On 22 January 2021 amendments to the Bulgarian Ordinance on the Terms and Conditions of Posting of Workers within the Framework of Provision of Services were promulgated in the State Gazette. To distinguish this type of business travels from those falling out of the scope of the EU legislation (such as assignments that are beyond the framework of provision of services or to third countries, which are subject to different requirements in Bulgaria), herein below we refer to them as ‘postings’, the employees on such assignments – ‘posted’, and the mentioned ordinance – the ‘Posting Ordinance’. The new rules on postings should have been enacted by 30 July 2020, by which date Directive (EU) 2018/957 (the ‘Revised Posting Directive’) had to be transposed. Anyway, this happens 7 months later and the amendments are effective as of 25 January 2021.
Employers and temporary work agencies (‘TWA’) that have ongoing postings by the date the amendments enter into force have a 30-days transition period to bring them in compliance with the new requirements. The transition period therefore expires on 24 February 2021.
Bulgarian law regulates both inbound and outbound postings. As regards outbound postings, observance of the host State posting requirements is of utmost importance to avoid sanctions.
In the brief below, we will outline a summary of the major changes and their impact, viewed from an outbound perspective. For information in regards to the changes for inbound postings, you can read more here.
Outbound Postings from Bulgaria to other EU/EEA States
We can summarise five general sections of amendments, which employers need to be aware of.
Minimum Rates of Pay replaced by Equal Pay
The major novelty is the transposition of the principle of equal pay for equal work at the same place, laid down by the Revised Posting Directive, which we discussed briefly in the past. Pursuant to it, a Bulgarian employer will have to pay its posted employees a labour remuneration not lower than the basic salary and the additional labour remunerations established for the same or similar work in the respective host State. Until now, Bulgarian employers had to observe just the minimum rates of pay established in the host State.
The shift from minimum rates of pay to equal remuneration will likely have a substantial impact on posting companies, especially from lower-income countries, such as Bulgaria. The new requirements are likely to increase labour cost for posted workers and limit competitiveness (especially price-driven) of Bulgarian service providers. When determining costs and offering prices, the workforce salaries should be calculated as per the host State requirements. Some EU/EEA States have especially strict enforcement practices with sanctions for breaches of posting-related requirements severe enough to even imply criminal liability.
To ensure legal safety, Bulgarian companies will have to tackle with increased administrative burden. It comes from the need to look into a much broader scope of sources in order to identify the terms and conditions of employment to be ensured to posted workers, as per Host State requirements. Already those sources include not only laws, regulations and administrative provisions, but also collective bargaining agreements (‘CBA’), declared universally applicable in the host State. CBAs were previously relevant only for postings in the construction sector. Presently, universally applicable CBAs may be relevant for postings in any industry.
Practically, Bulgarian posting employers have to check if the activities to be performed by the posted workers fall in the scope of a universally applicable CBA in the host State and, if yes, the working conditions envisaged therein should be ensured to the posted workers, not those set out in laws or administrative provisions.
The above approach should be followed for identifying all mandatory terms of employment (the so-called core-set), including the applicable remuneration, its structure and constituent elements. Once the respective levels/values of remuneration elements are determined, a comparison on a gross-to-gross basis should be made between (1) the remuneration actually paid (under the law applicable to the employment relationship) and (2) the remuneration due to posted employees (as per host State requirements). If the remuneration actually paid is higher, there is no need to top it up by additional amounts. If it is lower though, it should be equalised up to the remuneration level due as per host State requirements. It is important to properly present and document the extra amount, in order to avoid it being considered reimbursement of posting-related expenses. This would undermine its equalisation nature and thus local authorities may find posted workers to be underpaid.
The problem, which Bulgarian employers will likely confront, is the poor access to comprehensive and reliable information about applicable CBAs in some Host States. In many countries, those are not or are only partly disclosed on the single national websites. In others countries, CBAs or extracts thereof are available only in local language. Also, it is often that only particular amendments to CBAs are published, without the underlying text (unconsolidated), which hinders the proper comprehension of the applicable rules. It remains to be seen if and how the transparency and access to relevant information will be improved.
Posting of Temporary Workers hired-out to User Undertakings
Posting of temporary workers, hired-out by a TWA to a user undertaking, was expressly regulated by amendments to the Bulgarian Labour Code in line with the Revised Posting Directive and the preceding ECJ case-law. It was stated, that, if a hired-out temporary worker needs to be posted, the TWA should make the posting at user undertaking’s request. Accordingly, the TWA as a direct legal employer and not the user undertaking is responsible to arrange and properly document the posting including to sign a posting annex with the posted worker containing the mandatory information.
Mandatory content of Posting Annex
Under Bulgarian law, a posting should be documented by a bilaterally signed document (annex). Unilateral documents, issued and signed only by the employer, such as secondment order, assignment letter or alike, do not meet this requirement.
This is a controversial solution, minding that cross-border business travels, which do not constitute postings can be implemented by employers in a much more flexible way, by merely serving on the employee of a simple secondment order. This puts Bulgarian employers in a more disadvantageous position when posting employees to the EU, compared to when sending employees to third countries. In the former case, the implementation of a posting depends on the consent of the employee, whereas consent is normally not needed to implement a cross-border secondment to a third country (up to 30 days).
Leaving aside the obvious restriction on the freedom of cross-border provision of services, it is important to note, that the posting annex should contain certain mandatory elements. It should now specify, among others, the employee’s lodging conditions during the posting, insofar as lodging is ensured by the employer.
Another change concerns the additional labour remunerations to be specified in the annex. Until now this was required only for those of permanent nature, whereas in the future this is required for all additional labour remunerations.
The amended Posting Ordinance does not touch the point on covering lodging costs and they remain a matter of negotiation between the employer and the posted employee. Due to this, it is not much likely to see an evolution in the discriminatory treatment of Bulgarian revenue authorities, which tend to refuse recognition of lodging costs related to postings, whereas recognizing such costs related to cross-border assignments to third countries, which are out of the scope of the Posting Ordnance.
Expenses for travel to and from the place of posting abroad, as well as those for travel from and back to the place of posting abroad when using annual paid leave remain at employer’s account.
Unlike business travels, where per diem payments are due, in case of posting, the remuneration of the posted worker is equalised with the levels of local workers through posting allowance.
Re-posting and Related Expenses
When a posted employee needs to be re-posted, i.e. to perform work outside the place to which he/she was originally posted in the host State, the associated costs for travel, board (per diem) and lodging should be covered by the employer, as per the Host State requirements. The amended Posting Ordinance fails to expressly set out that the above rule applies also where a posted worker is required to travel (commute) from accommodation to his/her regular place of work in the host State and back. Yet, the Revised Posting Directive is clear on that, so local authorities in the Host State would highly likely analyse, if this requirement is observed.
How We Can help
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As always, keep in mind, that the information contained in this post is solely intended to alert you of legislative developments, that may be relevant to or affect your business. The information contained herein is by no means comprehensive and does not substitute actual legal advice.