Employing foreign citizens
Under the Foreign Nationals Act, foreign citizens with permanent residence in Bulgaria are allowed to work under the same conditions, which are valid for Bulgarian nationals.
The main legal documents arranging the employment of foreign citizens in Bulgaria are the following:
- Foreign Nationals in the Republic of Bulgaria Act;
- Employment Promotion Act;
- Regulation on terms and conditions for issuance, denial and suspension of work permits of foreign nationals in the Republic of Bulgaria;
- Regulation on terms and conditions for acceptance of detached foreign nationals in the Republic of Bulgaria in the framework of provision of services.
Foreign citizens have the right of employment on the territory of Republic of Bulgaria if:
- Are hired by employer in the accordance with the Labour Codex
- Are commissioned for a particular term by a foreign employer within the framework of offering services on Republic of Bulgaria territory
- Wish to be self-employed Employment could be performed only after the issue of a Work Permit by the National Employment Agency.
Other conditions for foreign persons Foreign persons shall be secured according to the regulations for Bulgarian citizens. The insurance conditions should be settled in the employment contract. Foreign persons registered as exercising free lance profession and/or craft activity or working as sole traders, owners or partners in commercial companies are obligatory insured for disability due to general decease, for old age and death. The amount of the insurance contribution is 29% and is paid entirely by the insured person. The above mentioned persons on their choice can secure for all social risks without labor accident and professional decease and then the amount of the insurance installment is 32 %. Disputes under contract with foreigners may be handled either by Bulgarian or other court, as agreed. The labor law is well-organized and quite comprehensive for foreigners so there could be no problems in the legal aspect of employment relations.
The full remuneration and salary structure is set up according to the Labor code in Bulgaria. The total cost of employment consists of the basic salary plus the social security payments and a number of other smaller taxes. Salaries in the private sector are usually higher than in the State sector. It is not uncommon for workers and managers in the private sector to be paid a higher salary than those of many senior government officials. There is a tendency for new companies coming to Bulgaria to pay what they consider a fair salary, lower than in their home country, but still higher than is normally found in Bulgaria. This problem is compounded when applicants for jobs state their present salary at a higher level than they actually are. For example they might say their salary is the net figure when in reality it is the gross or they might include overtime and bonuses as part of the basic salary. It is difficult for a new investor to be able to judge what the real situation is.
The Bulgarian International Business Association (BIBA) provides, every year, a very detailed set of salary tables for most of the industry sectors including consulting, retailing and manufacturing. These figures are averaged in most cases over 20 or 30 companies and give a good guide to the real salary figures. The BIBA salary survey also gives information on the levels of bonuses, provision of cars and telephones and other components of the full remuneration package. It should be remembered that any additions to the basic salary are taxable. One must be careful that these incentives are not included as part of the basic salary otherwise they will be included in calculating the Social Security taxes. If the incentives are given as extras to the basic salary then they are not counted for Social Security and the employee is liable for taxation. It should be noted that salaries outside Sofia are lower for all positions than those for workers in Sofia.
The most common form of incentives are:
- Free medical service
- Food vouchers
- Transport cards for the buses
- Clothing allowances
- Discount on company’s product
- The more senior managers frequently get a car, telephone or representation allowances and often club membership.