Employment Contract – Everything We Need to Know in 2025

An employment contract is the main legal instrument that settles the relationship between the employer and the employee. Whether you are starting your first job, changing employers or managing a team, knowing the key aspects of employment law and the contents of an employment contract is essential.

In this detailed article we will look at what an employment contract is, what types exist, how it is concluded, amended and terminated, and what rights and obligations it brings to the parties.

What is an employment contract?

According to the Labour Code of the Republic of Bulgaria, it is an agreement between the employee and the employer by the power of which the employee undertakes to perform certain work for remuneration, under the direction of the employer and during certain working hours.

The conclusion of an employment contract is the main legal form for the provision of work for pay. All other forms of employment that do not go through an employment contract (except for civil contracts in specific cases) can be considered illegal employment or so-called "undeclared work".

Types of employment contracts

1. Open-ended employment contract

This is the most common and preferred form. It does not set a specific time limit for the duration of the employment relationship.

The employee may work indefinitely and the employment relationship is terminated upon the occurrence of the conditions provided for in the law or the contract.

Employee Benefits:

• More security;
• More rights upon termination;
• Harder to be fired without cause.

2. Fixed-term employment contract

It is concluded for a certain period of time - for example for 6 months, 1 year, or until the completion of a specific task:

• For a fixed period (e.g. 1 year);
• Until the return of an absent worker (e.g. maternity leave);
• For a specific job (project or seasonal activity).

Important: Fixed-term contracts cannot be renewed indefinitely - the law allows a maximum of 3 years with conditions.

3. Part-time employment contract

It is concluded when the parties agree to work less than 8 hours per day. For example, a 4-hour working day. All rights of the employee are proportional to the time worked.

4. Contract for homeworking and teleworking

They are possible for those working from home or remotely, for example freelancers, IT professionals, administrators, etc. The law allows for flexibility in work location and hours.

Mandatory content of an employment contract

The employment contract must include:

• Name and UIC of the employer;
• Name and ID of the employee;
• Place of work;
• Job title and description of duties;
• Start date;
• Type of contract (fixed-term or open-ended);
• Working hours;
• Amount of basic and additional salary;
• Termination conditions;
• Duration of leave;
• Other specific conditions (if any).

Important: Any employment contract must be concluded in writing before commencement of employment and registered with the NRA.

How is an employment contract concluded?

1. Pre-negotiation: the employer and the applicant agree verbally or in writing on the terms.
2. Drafting of the contract: Once an agreement is reached, the employer drafts a written contract.
3. Signing: Both parties sign the contract.
4. Registration with the NRA: Within 3 days of the conclusion, the employer must submit a notification to the National Revenue Agency.
5. Commencement of work: The employee can only start work after signing and registration.

Amendment of the employment contract

Any change in:

• workplace, 
• job title,
• remuneration,
• hours of work,...

must be reflected by an additional agreement signed by both parties.
The employer is not allowed to unilaterally change the main clauses of the contract, except in the cases expressly provided for by law (e.g. in the case of a temporary transfer).

Termination of employment contract

1. By mutual consent (Art. 325(1) of the Labour Code)

The least painful way. Written consent of both parties is required.

2. With notice from the employee or employer (Art. 326)

• Notice is usually 30 days (may be shorter by contract);
• If the terminating party fails to give notice, compensation is due.

3. Without notice (Art. 327 and Art. 330)

In certain cases, e.g. when the employer does not pay wages, there are serious violations or there are serious health reasons.

4. Disciplinary dismissal

Imposed in cases of serious misconduct such as:

• systematic delays;
• refusal to perform duties;
• embezzlement, theft, etc.

Rights and obligations of the parties

Employee Rights:

• To receive the agreed pay;
• To take paid annual leave;
• To work in safe conditions;
• To be insured;
• Not to be discriminated against;
• To be notified of any change in conditions.

Duties of the employee:

• To observe internal rules and regulations;
• To perform his/her duties in good faith;
• To protect company confidentiality;
• To treat the employer and co-workers with respect.

Employer's rights:

• To direct and control labor;
• To impose disciplinary action;
• To require performance of duties;
• To modify conditions within the law.

Duties of the employer:

• To provide safe working conditions;
• To pay wages regularly;
• To keep records of the employment relationship;
• To provide for the worker in accordance with the Social Security Act;
• To protect the personal data of employees.

Common problems and cases

The employer does not give a contractI

llegal work without a contract is common, especially in seasonal and low-skilled employment. This poses serious risks for the worker - lack of insurance, unsustainable income, inability to protect their rights.

Tip: Never start work without a signed and registered employment contract.

Verbal contract

A verbal contract is not valid under Bulgarian labour law. Even if there is an oral agreement, it has no legal value before the institutions.

Forcing employees to register as ‘self-employed’ instead of having an employment contract

Some employers offer employees to register as ‘self-employed’ instead of employing them on an employment contract to save on insurance. This is an illegal practice in a job that has the characteristics of an employment relationship (working hours, control, hierarchy).

What to do in case of breach of contract?

If you think your rights have been violated:

1. Contact your employer - sometimes it is a misunderstanding;
2. Collect documents and evidence;
3. Report to the Labour Inspectorate;
4. Seek legal help or go to court.

The Labour Inspectorate has the power to inspect, impose fines and oblige the employer to comply with the law.

Conclusion

The employment contract is much more than just a signed piece of paper - it is the legal foundation of the employment relationship. A well-written and lawful employment contract protects both parties, creates predictability and ensures that the interests of both the employee and the employer will be respected.

To be protected and confident in your work, always:

1. read the contract carefully before signing,
2. ask for a copy,
3. keep it,
4. ensure all clauses are carried out regularly.

The well-known adage "it is better to know your rights than to hope that they will not be violated" applies with full force in the field of employment relations.