European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Articles 4 to 30 (Law for guaranteeing workers' and employees' receivables in the event of employer's insolvency); Annex 3 (Law on the state social security budget, published annually); Article 5(4) items 1 and 2, article 8(2) item 1, article 20(2) item 4 and (3) item 1, article 33(5) items 6 and 10 (social insurance code).
The procedure to grant and pay guaranteed claims is regulated by the law for guaranteeing workers' and employees' receivables in the event of employer's insolvencyand the regulation on the procedure and manner for informing the employees and for granting and payment of secured claims in case of insolvency of the employer.
The purpose of the law is to provide a maximum degree of protection to workers when insolvency proceedings have been opened. A special Guarantee Fund (guaranteeing the claims of workers and employees in the event of insolvency of the employer) was established to secure the payment of parts of the unsettled claims of the workers affected, including wages and social security contributions and other compensations.
Article 4(1) of the law defines employees entitled to guaranteed claims in case of insolvency. These are employees that are or have been employed and have not been paid their wages, regardless of the type of contract.
Article 22(1) defines the guaranteed amounts, which are the last six accrued but unpaid monthly wages and cash benefits in the last 36 (formerly 12) calendar months, preceeding the month in which the decision of insolvency is entered pursuant but not more than the maximum amount of guaranteed claims, and in case the employee has been in employment with the same employer for at least three months.
Article 25 regulates the beginning of the procedure for receiving the guaranteed claims. The procedure starts based on an application filed by the employee to the national social security institute. This application must be filed within 3 (formerly 2) months from the information to employees about the insolvency proceedings.
According to the social insurance code the insurers shall provide to the national revenue agency data on their instalments to the fund for guaranteed claims for each insurable employee. Such obligation also applies to social insurance funds (established by freelancers, cooperatives and so on).
According to article 33(5) item 6, the national social security institute maintains an information system about paid guaranteed claims and payment of guaranteed claims.
Employers are obliged to pay mandatory monthly contributions to the fund for guaranteeing workers' and employees' rights in the event of employer's insolvency. The amount of these contributions is determined by the law on the state social security budget for each calendar year. The employers' contributions can not be higher than 0.5% of the gross salary and are not bound by the minimum monthly amount of the insurance income by activities and groups of professions. For certain years, the law on the state social security budget may stipulate that employers are not required to make contributions to the fund.
The adoption and application of the law for the budget of the state social security marks considerable progress in development of the Bulgarian labour law. It strengthens the protection of employees and widens the protective function of Bulgarian labour law as a whole.
For each calendar year, the law specifies the maximum amount of guaranteed claims and the current budget of the fund. For data on payments from the fund, see NSSI's State Social Security Reports.
Eurofound (2015), Bulgaria: Wage guarantee in case of insolvency, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/wage-guarantee-in-case-of-insolvency/bulgaria
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