How to Use An Employer of Record in
Bulgaria

If you want to hire in Bulgaria, your company must comply with the Labour Code (Кодекс на труда), which mandates written employment contracts in Bulgarian, sets minimum wage at 933 BGN per month as of 2026, and requires employer social security contributions totalling 17.9% to 18.8% of gross salary paid to the National Social Security Institute (NOI). An Employer of Record in Bulgaria becomes the legal employer of your staff, handles all statutory filings and payroll, and lets you onboard employees in days without establishing a local entity. The EOR removes the risk of non-compliant contracts, late NOI payments (which trigger penalties starting at 1,000 BGN), and misclassification under Bulgarian tax and labour law.

What Is an Employer of Record in Bulgaria?

An Employer of Record in Bulgaria is a third-party organisation that becomes the legal employer of your staff under Bulgarian law, handling all statutory obligations, payroll processing, and compliance with the Labour Code and Social Insurance Code while you retain full operational control over day-to-day work, performance management, and business outcomes.

Under the Labour Code, every employment relationship in Bulgaria requires a written contract in Bulgarian, registration with the National Social Security Institute (NOI) before the first working day, adherence to the statutory 40-hour working week, compliance with mandatory annual leave (minimum 20 working days), and strict termination procedures including notice periods and severance obligations. If a collective labour agreement (колективен трудов договор) covers your sector, those terms override statutory minimums. The EOR ensures your company meets these obligations without needing in-country legal or HR infrastructure.

You retain complete control over your employee's role definition, daily tasks, objectives, and performance reviews. The EOR owns the legal employment relationship, issues the compliant contract, processes payroll in Bulgarian Lev (BGN), withholds income tax (данък върху доходите на физическите лица) and employee social contributions, remits employer social contributions to NOI, and manages termination procedures including statutory notice and severance calculations.

How Does an Employer of Record Work in Bulgaria?

When you engage an EOR in Bulgaria, they take on the role of legal employer for your workforce while you direct the work. The process covers everything from contract drafting under the Labour Code to ongoing payroll and compliance with the National Revenue Agency (NRA) and National Social Security Institute. Here is how it works step by step.

Step 1: Define Employment Terms

You agree on job title, salary, location, working hours, and start date with your chosen candidate. If the role falls under a sector covered by a collective labour agreement (for example, IT, manufacturing, or hospitality), the EOR checks whether those terms set higher minimums than the statutory baseline. You confirm the final offer, and the EOR proceeds with contract preparation.

Step 2: EOR Compliance Review

The EOR verifies that gross salary meets or exceeds the 933 BGN monthly minimum wage set by the Council of Ministers for 2026. They confirm working hours comply with the 40-hour statutory week and classify the role correctly under Bulgarian tax and labour law to avoid misclassification penalties from the National Revenue Agency. The EOR also checks whether the employee qualifies for any special labour protections, such as pregnant workers or parents with young children, which trigger additional compliance requirements.

Step 3: Prepare Employment Contract

The EOR drafts a written employment contract in Bulgarian as required by Article 66 of the Labour Code. The contract must include: parties' names and addresses, place of work, job title and duties, start date, salary and payment frequency, working hours and rest periods, annual leave entitlement, notice period, and probation period if applicable. For indefinite contracts, probation may not exceed six months for managerial roles or three months for other positions. For fixed-term contracts, the Labour Code permits a maximum duration of three years, renewable once, after which the relationship converts to indefinite unless objectively justified. The employee reviews and signs the contract, and the EOR countersigns as the legal employer.

Step 4: Register with Government Authorities

Before the employee's first working day, the EOR must register the employment relationship with the National Social Security Institute using form Образец № 1 (Employment Notification). Bulgarian law requires this filing no later than the day before work commences. Failure to register on time triggers administrative fines starting at 1,000 BGN plus penalties for each day of delay. The EOR also registers the employee with the National Revenue Agency for income tax withholding purposes and, if applicable, with the supplementary pension fund. These registrations establish your employee's eligibility for state healthcare, pensions, unemployment benefits, and occupational injury coverage.

Step 5: Process Monthly Payroll

The EOR runs payroll in Bulgarian Lev on a monthly cycle, which is standard practice in Bulgaria. They calculate gross-to-net pay by withholding personal income tax (PIT) at the flat rate of 10% and employee social security contributions (approximately 13.78% covering pension, unemployment, general sickness and maternity, and supplementary pension). The EOR remits employer social security contributions (17.9% to 18.8% depending on occupational risk category) to NOI and withheld income tax to the National Revenue Agency by the 25th of the following month. The employee receives a payslip detailing all deductions and net pay, and funds are transferred to their Bulgarian bank account.

Step 6: Maintain Ongoing Compliance

The EOR manages monthly payroll tax and social contribution filings with the National Revenue Agency and National Social Security Institute. They process statutory leave entitlements including 20 working days of paid annual leave (higher under many collective agreements), public holidays (currently 13 per year in Bulgaria), sick leave (paid by the employer for the first three days, then by NOI), and maternity or paternity leave (410 days total, with benefits paid by NOI). The EOR ensures compliance with occupational health and safety obligations under the Health and Safety at Work Act (Закон за здравословни и безопасни условия на труд), maintains employment records for the statutory five-year retention period, and files annual tax declarations. If minimum wage, contribution rates, or Labour Code provisions change, the EOR updates contracts and payroll calculations immediately.

Step 7: Manage Termination Procedures

When employment ends, the EOR follows the termination rules in the Labour Code. Bulgaria requires just cause or mutual agreement for dismissal. For termination by the employer with notice, the statutory minimum notice period is 30 days, but collective agreements or individual contracts often require 60 or 90 days for senior roles. Severance pay is mandatory for certain termination grounds: for redundancy or liquidation, the employee receives one gross monthly salary if employed for at least five years, two months' salary if employed for at least ten years. For fixed-term contracts ending without renewal, no severance is due unless specified in the contract. The EOR calculates final pay including accrued unused leave, processes final tax and social security filings, and deregisters the employee from NOI using form Образец № 1а.

Employment Laws and Compliance an Employer of Record Handles in Bulgaria

When you hire through an EOR in Bulgaria, they assume full responsibility for compliance with Bulgarian employment, tax, and social security law. You avoid the cost and risk of building an in-country HR and legal function.

• Employment Contracts: The EOR issues written contracts in Bulgarian as required by the Labour Code, including all mandatory clauses (Article 66). Non-compliant or missing contracts trigger fines from the General Labour Inspectorate starting at 1,500 BGN per violation. The EOR ensures fixed-term contracts do not exceed three years plus one renewal, and that probation periods comply with statutory maximums.
• Payroll Tax and Income Withholding: The EOR withholds personal income tax at 10% from employee salaries and remits it to the National Revenue Agency by the 25th of the following month. Late or incorrect filings result in penalties of 10% of the unpaid amount plus daily interest. The EOR also files annual personal income tax declarations (form Declaration under Article 50 of the PIT Act) by 30 April each year.
• Social Security and Pension Contributions: The EOR calculates and remits employer contributions (17.9% to 18.8%) and employee contributions (approximately 13.78%) to the National Social Security Institute, covering pension, health insurance, unemployment, sickness and maternity, and supplementary pension funds. Contributions must be paid by the 25th of the following month. Late payment triggers daily interest at the Bulgarian National Bank base rate plus 10 percentage points, and persistent non-compliance can result in criminal liability for company officers.
• Statutory Leave Entitlements: The EOR administers 20 working days of paid annual leave (the Labour Code minimum), 13 public holidays in 2026, paid sick leave (employer pays first three days at 70% of average salary, NOI pays from day four), maternity leave (410 calendar days with benefits paid by NOI at 90% of average insurable income), and paternity leave (15 days, also paid by NOI). Failure to grant statutory leave or pay leave correctly can result in claims before the labour inspectorate and civil courts.
• Termination and Severance: The EOR ensures termination complies with the Labour Code, which prohibits arbitrary dismissal and requires just cause or mutual agreement. For redundancy or liquidation, the EOR calculates severance (one month's gross salary after five years, two months after ten years) and processes final payments. Improper termination procedures can result in reinstatement orders and compensation awards of up to six months' salary.
• Working Time Limits: The EOR enforces the statutory 40-hour working week and daily rest requirements (11 consecutive hours between shifts and 24 hours of weekly rest). Overtime is capped at 150 hours per year (or 300 under collective agreement) and must be compensated at 150% of base hourly rate or with paid time off. Violations of working time rules are penalised by the General Labour Inspectorate with fines up to 10,000 BGN.
• Health and Safety Compliance: Under the Health and Safety at Work Act, the EOR conducts mandatory risk assessments, provides required safety training, arranges periodic medical examinations for employees in hazardous roles, and maintains health and safety documentation. Non-compliance can result in administrative fines, work stoppages, or criminal liability if serious injury or death occurs.
• Data Protection and Employee Privacy: The EOR processes employee personal data in compliance with the General Data Protection Regulation (GDPR) and the Bulgarian Personal Data Protection Act. This includes lawful basis for processing, employee consent where required, data breach notification within 72 hours to the Commission for Personal Data Protection, and maintaining records of processing activities. GDPR violations can result in fines up to 20 million EUR or 4% of global turnover.
• Collective Labour Agreements: If a sectoral or company collective agreement applies, the EOR ensures employment terms meet or exceed those standards. Many collective agreements in Bulgaria set higher minimum wages, longer notice periods, additional leave days, or enhanced severance. The EOR monitors whether your employee's role falls under a collective agreement and applies those terms automatically.
• Work Permits for Foreign Nationals: If you hire a non-EU/EEA national in Bulgaria, the EOR coordinates with the Employment Agency to obtain a single permit for residence and work (Единно разрешение за пребиваване и работа). The process requires labour market test confirmation unless exempted, and processing takes approximately 60 to 90 calendar days. The EOR holds the permit on your behalf and ensures renewal before expiry.

How Much Does It Cost to Use an Employer of Record in Bulgaria?

Using an EOR in Bulgaria involves two cost components: the EOR service fee and statutory employer on-costs fixed by Bulgarian law. Employer social security contributions, occupational accident insurance, and payroll compliance costs are set by the Social Insurance Code and the Income Taxes on Natural Persons Act, so they apply whether you use an EOR or employ staff through your own entity. Playroll's EOR service fee starts from $399 per employee per month and is billed separately from payroll costs.

Let's look at an example that includes a base salary and the EOR service fee.

The EOR service fee covers employment contract preparation and maintenance, monthly payroll processing and net salary payment, calculation and remittance of all employer and employee social contributions to NOI and income tax to NRA, ongoing compliance monitoring and legislative updates, administration of statutory leave and benefits, termination procedures including severance calculation and final filings, and dedicated support from Playroll's Bulgarian employment law specialists.

Employer of Record vs Setting Up an Entity in Bulgaria

If you are deciding between an EOR and establishing your own presence in Bulgaria, the choice comes down to speed, cost, and administrative commitment. Foreign companies typically register a limited liability company (дружество с ограничена отговорност, or OOD) in Bulgaria, which requires notarised articles of association, a registered office address, appointment of a local manager (who may be a foreign national), and registration with the Bulgarian Commercial Register and Bulstat (the national statistical identifier system). The process takes four to six weeks and costs approximately 2,000 to 4,000 BGN in legal, notary, and registration fees, plus the cost of maintaining a registered office and appointing a local accountant.

For companies hiring fewer than 15 employees in Bulgaria, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries so you can transition from EOR to your own compliant entity in Bulgaria when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Bulgaria Through an Employer of Record?

You can onboard an employee in Bulgaria through an EOR in 5 to 10 business days from contract signature to first day of work, assuming the candidate provides documents promptly and no work permit is required.

• Stage 1: Contract preparation and signing (1 to 2 business days): The EOR drafts a compliant employment contract in Bulgarian under the Labour Code, incorporating your agreed terms and any applicable collective agreement provisions. The candidate reviews, signs, and returns the contract. Timing depends on how quickly the employee responds and whether any negotiation is needed on specific clauses.
• Stage 2: Government registrations (1 to 2 business days): The EOR files the employment notification (Образец № 1) with the National Social Security Institute and registers the employee with the National Revenue Agency for income tax purposes. Bulgarian law requires NOI notification by the day before the first working day. Missing this deadline triggers fines starting at 1,000 BGN and can delay the employee's eligibility for state benefits.
• Stage 3: Payroll configuration and first cycle (1 to 3 business days): The EOR configures the employee in the payroll system, collects bank details for salary payment, and sets up tax and social security withholdings. Bulgaria follows a monthly payroll cycle with payment typically on the last working day of the month. The first payslip reflects a full month if the start date is the first of the month, or a pro-rated amount if hired mid-month.
• Stage 4: Bulgaria-specific requirements (2 to 5 business days, if applicable): If the employee is a non-EU/EEA national, the EOR must coordinate a single work and residence permit application with the Employment Agency, which adds 60 to 90 calendar days to the timeline and cannot run in parallel with onboarding. For EU/EEA nationals, only registration with the local municipality (within three months of arrival) is required, which does not delay the start date.

Delays can occur if the candidate does not provide required identity documents, tax identification numbers, or bank details promptly, or if the role falls under a collective agreement requiring additional verification before contract issuance. If a work permit is needed, the timeline extends by two to three months.

By comparison, incorporating an OOD in Bulgaria and then hiring your first employee takes four to six weeks for entity setup plus another one to two weeks for payroll configuration and government registrations, totalling six to eight weeks minimum.

How Playroll's Employer of Record Process Works in Bulgaria

Playroll makes hiring in Bulgaria straightforward, compliant, and fast.

1. You define the hire

You provide the job title, salary, working hours, start date, and any specific terms you have agreed with the candidate. Playroll reviews the terms against Bulgarian minimum wage, Labour Code requirements, and any applicable collective agreement to confirm compliance before proceeding.

2. Playroll prepares the employment contract

Playroll drafts a written employment contract in Bulgarian that meets the requirements of Article 66 of the Labour Code, including all mandatory clauses such as job duties, salary, working hours, notice period, and annual leave entitlement. The contract is issued in your company's name as the operational employer, with Playroll as the legal employer, and sent to the candidate for signature.

3. Employee onboarded and payroll goes live

Once the contract is signed, Playroll registers the employee with the National Social Security Institute and National Revenue Agency within 5 to 10 business days. The employee can start work as soon as registration is complete. Playroll processes monthly payroll in Bulgarian Lev, withholds income tax and employee contributions, remits employer contributions to NOI, and transfers net salary to the employee's bank account.

4. Playroll manages ongoing compliance

Playroll handles all statutory filings, leave administration, payroll tax remittances, Labour Code updates, and employee lifecycle changes including contract amendments and terminations. If your hiring in Bulgaria grows to a point where establishing your own entity makes sense, Playroll can support that transition through its global entity setup service, so you maintain continuity without switching providers.