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Workforce Flexibility and Government Incentives in times of Covid-19 - Bulgaria

Short-Term Work State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

On 23 March 2020 a new State of Emergency Act was promulgated.

There are provisions in it regarding the opportunity in the event of a state of emergency, for the employer to assign homeworking and distant work unilaterally by issuing an order. The previous provisions in the Labor code stipulated that such transition to homeworking or distant work is negotiated by signing a bilateral agreement between the employer and the employee.

According to the new act the employer also has the right to introduce part-time work for the whole or part of the emergency period to the employees working full time.

Under the standard rules an employer may introduce part time work in case of decrease in the workload for a total period of up to 3 months.

In any case the working time may not be reduced by more than 50% compared to the standard working hours.

Under the new act the employer is able to grant up to one-half of the annual paid leave to their employees without their consent. In addition, in case of an employer’s order or an order of a state body that terminates the work of the whole enterprise, part of the enterprise or individual employees due to the state of emergency, the employer has the right to grant all the annual paid leave to the employees (or some of them) without their consent.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

1) On 30 March 2020 the government adopted a decree for the provision of support of the local business in relation to the COVID – 19 crisis. The decree was amended on 21 April 2020.

Under this program the government will cover up to 60% from the insurance income of the employees based on the request of the employer and 60% of the part of the social security contributions due by the employer. The remaining 40% of the employees’ remunerations shall be paid by the employer. The measures will apply in respect of employees whose work has been suspended. In case of part time work the measures will be applied proportionally in respect of the part of the non-working hours.

The support will be available for:

  • Companies from sectors which were affected directly from the crisis. Such companies include retail, restaurants, tourism and are exhaustively listed in the decree of the Council of Ministers.
  • Any other company whose revenues have decreased with at least 20%. The reference period for the comparison is the same month of 2019. The company may apply for funding of the remuneration of all or a part of its employees.

Certain sectors are excluded from this option. They include sectors such agriculture, financial and insurance service, education, healthcare etc.

The measures requires the employer to pay the full remuneration to the employees, not to terminate any employees due to reduced workload, headcount reductions and closure of part of the enterprise.

The employer is entitled to request state support in respect to selected employees. Such employees may not be dismissed for a period equal to the period of support.

2) The newly adopted Emergency act also introduced extension of the deadline for annual corporate declarations submission and corporate tax and expense tax payment with one month (until 30 June 2020).

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

For the program under p.1 in the previous answer (Program 60/40), companies have the right to apply for it if they:

  • are local natural or legal persons, as well as foreign legal entities, which carry on business in Bulgaria;
  • have no tax and social security contributions obligations which have become overdue;
  • are not insolvent/not in liquidation procedure;
  •  retain the employees for whom they have been compensated for a period not less than the period for which the compensations have been paid (up to 3 months);
  • do not terminate employment contracts of employees on specific grounds of the Labor Code during the period for which they are compensated (for details see above);
  • do not have a penal decree or court decision under certain provisions of the Labor Code and the Labor Migration and Labor Mobility Act during the period of 6 months prior to the issuance of the termination of work order.
  • are not a company experiencing difficulties as a result of the epidemic.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

For the application on the Program 60/40 the procedure is the following:

  • Application and the required documents to it shall be submitted to the Labor Office Directorate on the territory of which is the workplace the employees. The documents may be submitted in the office of the Directorate, electronically or by registered mail.
  • The application shall include:

    • Declaration on employment retention, Declaration containing details of the employer 's payment account and Declaration of reduction in revenues;
    • List of employees for which the application for compensation is submitted
    • A certified copy of the Order of the employer for termination of work or for the introduction of part-time work;
    • For employers applying for payment of compensation claiming reduction in the revenues - documents certifying a decrease in sales revenue of not less than 20% in the month preceding the month of filing for compensation compared to the same month of the previous year. For companies established after 1 March 2019 the average earnings for January and February 2020 is taken.
  • A commission in the Labor Office Directorate reviews and assesses the documents within 7 working days from the application.
  • The Commission informs the employer on the status of the application – accepted or denied within 2 working days from the decision.
  • Every day, but no later than 6 working days after receiving the documents from the employer, the Labor Office Directorate shall electronically send to the Employment Agency a list of employers who meet the criteria for payment of compensation, the minutes of the Commission and for each employer a list of employees and a statement of payment account.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 23 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.