Government support for business and workers in Bulgaria

Decree No 55 from 30 March 2020 on determining the conditions for paying compensation to employers in order to preserve the employment relationship with the employees during the state of emergency (the “Decree”) was announced on 1 April 2020, and later slightly amended by Decree No 71 on 16 April 2020. Under the Decree, certain employers are entitled to compensation in the amount of 60% of the gross salaries of the employees for maximum of three months. 

The employers entitled to compensations under the Decree are:

1. Employers who, due to an order issued by a government body, have terminated the work of the whole or part of the enterprise;
2. Employers who, due to orders given at their own discretion because of the state of emergency, have terminated the work of the whole or part of their enterprise or certain employees; and
3. Employers who, based on the state of emergency, have introduced part-time working hours for the entire enterprise or separate unit/s. 

The compensations are paid by the government and more specifically by the National Social Security Institute. They amount to 60% of the gross salaries of the employees and their social security contributions for the period of the application. An employer who has introduced part-time work for the full-time employees and wishes to benefit from compensation, would still need to pay the full salaries to the affected employees and apply for compensation for 60% for the hours not worked.

All employees who are hired on a standard employment agreement are covered if they have been working for the employer since before the state of emergency began and are not simultaneously using unpaid leave, or temporary work incapacity leave, or maternity leave.

Based on their economic activity and revenue, the employers covered are the following:

1. Employers who, based on a government body order, have terminated the work of the whole or part of the enterprise – only employers who fall under one of the following categories: retailers (certain exceptions apply); various types of passenger transportation company; hotels, restaurants and bars; cinemas; travel agencies; places organizing artistic and creative activities, commercial fairs, cultural activities, sports activities; centres for training drivers of vehicles; private preschool education and children centres.
2. Employers who, based on their own orders given because of the state of emergency, have terminated the work of the whole or part of the enterprise or of certain employees – employers within almost every scope of economic activity, if they are able to prove a decrease in sales revenue of not less than 20% in the month preceding the month they submit the application for payment of compensation, compared to the same month of the previous calendar year.
3. Employers who, due to the state of emergency, have introduced part-time working hours for the entire enterprise or separate unit/s – employers within almost every scope of economic activity, if they are able to prove a decrease in sales revenue by not less than 20% in the month preceding the month they submit the application for payment of compensation, compared to the same month of the previous calendar year.

Employers who wish to benefit from the compensation may apply immediately by sending the required documents electronically or on paper to the respective Labour Office Directorate, to the Employment Agency, and to the Ministry of Labour and Social Policy. 

The application includes several documents (templates are provided for most documents on the website of the Employment Agency) such as declaration for compensation; list of employees for whom the employer applies; statement containing details of the employer’s bank account; documents certifying a reduction in the revenue; and order for suspension of work or introduction of part-time working hours.

The application evaluation is conducted by the respective Labour Office Directorate, the Employment Agency, and the National Social Security Institute. The approved employers should receive the compensations about two to three weeks after filing their applications.

To qualify for compensation, generally the employer has to either suspend the work of the enterprise, part of it or individual employees by government order or by its own order due to the state of emergency, or it has to establish part-time work for the entire enterprise or a unit. 

In addition, employers must comply with a few other requirements such as not having tax obligations or social security contributions obligations; not having been declared bankrupt or in bankruptcy or liquidation proceedings; not being subject to a court decision against them for violations of certain provisions of the Bulgarian Labour Code or of the Labour Migration and Labour Mobility Act in the past six months.

Yes, the employees covered by the scheme are protected from some of the possible grounds for dismissal under the Bulgarian Labour Code. Employers are obliged to keep the employees for whose salaries they apply for compensation at work for at least the same period afterwards for which the compensation is paid. Additionally, the employers are not allowed to lay off any employees in the enterprise on the basis of partial closure of the enterprise, staff cuts (downsizing), reduction of the work volume in the company, or suspension of work for more than 15 days. This leaves the employers with very limited grounds for dismissal without violating the requirements for the compensation.