Bulgaria

A. Hiring of employees (onboarding)

Mandatory employer requirements

According to the Bulgarian legislation, an employer may be any natural person, legal entity or its branch, as well as any other organizationally and economically separate entity, who or which independently employs employees under an employment relationship, including for work at home and remote work and for commissioning to work at a user undertaking. Therefore, there is no strict requirement to establish a legal entity to hire employees.

After concluding an employment contract, the employer is obliged to send a notification within three days to the relevant territorial directorate of the National Revenue Agency (NRA). The employer should request from the NRA to be sent a certified copy of the notification, which, together with a copy of the employment contract, should be handed over to the respective employee. According to the law, the employer has no right to allow the employee to their workplace before sending them these documents. The notification is blank and can be downloaded from the official website of the NRA.

Probation periods

Where the work requires testing of the ability of the worker or employee to perform it, the employment agreement may be concluded under a probation period of up to six months. The party to whose benefit the probation period has been agreed may terminate the contract without notice and without the need to motivate its decision. The probation period shall not include the time during which the employee has been on a leave, or for other valid reasons has not performed the work for which the contract has been concluded. An employment contract with a probationary period may be concluded only once for the same work with the same employee in the same enterprise. The employment contract is presumed finally concluded if it is not terminated prior to the expiry of the probation period. After this date, the contract may be terminated only on the grounds explicitly listed in the law.

Hiring checks

Medical examination
All employees in Bulgaria are subject to mandatory preliminary and periodical medical examinations. The preliminary medical examination is done prior to hiring, and it is intended for persons who begin work for the first time, persons who have not been in an employment relationship for the past three months and persons who transfer to another job which is related to harmful factors and risks of occupational injuries. The preliminary medical examination contains a conclusion regarding the person’s suitability to perform the profession for which they are applying. In general, there are no explicit rules for the contract to be cancelled because of medical results. However, as these results are usually presented to the occupational medicine service provider in order to assess if the employee is fit for the respective position, theoretically it is possible that a contract may be terminated due to the employees’ results (e.g. in case the specific job requires physical work and the employee suffers a serious injury).

Criminal background check
The criminal record certificate of persons can be required by the employer only when the law or an act requires the certification of the person’s judicial past.

Reference and education checks
References and education checks can be required by the employer prior to hiring if those are needed for the position for which the person is applying.

Diversity & inclusion

Upon hiring, no discrimination, privileges or restrictions based on race, nationality, ethnicity, gender, national origin, religion, beliefs, membership in political, trade union and other public organizations or movements personal, social and property status or presence of disability are allowed.

According to the Bulgarian Protection against Discrimination Act, the employer provides equal remuneration for identical or equal work. When hiring, the employer is obliged to encourage persons belonging to the underrepresented sex or ethnic groups to apply for a certain job or to hold a certain position. The employer is obliged, under equal conditions, to promote the professional development of workers belonging to a certain gender or ethnic group, when they are less represented among the workers or employees holding certain positions.

Further, in order to ensure the employment of people with permanent disabilities in a normal work environment, employers shall hire workers with permanent disabilities under a quota as follows:

1. Employers with 50 to 99 workers and employees - one person with permanent disabilities;
2. Employers with 100 or more workers and employees - two percent of their average number of employees.
   

Types of employment contracts

When it comes to the duration of a contract, there is a possibility to conclude both fixed term and open-ended contracts. The open-ended contract cannot be converted into a fixed term contract unless the employee expresses their wish in writing. The employees employed under a fixed-term employment have the same rights and obligations as the employees employed under an open-ended contract.

There are different types of fixed-term contracts. The first type of fixed term contract cannot be concluded for a period longer than three years. Another type is the “project-based contracts” for which the “term” is related to the time required to complete a certain type of work, which is why project based contracts may last for more than three years. Bulgarian law also allows for the conclusion of a contract for temporary replacement of a worker or employee who is absent from work (which may also last for more than three years). Another type of fixed-term contract relates to contracts for work in a position which is to be occupied through a competitive examination (for the time until the position is occupied on the basis of a competitive examination). A fixed-term contract can also be concluded for a certain term of office, where such has been specified for the respective body.

All employment contracts need to be concluded in writing and should include certain prerequisites as per the Labour Code.

Specific rules for executives

In Bulgaria, the relationships between the company and its managing/executive director(s) are not governed by the employment legislation. The managing/executive director is hired by a resolution of the general meeting of shareholders/sole owner of the share capital of the company and their specific relations are regulated by a management agreement as per the Commercial Act.

Language requirements

There are no specific requirements for language use. Any such requirement may be established by the respective employer. However, competent authorities will in any case require a Bulgarian version of the employment contract if they perform any inspections.

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B. Termination of employees (Offboarding)

Kinds of dismissal

According to Bulgarian law, an employment contract can be terminated at the initiative of the employer either with or without a notice period (предизвестие) depending on the legal ground.

• Dismissal with a notice period: closure of the company or a part of it; staff reduction; reduction in the workload; ceasing the working process for more than 15 days; lack of competence, qualification and capacities of the employee; movement of the company to another town where the employee does not agree to follow the enterprise, etc. In some of the above specified dismissal cases, the employee is entitled to receive compensation for the time during which they have remained unemployed, but for no more than one month (unless compensation for a longer period of time is agreed under a collective labor agreement or in a deed of the Council of Ministers). However, in all cases of termination the employer is obliged to pay the employee compensation for unused annual paid leave, if any.
• Dismissal without a notice period: dismissal for serious cause (due to a serious breach of the working discipline); when the employee is deprived of performing their professional duties by means of administrative act or court decision, etc. In these cases, the employee is entitled to only receive compensation for unused annual paid leave if any, but no other compensations. Furthermore, pursuant to the Bulgarian labour legislation, in the event of dismissal for serious cause, the employee shall pay the employer a compensation calculated on the basis of the employment remuneration due for the notice period – in case of an employment contract for an indefinite period, or at the amount of the actual damages suffered by the employer – in case of an employment contract for a definite period.
• Dismissal at the initiative of the employer against compensation agreed between the parties: the employer may offer its employees to terminate their employment contracts after paying them a one-time compensation equal to the minimum amount of four months’ remunerations of the dismissed employees. In this case, the law stipulates only the minimum amount of the compensation, but the parties are free to agree on a higher compensation (there is no limitation regarding its maximum amount). In this case, the employer shall again pay to the employee compensation for unused annual paid leave.

The employer shall pay maximum six months’ remuneration as compensation in case the dismissal has been found illegal by (a final decision of) the Bulgarian civil court. This specific compensation is calculated on the basis of the months during which the employee has not worked (or has worked for a lower salary) but its amount cannot exceed the six-month remuneration of the dismissed employee.

Dismissal motivation

By general rule, a reason for dismissal must be stated. The reasons are defined by law; the list is exhaustive and binding for the parties. The grounds for dismissal are described in section Kinds of dismissal.

Notice period

The notice period is subject to agreement by the employer and the employee, but only within the timeframe prescribed by law. It is always equal for both parties.

• Notice period in case of employment contracts for an indefinite period: the notice period the parties could agree on may vary between 30 days and three months. Unless the parties agree otherwise, the notice period is 30 days. It should be noted that the most common notice period is 30 days.
• Notice period in case of employment contracts for a definite period: the notice period is three months, but not more than the remaining duration of the contract.
  

Severance pay

Upon dismissal with compensation, the employee is entitled to severance pay amounting to minimum four months’ gross salary. Furthermore, there exist numerous forms of severance pay regulated by the law. The major ones, amongst others, are compensation for unused annual paid leave, compensation for non-observed notice period (if applicable), compensation for becoming unemployed (applicable only in specific cases), etc.

Dismissal formalities

The termination of an employment contract especially when initiated by the employer, is quite formal and requires a lot of paperwork. In addition, the court practice is employee protective.

Irrespective of the reason, the dismissal must be given in writing. Also, the employer is always obliged to issue an order stating the reason of dismissal. The reasons for dismissal must be clearly identified and stated in the documents. In certain cases (e.g. staff reduction) the employer is required to perform preliminary paperwork.

Upon staff reduction and in some other cases, the employer is obliged to perform a preliminary selection between employees. Absence of selection causes inconformity with the law and thus invalidity of the dismissal.

The employer has specific obligations in the event of collective dismissals (e.g. to provide certain information to the representatives of the employees and the Employment Agency).

Generally, if any of the formalities for dismissal of an employee are not observed, the dismissal may be claimed null and void and, in case of a lawsuit – revoked by the court.

Special dismissal protection

Some employees enjoy a special protection against dismissal. The protection applies in exhaustively determined cases, such as staff reduction, termination due to decrease of the intensity of the work of the company, dismissal due to breach of working discipline, etc.

The protected categories of employees are, amongst others, the following: mothers of children less than 3 years old, employees with disabilities who work under special working conditions, employees suffering specific illnesses (exhaustively listed by law), each employee while using any type of leave, employee representatives, trade union representatives, etc.

The protection could consist of: prior consent of the labour authorities required, valid dismissal only in specific cases (e.g. dissolution of the whole company), etc.

Legal means of employees

The employees are entitled to challenge the dismissal before court. This right could be performed within two months following the dismissal. Basically, the employee may claim recognition of the dismissal as unlawful and its cancelation or, alternatively, recognition of the dismissal as unlawful and reinstatement of the employee to the previous job position. Monetary compensations related to the illegal dismissal may be claimed within three years. When challenging the dismissal, the employee is not required to pay any court fees.

Specific rules for executives

The relations between the managing directors and the company are regulated by a Management Agreement. The Management Agreement is not governed by the employment legislation. The managing director can be dismissed by means of a resolution of the General Meeting of the Shareholders/ Sole Owner of the share capital of the company. The managing agreement may envisage specific rules for termination, such as the notice period of termination, compensation in case of terminations, etc.

Collective dismissals

"Collective dismissals" are dismissals on one or more grounds carried out at the discretion of the employer and for reasons unrelated to the particular employee, when the number of dismissals is:

• At least 10 in undertakings where the list of employees in the month preceding the collective dismissals is more than 20 and less than 100 employees for a period of 30 days;
• At least 10 percent of the number of employees in undertakings where the list of employees in the month preceding the collective dismissals is at least 100 but not more than 300 employees for a period of 30 days;
• At least 30 in undertakings where the list of employees in the month preceding the collective dismissals is at least 300 or more employees for a period of 30 days.

Where during these periods, the employer has dismissed at least five employees, any subsequent termination of employment carried out at the discretion of the employer on other grounds and for reasons unrelated to the employee shall be taken into account in determining the number of dismissals.

The employer is obliged before initiating a collective dismissal, to start consultations with the employees' representatives in a timely manner, but not later than 45 days before their execution, and to make efforts to reach an agreement with them in order to avoid or limit the collective dismissals and mitigate their effects. The order and manner of conducting the consultations shall be determined by the employer and the employees' representatives. In addition to the consultations, the employer is obliged to provide written information to the employees with precisely defined content regarding the planned mass dismissals - the reasons for the planned dismissals, the number of employees who will be fired, etc.

Before the dismissals are made, a notification must also be sent to the relevant division of the Employment Agency for the forthcoming collective dismissal.

COVID-19 measures

There are no specific exceptions for termination of employment due to COVID-19. However, in case an employer wishes to apply for government support due to suspending work of its enterprise or part of it with the purpose of keeping its employees, there must not be a termination of employment contracts on certain grounds for the period during which the government support is requested.

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