The legal differences between employment and work contracts
According to Article 1 (2) of the Labour Code relationships concerning the performance of work/labour are classified as employment relationships. It is important to distinguish this type of relationships from the one arising from civil contracts for services. Contracts that have been concluded related to the employment relationship are legally defined as “similar to labour-law related contracts”.
A brief discussion of the differences between employment and service contracts in Bulgaria:
Content: The first characteristic of the employment contract – which is also the first difference from the service contracts – is that the employee does not owe results (services performed) but performance of a specific job, performance in the sense of applying his working force.
Form: The employment contract must be concluded in writing; the service contract is generally formless.
The parties to an employment contract are in a hierarchical relationship of dependence – the employee has to abide to the orders of the employer; the parties to a civil contract enjoy generally equal rights.
The employee performs his job within the stipulated working time, working place and in accordance to the nature of the work. The contractor has no defined working time or place. He may define them by himself; his only obligation is to finish the work, to deliver the result – subject of the contract.
The labour-law related rights and obligations are personal and inalienable. The rights and obligations related to service contracts are generally personal (intuitu personae) but may be transferred to third parties if nothing else has been agreed upon in the contract.
The employee uses materials and supplies provided by the employer. The contractor uses material of his own or the principal’s ownership.
Disciplinary liability: The employee is disciplinarily liable for the non-fulfillment of the inner codes of conduct and for violations of the work discipline. The contractor is not under the principal’s control and neither is he disciplinarily liable.
Remuneration: The employer owes the employee remuneration in the form of a salary, paid regularly. Depending on the agreement, the contractor may or may not be owed remuneration.
Legal regulation: The relationship between employer and employee is regulated by the Labour Code. The relationship between the parties to work contracts is regulated by the Bulgarian Obligations and Contracts Act and by the written agreements between the parties themselves.
Registration: Employment contracts must be filed within the Bulgarian Revenue Agency within a time period of 3 days. Service contracts do not need to be registered.
Disputes: Labour disputes are treated according to Chapter XVIII of the Labour Code. Civil disputes and contracts are treated according to the regulations of the Obligations and Contracts Act and the Code of civil procedure.
Securities: Regarding employment contracts the common civil securities (joint liability, indivisibility, pledge, mortgage and guarantee) are not applicable. Within the framework of a work contract, they are.
Non-fulfilment: Penalty payments or damages to the amount of the statutory interest by the day of default may not be required in labour law matters. The liability under the Labor code is specific and limited.
Social insurances: Employees are socially insured covering all social risks listed in Article 4, para. 1, p. 1 of the Social insurance code. Persons that concluded a civil work contract are not insured in cases of occupational injury and professional decease.