According to Art. 67, para. 1 of the Bulgarian Labour Code, the employment contract may be concluded for an indefinite period or as a fixed-term employment contract. Art. 68 of the Labour Code contains an exhaustive list of the types of fixed-term employment contracts and the conditions, under which such an agreement can be concluded, namely:
- for a fixed period not longer than 3 years, if not otherwise provided by law or an act of the Council of Ministers;
- until a specific job is completed;
- when hiring a substitute for an employee who is absent from work;
- where the employment is a result of a competitive bid - for the time until it is taken on the basis of a competitive bid;
- for a fixed mandate when such is established for the respective body;
- in cases of long-term secondments to fill a position in a foreign representation.
The above scenarios are examined below.
1. Employment contract for a fixed period
Pursuant to Art. 68, para. 3 of the Labour Code, a fixed-term employment contract under Art. 68, para. 1 pt. 1 of the Labour Code shall be concluded in Bulgaria for temporary, seasonal or short-term jobs and activities, as well as with new employees and workers by companies who are in a procedure for the declaring of insolvency or in a liquidation procedure. Temporary work should be understood as work of random or occasional nature and one that has only a support function to the main business of the employer. Seasonal work, in turn, is characterized by greater stability than temporary work and depends on the season, the various atmospheric and temperature conditions. Short-term work generally occurs due to unforeseen circumstances such as damage arising from natural disasters which should be remedied as soon as possible, in order for a company to be able to continue its activities unimpeded.
The second situation, in which it is possible to conclude fixed-term employment contracts, is with companies in Bulgaria that are in proceedings for bankruptcy or liquidation and are declared insolvent or liquidated. Newly hired employees on fixed-term employment contracts on that basis in fact support the activities of the insolvency administrator, respectively liquidator. Hence the time-sensitive nature of their activities, since these procedures only last for a certain period of time.
According to Art. 68, para. 4 of the Labour Code, exceptionally a fixed-term employment contract under Art. 68, para. 1 pt. 1 of the Labour Code may be concluded for works and activities that are not temporary, seasonal or short-term in nature, but for at least 1 year. The minimum period can be shorter, but only at the express written request of the employee or worker. When a fixed-term employment contract under Art. 68, para. 1, item 1 of the Labour Code was concluded for a year or less than a year (but not more than three years) at the written request of the employee, such an employment contract with the same worker can be concluded only one more time and for period of at least one year, even if the worker has requested in writing a shorter period. This legal decision is adopted by the legislature in view of the fact that workers have no interest to conclude short-term contracts since the law provides for the possibility, under certain conditions, that an employee or worker can terminate an employment contract of unlimited duration with one month's notice.
According to para. 8 of the Additional and transitional provisions of the Labour Code, "exceptions" within the meaning of Art. 68, para. 4 of the Labour Code occur in specific economic, financial, technological, marketing and other objective reasons of similar nature. Objective reasons here relate to the production activities of the employer - for example due to the resultant favorable conjuncture, an entity receives more orders than originally placed, requiring the appointment of a new workforce in order to meet the demand of consumers. In the given example, after a certain period the need for additional manpower will no longer exist. It is required by law that these reasons be available at the time of conclusion of the contract, to be pointed out and to be made clear that they are the reason for its term. According to settled case-law of the SCC in connection with employment contracts under Art. 68, para. 4 of the Labour Code, in order to be lawful, they must meet the cumulative conditions. This has also been specifically established by the legislature in Art. 68, para. 5 of the Labour Code, under which an employment contract, which was concluded in violation of Art. 68, para. 3 and 4 of the Labour Code is considered as a contract of unlimited duration.
2. Employment contract concluded for the completion of a specific job
In addition, Art. 68, para. 1, pt. 2 of the Bulgarian Labour Code provides the opportunity to enter into a fixed-term employment contract to complete a specific job. In order to be lawful, this type of contract should explicitly state and describe the implementation or completion of what work is assigned to the employee. The duration of such contracts is not bound by a mandatory set maximum, so that the work under this contract may continue for a period longer than three years, if this is required to complete the work for which the person was hired.
3. Employment contract concluded for substitution
Widely used in practice is the fixed-term employment contract for substitution, referred to in Art. 68, para. 1 pt. 3 of the Labour Code. The substituted employee may be absent for various reasons, including leave due to temporary disability, maternity leave, unpaid leave, etc. In this case the employer, given that the labor obligations should be completed, may appoint another person in the place of the absentee to occupy their position for the duration of the substitution. The conclusion of such contracts is permitted both when the absentee was appointed under a fixed-term contract and a contract of unlimited duration. The substitute takes over all of the employment duties and powers of the holder of the position with regard to salary, leave, disregarding those that are driven entirely by the personal qualities of substituted employee (e.g. additional salary, depending on the acquired work experience). Fixed-term employment contracts for substitution are terminated pursuant to Art. 325, para. 1, pt. 5 of the Labour Code, namely without notice with the return of the original holder of the position. In Decision № 1547 of 28.09.2006 of the SCC regarding civil case № 3239/2003, GK, III division, Rapporteur Judge Tanya Mitova stipulated that a fixed-term contract for substitution may be terminated without notice not only in cases where the holder of the position resumes their employment, but also if their (the holder’s) employment contract is terminated.
4. Fixed-term employment contract during a competitive bid
Fixed-term employment contracts which are concluded during a competitive bid are provided for in Art. 68, para. 1 pt. 4 of the Labour Code. In order to fill the position, a competition is held as provided by law and subject to the relevant legal procedures. When a position needs to be fulfilled, it is allowed to hire a person under a fixed-term employment contract until the competition is held. The employment relationship with the person who ranked first arises from the day on which they received a notice of the results.
5. Fixed-term employment contract for a fixed mandate
Further, in Art. 68, para. 1, p. 5 of the Labour Code, Bulgarian legislation also provides for the conclusion of a fixed-term employment contract for a fixed mandate, under the following scenario: contracts on that basis are concluded with employees who carry out support activities for a mandate body for the duration of their mandate. Mandate bodies are, for instance, the president, mayor, National Assembly.
6. Fixed-term employment contract for long-term secondments
The last type of employment contract is indicated in Art. 68, para. 6 of the Labour Code. It covers cases where an employee on diplomatic service at the Ministry of Foreign Affairs or another agency is seconded for a longer period of time.
Conversion of fixed-term employment contracts to employment contracts of indefinite duration
In Art. 69, para. 1 of the Labour Code, it is stipulated that a fixed-term employment contract, i.e. one under Art. 68, para. 1 pt. 1 of the Labour Code, shall become a contract of unlimited duration, if the worker / employee continues to work after the expiry of the agreed contract for a period of 5 days or more without a written objection by the employer and where the position is vacant. The prerequisites for this conversion are given cumulatively, i.e. all of them need to be fulfilled, namely: an expired employment contract under Art. 68, para. 1 pt. 1 of the Labour Code, vacant position, an employee that continues to perform their obligations under the said contract after its term has expired and the employer does not object to it in writing.
Fixed-term employment contracts that were signed for substitution purposes can also become employment contracts of unlimited duration, if the legal requirements under Art. 69, para. 2 of the Labour Code are met, namely, the above prerequisites of Art. 69, para. 1 of the Labour Code and the termination of the employment contract with substituted worker / employee during the substitution period. What kind of contract will an employment contract for substitution under Art. 69, para. 2 of the Labour Code become depends on what the terminated contract concluded with the holder of the position was - if it was one of unlimited duration, then the fixed-term employment contract will also become one of unlimited duration; if it was fixed-term of one of the relevant types - then the new employment contract will fit within its framework.
Termination of fixed-term employment contracts
With regard to the termination of fixed-term employment contracts, it should be borne in mind that in principle they should be terminated after the expiration of the period for which they were concluded. Moreover, in Art. 327 pt. 7 of the Bulgarian Labour Code, the legislator has foreseen the possibility of termination by the employee without notice where they work under an employment contract under Art. 68, para. 1 pt. 1 or pt. 3 and move to another job for an indefinite period of time, i.e. they entered into an employment contract of indefinite duration, whose implementation will start after the termination of the fixed-term employment contract. Unilateral termination in this case is based on a written statement to the employer under the fixed-term employment contracts.
Another option to terminate the fixed-term employment contract is covered by Art. 326, para. 2 of the Labour Code, which provides that the period of notice for a fixed-term employment contract is 3 months but not more than the remainder of the contractual term. Art. 220 of the Labour Code should also be considered, which stipulates that where the notice period is not complied with, the party which was responsible shall be liable to the other party for a compensation equal to the gross salary of the employee / worker for the notice period. Of course, it is always possible to terminate a fixed-term employment contract pursuant to Art. 325, para. 1 pt. 1 of the Labour Code, namely by mutual consent.