18.92% - 19.62%
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With employment costs that are among the cheapest in Europe, Bulgaria is a very attractive country for international companies looking to grow their remote teams. Especially when it comes to IT outsourcing, Bulgaria ranks among the best destinations in the world thanks to its long-standing tradition in software development. The overall high proficiency in English is just an additional asset of the country’s well-educated workforce.
Bulgarian law mandates employment contracts to be in writing, regardless of whether they are temporary – duration ranging from one up to three years – or indefinite. Otherwise, they are not valid. As a minimum, employment law stipulates that contracts contain at least the following basic information:
Identification of both parties
Date of conclusion, date of commencement (and employment duration for temporary contracts)
Place(s) of work
Job title, duties and responsibilities
Basic salary as well as other compensation or benefits
Notice periods for employment termination
When concluding an employment contract in which at least one of the parties is subject to international law, the parties can agree on basing the new contract under a foreign legislation.
Probation periods in Bulgaria can extend to up to six months.
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Employees in Bulgaria usually work 40 hours per week, i.e. eight hours over a five-day working week. As Bulgarian law provides for flexible working arrangements, it is up to the employer to decide how an employee’s daily working time should be distributed. However, the following regulations on breaks and rest periods must be respected:
employees must have a break of at least 30 minutes in order to eat
as a minimum, employees should have twelve hours of rest per day
weekly rest periods must not be shorter than 48 hours – with Sunday being a mandatory rest day in most cases
In no case must weekly working time – as stated in the employment contract – exceed 48 hours.
Although Bulgarian labour law generally prohibits overtime work, there are some exceptional cases in which overtime work may be permitted. However, even in these cases, the following regulations apply:
yearly maximum: 150 hours
monthly maximum: 30 hours
weekly maximum: six hours (for day work)
maximum over two consecutive days: three hours
maximum daily working time: ten hours
Unless stated otherwise in the employment contract, overtime work on normal working days is to be compensated at a rate of 150% – at least.
The national minimum wage in Bulgaria is currently (February 2023) set at BGN 780 per month. The hourly minimum wage stands at BGN 4.72. In specific industries, collective agreements may provide for a higher minimum pay rate.
In case of sickness-related absence from work, employees are entitled to sick pay which amounts to 80% (for common diseases) or 90% (for employment-related injuries and diseases) of the employee’s usual salary. During the first three days, sickness benefits are paid by the employer at a rate of 70%. Sick leave exceeding three days is covered by Social Security. However, sick pay is only issued on presentation of a medical certificate and for a period of up to 18 months.
Bulgarian law does not mandate employers to pay their employees an annual bonus.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for Bulgaria.
Employees and employers in Bulgaria are subject to the following tax and social security contribution rates (rates valid for 2023):
10% corporate tax rate
20% VAT (standard rate)
individual income tax rate:
10% flat tax rate on all incomes
up to 19.62%
18.92% to 19.62% of employee’s gross salary including:
4.8% health insurance
14.12% – 14.82% for general social security
13.78% of employee’s gross salary including:
3.2% health insurance
10.58% for general social security
Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).
According to Bulgarian law, employees are entitled to a minimum of 20 days of paid annual leave as soon as they have completed four months of employment. However, additional days off can be negotiated. Unused annual leave can be carried over into the next year but must then be used by June.
In addition, the country observes up to 14 public holidays. Employees who are required to work on a public holiday are to be paid at a double rate. As a compensation for public holidays falling on a rest day, i.e. Saturday or Sunday – except for Easter – employees receive an extra day off which is usually the first business day following that public holiday.
For each child, female employees can claim 410 days of maternity leave which can start up to 45 days prior to the expected due date. During this leave, the employee receives maternity benefits from the national Health Insurance Fund which amount to 90% of her normal salary.
Fathers who are married to or live together with the child’s mother are entitled to 15 days of paid paternity leave, usually beginning with the day the mother leaves hospital. Paternity benefits are paid by the national Health Insurance Fund and amount to 90% of usual wages.
In addition to the standard paternity leave allowance, fathers have the possibility to use any of the mother’s unused maternity leave days as parental leave – only applicable if the mother consents and if the child is already older than six months.
Mothers who want to continue caring for their baby after maternity leave is over are allowed to take further parental leave until the child is two years old. Parental leave benefits are paid by Social Security and equal the national minimum wage.
Bulgaria recently introduced a new parental leave entitlement for fathers. Under the new regulations, fathers who haven't used any parental leave transferred from the child's mother are entitled to additional leave of up to two months. During this time, the father receives a statutory allowance.
In addition, employees in Bulgaria can claim paid leave in one of the following cases:
death of a family member
25 days for exam preparation – applicable to those employees enrolled in a secondary – or higher – education course
In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, the Bulgarian Labour Code provides for the following reasons for employee dismissal (non-exhaustive list):
employee’s underperformance or incapability to fulfill his or her duties
reasons related to business situation, e.g. closure, redundancy
breach of employment contract resulting in disciplinary dismissal
In those cases where prior notice is required, the notice period should not be shorter than 30 days – three months for fixed-term contracts. However, payment in lieu of notice is possible. Pregnant women, mothers of children under three and those employees on leave or in rehabilitation are generally protected from dismissal.
Although there is no legal requirement for severance payments, those employees who are terminated due to redundancy can claim redundancy pay equaling one month’s salary.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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