaria while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Bulgaria.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in over 185 countries around the world, quickly and painlessly.
Bulgaria, in southeastern Europe, borders the Black Sea and has a population of 7 million people. Bulgarians are known for being friendly and helpful, and many speak multiple languages. They value face-to-face meetings, and it is unwise to rely solely on email and telephone for communication. When speaking in person with a Bulgarian, keep in mind that they nod their heads for “no” and shake them for “yes.” Bulgarians are very talkative, and they do not like being interrupted. Written contracts are necessary and organizations are very hierarchical.
When negotiating terms of an employment contract and offer letter with an employee in Bulgaria, it may be useful to keep the following standard benefits in Bulgaria in mind:
Hiring in Bulgaria
Work permits are required to hire a foreign national and evidence must be presented as to why a local person cannot be hired for the position. By law, a decision whether to issue the permit must be reached within a month.
The Bulgarian Labour Code governs the worker-employer relationship in Bulgaria, regardless of worker or corporate nationality. Written employment contracts are required under the code, and it has clear rules governing employee termination, including protection from unlawful dismissal. Employees may sue employers if they feel they have been unlawfully dismissed. Remedies include reinstatement, back wages, and modification of employment records.
When negotiating the terms of an employment contract and offer letter with an employee in Bulgaria, it may be useful to keep the following standard benefits in Bulgaria in mind:
Employment Contracts in Bulgaria
The general rule in Bulgaria is that employment contracts are executed for an indefinite duration. If the employment contract is executed for a fixed term, an explicit agreement between both parties is required and the contract cannot exceed three years. A fixed-term contract can be used under the following circumstances:
- For completion of specific work (project work)
- For temporary replacement of absent employee.
- For short-term, temporary, or seasonal work (usually for several days/weeks, up to 3 years)
- For the usual business of the employer in case of specific and objective production, market and other circumstances which exist at the time of the conclusion of the contract and necessitate its fixed-term nature.
If the conditions for the fixed-term contract are not present, the contract is considered to be for an indefinite duration (the fixed-term clause is null and void).
Working Hours in Bulgaria
The standard workweek in Bulgaria consists of a maximum of 8 hours per day, 5 days a week.
Overtime can be performed if agreed upon by both parties and is only permitted if the work performed is in relation to public security or if it relates to an emergency repair or ensures work safety.
The additional payment for overtime work is as follows (the compensation of overtime work with additional leave is forbidden):
- 50% on weekdays
- 75% on weekends
- 100% on public holidays
Holidays in Bulgaria
Bulgaria celebrates 12 public holidays for which employees are given the day off, including:
- New Year’s Day
- Liberation Day
- Orthodox Good Friday
- Orthodox Easter Monday
- Labor Day
- Saint George’s Day / Army Day
- Culture & Literacy Day
- Unification Day
- Independence Day
- Christmas Eve
- Christmas Day
- Second Day of Christmas
Public holidays that occur on the weekend are carried over to the following Monday (with the exception of Easter Saturday and Sunday). For faith groups other than Eastern Orthodox Christians, Bulgarian labor law and legislation on the civil service permits days off, either as paid or unpaid leave, for these groups’ holiest days. Bulgaria’s Cabinet decrees such a list each year.
Vacation Days in Bulgaria
Employees in Bulgaria are entitled to a minimum of 20 business days off per year. The employees should use their annual leave entitlement during the year earned.
If annual leave remains unused, the days that have remained unused shall be transferred to the following calendar year. According to the Labour Code, the annual paid leave shall lapse within 2 years of the end of the year for which it is due or as of the end of the year in which the reason for its non-use is no longer present.
On termination of their employment contract, employees are entitled to receive the monetary value of their paid leave entitlement.
Bulgaria Sick Leave
The three days of sick leave are paid for by the employer based on the employee’s average daily wages. Further sick leave will be paid by the National Social Security Fund. In all cases, the employee is obliged to request a sickness certificate issued by their physician or relevant medical institution. The sick leave or injury indemnity payments amount to the following:
- 70% of an employee’s daily gross salary
- 90% of an employee’s daily gross salary in the case of a work-related accident or illness.
An obligatory six months of work (and social security payments) must be completed before the employee is eligible for sick leave compensation, unless the sick leave is due to a work accident or a professional illness, or if the employee is a minor.
The maximum allowed sick leave on an uninterrupted basis is 18 months.
Carers’ Leave: If an employee has a disabled child or ill child, or another disabled or ill family member, the employee is entitled to sick leave as if it were his/her own disability or illness.
Maternity/Paternity Leave in Bulgaria
Pregnant employees are entitled to 410 days of paid maternity leave, 45 of which must be taken before giving birth. Employees on maternity leave receive indemnity payments from the National Social Security Fund which amount to 90% of the employees’ gross salary.
The father is entitled to 15 days of paid paternity leave after the birth of a child. Once the child has reached at least 6 months, the father can use any unused maternity leave with the mother’s consent.
Adoptive parents are entitled to the same rights mentioned above with the exception of the 45 days taken prior to giving birth for the adoption of a child under 5 years of age from the date of adoption.
Once the maternity leave has expired, an employee is entitled to paid parental leave until the child reaches two years of age amounting to the following:
- Two calendar years for the first, second and third child.
- 6 months for each additional child.
Parental Leave is subject to some restrictions, the father of a child (eight years old or younger) is entitled to leave of up to two months. In order to exercise this right, the employee must notify the employer at least ten working days in advance. Fathers using such leave are entitled to statutory compensation for the leave period in accordance with amendments to the Social Insurance Code.
Health Insurance in Bulgaria
Health insurance is provided by the National Health Insurance Fund and it is mandatory that all residents contribute to this fund.
Bulgaria Supplementary Benefits
Food Vouchers are common in Bulgaria and are tax-exempt up to BGN 200 per month.
Private health insurance is sometimes provided by employers.
Generally, we recommend budgeting 45% for benefits on top of the gross salary to calculate the total employee cost including benefits in Bulgaria.
Bonuses
The 13th-month bonus in Bulgaria is considered a gratuity and is not required by local law. An employer’s internal rules regarding how bonuses are paid out should be followed and bonus policies should be communicated to employees to avoid possible labor law discrimination disputes.
Termination/Severance in Bulgaria
The employer can set a probationary period in the employment contract not to exceed 6 months.
Resignation or Termination Notice Period: Employment contracts may be terminated with or without notice depending on the circumstances or by mutual consent.
- If the employee or employer terminates an indefinite employment contract with notice, at least a 30-day notice is required.
- The notice period for a fixed contract is 3 months but not more than the remaining period of the contract.
- No notice is required if the employment contract is due to expire (as in the case of a fixed contract).
Severance Pay: There is no statutory requirement regarding severance pay, however, employees are entitled to redundancy pay equal to 1 month’s salary in the case of individual or collective dismissal on economic grounds.
- If employment is terminated as a result of illness and the employee has been in service for at least 5 years, 2 months’ severance pay applies.
- If employment is terminated because the employee has acquired the right to pension, 2 months’ severance pay applies or 6 months’ if the employee has been in service for at least 10 years.
Paying Taxes in Bulgaria
Employees receive indemnity payments from the National Social Security Fund; the amount is determined by the Social Security Budget Act.
Social security contributions are calculated as follows:
- Basic Social Security (unemployment, etc.): 24.7% to 25.4% of gross salary.
- Pension Insurance: 5% of gross salary.
- Health Insurance: 8% of gross salary.
Of the above, the employer pays 60% and the employee the remaining 40%. Furthermore, the employer has to contribute 0.4% to 1.1% of gross salary for accident insurance.
This information is provided as generally accepted information and is not intended as advisory services. We would be happy to discuss these options with you if you are interested in our employee leasing or PEO service in Bulgaria.
Why G-P
Establishing a branch office or subsidiary in Bulgaria to engage a small team is time-consuming, expensive and complex. Bulgarian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. G-P makes it painless and easy to expand into Bulgaria. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Bulgaria PEO and Employer of Record solution provides you peace of mind so that you can focus on running your company.
If you would like to discuss how G-P can provide a seamless employee leasing or PEO solution for hiring employees in Bulgaria, please contact us.