When providing his or her labour, the worker enters into a
legal employment relationship with the employer. This relationship originates upon the conclusion of an employment contract the subject matter of which is the worker/employee’s expending labour, applying their work force to the means of production in performing work-related duties under the contract. This type of employment relationship is governed by the statutory requirements of the Code of Labour. The Labour Code defines two main elements of the employment contract – the workplace and the working hours. A standard five-day workweek consists of up to 40 hours, approximately 8 hours a day. Extension of working hours, introduction of shorter, part-time or flexible working hours are possible only in the cases as stipulated by the Labour Code. The Labour Code strictly requires workers (employees) to comply with the work discipline and the internal work regulations, and if in violation – they are held responsible and are sanctioned pursuant to the disciplinary sanctions provided for by the Labour Code. The worker or employee is subordinate to and dependent on the employer. The employer on his/her behalf is obligated to provide a healthy and safe workplace so that any danger for the life and health of the worker/employee is excluded and limited. The socioeconomic and cultural service of the workers and employees is financed with the means of the employer and from other sources. The time spent in the employment relationship and the time spent working as a civil servant is considered years of service. Employment contracts are entered into for an indefinite or a fixed period of time. The fixed term employment contract cannot be concluded for more than 3 years. Every worker/employee has the right to an annual paid leave for not less than 20 workdays. In case of termination of an employment relationship, the law provides for the right to compensation for unused annual paid leave, and also other compensations upon contract termination without prior notice, etc.
The obligation for withholding and paying social security contributions (and the Tax prepayment under the Natural Persons Income Taxes Act) lies with the employer. The minimum social security income is determined annually by the Public Social Insurance Budget Act concerning the principal economic activities and professional qualification groups. The maximum social security income is also determined annually by the Public Social Insurance Budget Act - at present it amounts to BGN 2,000. The social security contribution for the employment relationship is due to the Pension Fund, the Occupational Injury and Disease Fund, the General Disease and Maternity Fund, and to the Unemployment Fund. Aforesaid social security contributions together with the health insurance contributions total 30,70% of which 17,80% are borne by the employer and the remaining 11,90% by the employee/worker.
A special category is the Management Contract which is not governed by the Labour Code because by its nature this is not an employment contract, although the two types of contract are treated as being equivalent by the tax and insurance legislation.
rnA Contract for Work Done
rnA Contract for Work Done is entered into by two parties, which in contrast to the Employment Contract is not for expending labour at a particular place and time, but for performing a certain task or job providing to the employer the agreed results. Upon delivery and acceptance of these results, as well as the payment of the remuneration, the contract is terminated. The legal relationship under the Contract for Work Done is regulated by the Obligations and Contracts Act. The practice has imposed the Contract for Manufacture as the preferred contract of this type.
The objective of the Contract for Manufacture is getting specific work results. The two relevant parties to the Contract for Manufacture are the Assignor and the Executor, the Executor being independent from the party ordering the work assignment. Under the Contract for Manufacture the Executor is obligated at his own risk to create a product according to the order of the other party, who should in turn pay remuneration for it. Unless negotiated otherwise, the Executor is obliged to produce or provide the ordered product or service with his/her own funds. The work done for a Contract for Manufacture in general should not be connected to the working hours and place, but has to only agree particular results. The independent worker should determine his/her own work schedule – when to work and rest, unless it is otherwise stipulated in the contract.
The obligation for payment of the social security under Contracts for Work Done is at the expense of the person paying the income, except when remuneration is paid to self-employed persons. In this case these renumerations are not taxed and the person paying the income does not pay social security. The social security income is determined by deducting 25% from the remuneration as tax-free expenses and if this amount exceeds the minimal work salary for the country, then the respective contributions are only due to the Pension Fund, the Additional Mandatory Pension Insurance, Health Insurance and the Tax Prepayment under the Personal Income Tax Act. Providing the received amount does not exceed the minimal work salary for the country contributions will be due for Health Insurance and Tax Prepayment under the
Personal Income Tax Act. Since contributions are not due for the Common Disease and Maternity Fund and the Unemployment Fund, the employed under the Contract for Work Done have no rights for illness, maternity or unemployment benefits. The total of the social security and health insurance under Contracts for Work Done sum up to 26%, where 14,80% is paid by the employer and 11,20% by the employed person.