Employee Benefits and Compensation in Bulgaria: A Comprehensive Guide

Employee benefits are the perks employers offer to attract and retain a talented workforce. These benefits are provided on top of the employee’s salaries and contribute to employee productivity and engagement. Moreover, these benefits and compensation offered to employees are either monetary or non-monetary according to the employees’ requirements and the company’s financial plan.

An economical benefits and compensation package in Bulgaria helps you to reinforce workplace morale, create a reputation as a trustworthy employer, and attract more talented applicants to occupy available job positions in your company.

The employees in Bulgaria acquire mandatory protections as settled in their employment contracts. These benefits entail statutory minimum wage, working hour limits, overtime compensation, paid leave, annual leave, maternity and paternity leave, severance fund, sickness benefits, retirement benefits, pension insurance, death benefits, and more.

Employers must conduct extensive market research before selecting employee benefits in Bulgaria. The following guide simplifies the setup procedure of compensation and benefits policy in Bulgaria and upkeeps the employees’ encouragement to let them work more efficiently.

Compensation Laws in Bulgaria

Various compensation laws in Bulgaria oversee employee benefits in the country. They are discussed below:

• Bulgarian labor law (BgLL):  It governs the legal relationship between individual workers and employees and between representative bodies and coalitions in Bulgaria. It also covers non-EU nationals, except if a particular Bulgarian law or valid international treaty states otherwise.
• The Bulgarian Labour Code: It applies to all employment contracts in Bulgaria unless otherwise controlled by another international treaty or law.
• The Civil Contract: A contract sui generis: Primarily, it is applied to prevent the restrictions and the protection offered by the labor law. It simplifies termination and shortens contractual terms without protecting particular groups like disabled people, mothers, etc.

How to Design an Employee Benefits Program for Employees in Bulgaria?

It is imperative to consider a few vital considerations before designing a compensation package in Bulgaria, which are as follows:

Step 1: Specify your business objectives and budget

Before framing the compensation policy, specify the objectives you expect from the compensation structure in Bulgaria. 

Assess employment contracts or collective bargaining agreements to validate employment relationships and the rights of employees’ benefits. Besides, you must assess your company’s budget to invest in employee benefits. Before framing the benefits policy in Bulgaria, consider the company’s capacity, commercial environment, and economic sector.

Step 2: Interpret employee requirements

To learn the employees’ needs and expectations, conduct interviews and use cases, or send them questionnaires. Subsequently, the employees can confidently share their opinions.

Conduct detailed research to study the existing industry standards and the benefits your competitors provide to their employees to attract talented employees. The relevant findings and internal survey will help you design an optimal compensation and benefits policy in Bulgaria that follows industry standards and market competition.

Furthermore, the internal survey specifies the areas that demand improvements and implies necessary changes to be employed in the compensation and benefits policy in Bulgaria. You can exclude certain redundant benefits and limit company costs at this stage.

Step 3: Map out your benefits plan

After discerning the employees’ needs and expectations, you should execute a gap analysis to evaluate the existing scenario of the benefits plan. Create a flexible benefits plan that helps uphold the dynamic business nature. The flexible benefits structure facilitates the employees to choose the necessary benefits easily. Moreover, it instructs the employer to discern maximum benefits from it.

You must incorporate employee contributions, organizational budgets, and outsourcing requirements when creating a benefits plan for worker’s compensation in Bulgaria.

Step 4: Disclose the benefits to the stakeholders and gain feedback

Share the benefits plan’s advantages with all the employees and stakeholders. They will provide feedback after you present the plan’s draft. This step helps you implement a plan advantageous to the workforce and the whole organization.

If you come across any valuable feedback, you can integrate them into your compensation policy. But if the feedback identifies any benefit as redundant, you can update the employee benefits in Bulgaria.

Step 5: Regularly investigate the plan

Companies in Bulgaria aim to provide optimum employee benefits to augment their competitive advantage in the market. Thus, you must regularly investigate the compensation structure in Bulgaria. This approach also helps you understand the benefits plan’s sustainability and efficiency.

You should also check for errors before employing the employee compensation policy in Bulgaria. Make sure to profoundly evaluate all the benefit plan’s elements and implement them afterward. 

Types of Guaranteed Benefits in Bulgaria

Employers provide various types of employee benefits in Bulgaria to their employees. Many of these benefits are mandatory and are discussed below:

Minimum wage

• The minimum monthly wage in Bulgaria is 780 BGN.

Working hours and overtime

• The typical working hours in Bulgaria are 8 hours a day and 40 hours per week.
• The work that exceeds the standard working hours is paid as overtime. The maximum overtime limits in Bulgaria are 3 hours per day (through two consecutive days), 6 hours a week, 30 hours a month, and 150 hours per year. Collective agreements or employment contracts control it.  

The table below indicates the employees’ compensation for their overtime working hours.

Paid leaves

• A minimum of 20 days of paid leave is offered to employees who have completed at least four months.

Public holidays

• The public holidays in Bulgaria are identical for all employees irrespective of their industry and sector. 
• The employees in Bulgaria receive 18 public holidays per year.  
• A few additional holidays may apply based on the region. 

The below table highlights the list of public holidays in Bulgaria.

Note: An employee working on a public holiday is paid 200% of the regular wages.

Sick leaves

• All employees in Bulgaria are entitled to sick leave for up to 18 months.
• The employer pays for the first three days of sickness at 70% of the regular salary. Subsequently, the National Social Security Fund funds the payments until the employee has served at least six months of employment or social security payments.
• It compensates the sick leaves at 80% of the standard salary rate or 90% for work-related sick leave or injury.
• The employees should submit a medical certificate within 48 hours of the commencement of the sickness.

Maternity leaves

• Female employees in Bulgaria are entitled to 410 days of paid maternity leave.
• Generally, maternity leave starts 45 days before the due date.
• NHIF (Bulgarian National Health Insurance Fund) pays maternity benefits to employees at 90% of their standard salary rate.

Paternity leaves

• Male employees who have completed at least one year of employment in Bulgaria are entitled to 15 days of mandatory paid paternity leave.
• It is compensated at 90% of the employee’s salary rate from the child’s birth.
• After the child is six months old, any residual maternity leave can be shared between the father and the mother with the mother’s consent.

Parental leave

• The parental leave of a minimum of six months is provided upon the employer’s permission. 
• It lasts until the child is two years old. 
• It can be shared among the father, the mother, or grandparents. 

Severance pay

• The minimum severance is four months’ gross salary (differs depending on the termination type).
• The employer must compensate for it within seven days after the termination.

Unemployment pay

• Employers in Bulgaria should pay 60% of the average security income for the past 24 months.
• It is available for a period ranging from 4 to 12 months based on the contribution period.

 Death benefits

• The employers provide a one-time cash benefit equivalent to BGN 540 in the event of the employee’s death.
• It also provides a survivor’s pension based on the security income of the deceased and the number of heirs. 

Retirement

• The employers provide 5% of supplementary mandatory pension security pay.

Disability Pension

• The employers provide a disability pension if the employee has 50% or more permanent disability owing to occupational disease, general disease, or work-related accident.

Compulsory health insurance (HIA)

• The employees in Bulgaria benefit from 8% of compulsory health insurance, which lets them access a basic package of medical services.
• The employers should provide 4.8%, and the remaining 3.2% is payable by the insured employee.

Mandatory pension insurance

• Both male and female employees in Bulgaria are entitled to mandatory pension insurance, whose amount is stated in the State Social Insurance Budget Act. 
• The age requirement for this benefit is 60 years and ten months for female employees and 63 years and ten months for male employees.

Employee Benefits for Expatriates

Foreign employees in Bulgaria can obtain the same benefits as local employees. During their employment in Bulgaria, the ex-pats can get benefits like health care insurance, dental care, child home care allowance, family allowance, unemployment benefits, meal allowance, and travel allowances for their employment service in Bulgaria. 

The ex-pats frequently moved abroad to achieve their short-term projects. Thus, businesses employ an easy, cost-effective alternative to hiring and compensating ex-pats through local subsidiaries.

How are Employee Benefits Taxed in Bulgaria?

In Bulgaria, employees must pay income tax at a 10% rate. Tax residents must pay for their worldwide income, whereas non-residents only pay for their income from Bulgaria. Self-employed individuals should pay the contributions for disability, pension, and general sickness. 

All employees and employers in Bulgaria must make the following contributions from their monthly salary:

Restrictions for Bulgaria Benefits and Compensation

The majority of benefits offered to employees in Bulgaria are taxable. So, you should be familiar with the benefits’ monetary worth to calculate the tax amount the employer owes precisely. An employer should also certify that all tax payments are made in a timely manner, disbursed, and conveyed to the respective authorities.

Ascertain that your business is integrated in Bulgaria and legally operates in the country before creating a benefits plan for employees. Also, companies should pay the minimum remunerations to the employees based on their sectors. The benefits and compensation package in Bulgaria should obey all the labor laws structured by the government.

The working time is restricted to 6 or 7 hours per day for employees working in particular conditions and under inevitable life/health risks. The Council of Ministers determines the condition at which a reduced working time validates.

The age restriction for a registered company director or manager in Bulgaria is at least 18 years. An employee can enter another employment relationship, except if the employment contract offers otherwise. Restrictions levied on an employee’s future employment are invalid.

Supplemental Benefits for Employees in Bulgaria

The following section describes some additional benefits offered to employees in Bulgaria.

• Supplementary health insurance: Several companies in Bulgaria provide additional health insurance and access to medical facilities and medical specialist examinations to their employees. Licensed health insurance companies maintain this insurance.
• Supplementary voluntary pension insurance: Several big companies provide retirement plans to their employees through a licensed Insurance company. Usually, additional pension insurance contributions are shared among the employee and the employer. The average rate is 2% of the monthly salary.
• Supplementary medical insurance: It covers outpatient care with instant access to specialized medical professionals and highly-specialized and costly tests without visiting the general practitioner.
• Accident and occupational disease insurance: Certain companies pay this contribution, whose amount is a percentage of the insured employee’s monthly insurance income.
• Work-related accident insurance: The companies provide this benefit with an individual sum insured for an employee with a minimum of seven gross annual salaries.
• Flexibility: Certain IT/tech/outsourcing companies provide flexible working hours and part or full-time WFH.
• Training budget: Many companies keep their employees’ professional skills updated and facilitate qualification training.
• Relocation: Some companies bear relocation and/or initial expenses in the new location.

How Multiplier Can Help with Benefits Management in Bulgaria

Setting up a business and recruiting a talented workforce must conform to the local laws and regulations before preparing employment contracts and confirming employee benefits. You can streamline this procedure by contacting a global PEO platform like Multiplier.

Multiplier promotes compliance with Bulgaria’s labor rules. We also help you with hiring skilled employees. Our expert staff can help you effectively manage the workforce without creating a subsidiary in the country. Henceforth, you can limit your employment expenditures and inspect new markets.