Hiring your first employee in Bulgaria: paperwork, filings and real cost

The employment contract and what it must say

If you run a Bulgarian company and you have been paying people as contractors, hiring employee number one is a different legal regime, not a bigger invoice. It starts with a written employment contract. Art. 62(1) of the Bulgarian Labour Code requires it in writing, and a verbal deal plus a monthly bank transfer counts as undeclared work, not as employment.

Art. 66(1) lists what the contract must contain. Leaving something out does not void the contract, but it is a breach the Labour Inspectorate spots immediately:

• details of both parties;
• place of work. By default this is the company's registered seat unless you agree otherwise or the nature of the work implies otherwise, which matters if the person works remotely;
• job title and the nature of the work. The title must come from the National Classification of Occupations and Positions (NKPD), so you cannot invent "Growth Lead" and leave it at that;
• the date of signing and the date work actually starts. These can differ;
• the term of the contract (open-ended or fixed-term);
• the amount of basic and additional paid annual leave;
• an identical notice period for both sides;
• basic pay plus any permanent additional remuneration, and how often it is paid;
• the length of the working day or week.

Two numbers foreign founders regularly get wrong: basic paid annual leave is at least 20 working days (Art. 155(4)), which is a statutory floor rather than a negotiable perk, and a probation period, if you want one, is capped at six months (Art. 70(1)) and must be written into the contract. You cannot add it later.

The Employment Register entry: three days, but before day one

This is where most first-time employers slip, partly because the rules changed recently. Since 1 June 2025 the paper employment booklet (trudova knizhka) is gone. Employment relationship data now goes into the Employment Register, kept by the National Revenue Agency (NRA), as a single electronic employment record.

The deadline is three days from signing or amending the contract and seven days from termination. That sounds relaxed. But Art. 63(1) of the Labour Code says that before the employee starts work you must hand them a copy of the signed contract and a copy of the register entry. So the three-day window is not permission to let someone work first and file later. The entry has to exist before their first working day.

In practice: sign on Friday for a Monday start, and the entry has to be submitted and accepted before Monday. If the NRA rejects it (wrong personal ID number, invalid NKPD code), you get three days from the rejection notice to fix it, and the person cannot legally work in the meantime.

The penalty is real money. Art. 414 of the Labour Code provides for a fine of 750 to 7,500 euro per separate breach where someone is allowed to work without a concluded and registered contract. "Per separate breach" means per person, not per inspection. Filing is electronic through the NRA e-services portal, so a qualified electronic signature is something to arrange before you start recruiting, not after.

Pay: the floors and the ceiling

You are not free to agree any figure you like. Three numbers frame the decision:

• Minimum wage. From 1 January 2026 it is 620.20 euro a month at standard full-time hours, or 3.74 euro an hour (Council of Ministers Decree No. 243 of 13 November 2025). Part-time minimums are pro-rated.
• Minimum insurable income by occupation. For a range of positions, contributions are due on a base higher than the salary you actually agreed. It is set by economic activity and occupation in the annual State Social Security Budget Act and can change mid-year, which is why the NKPD code you pick has a direct cost consequence.
• Maximum insurable income. 2,111.64 euro until 31 July 2026 and 2,300 euro from 1 August 2026. Above that ceiling no further social contributions are due, but income tax still applies to the whole salary. This is what makes senior hires in Bulgaria comparatively cheap.

The real cost on top of gross pay

Gross pay in the contract is not your cost. Employer contributions sit on top of it, and the employee's own contributions plus income tax come out of it. Here is the breakdown for the standard case: an employee on an employment contract, third labour category, born after 31 December 1959.

• state Pensions fund: 8.22% employer plus 6.58% employee;
• mandatory supplementary pension (universal pension fund): 2.80% plus 2.20%;
• General Illness and Maternity fund: 2.10% plus 1.40%;
• Unemployment fund: 0.60% plus 0.40%;
• Work Accident and Occupational Disease fund: 0.40% to 1.10%, employer only, depending on your company's economic activity;
• health insurance: 4.80% plus 3.20%.

Totals: 18.92% to 19.62% employer and 13.78% employee. On top of that, 10% flat personal income tax is withheld from gross pay after deducting the employee's own contributions.

Worked example: minimum wage and 1,000 euro

At the 620.20 euro minimum wage with a 0.40% accident rate (typical for office work):

• employer contributions: 117.34 euro;
• total monthly cost to the company: 737.54 euro;
• employee contributions: 85.46 euro;
• 10% tax on 534.74 euro: 53.47 euro;
• net in the employee's pocket: 481.27 euro.

At 1,000 euro gross on the same assumptions: 1,189.20 euro total cost, 775.98 euro net. The gap is about 413 euro, roughly 35% of total cost. By Western European standards that wedge is small, which is a large part of why founders hire here. What catches people out is not the rate, it is the monthly compliance attached to it.

Rule of thumb: multiply gross by 1.19 for your monthly cost and by 0.78 for net pay. A higher-risk activity pushes the first multiplier to about 1.20.

The monthly filings: declarations 1 and 6

Once someone is hired, a monthly cycle starts and does not stop while the contract is live. Every month you file two declarations with the NRA:

• Declaration form No. 1, "Data on the insured person": one record per employee, with days worked, insurable income, contributions and tax withheld.
• Declaration form No. 6: the company's total contributions and tax due.

The deadline is the 25th of the month following the month the data relates to, and form 6 is filed together with form 1. Contributions and withheld tax must also be paid by that same 25th.

Two practical details: with more than two insured persons a month, form 1 must be filed electronically with a qualified electronic signature, and above ten insured persons both declarations are electronic only. Corrections and deletions to form 1 are accepted until 30 April of the following year.

Beyond the filings you need internal records: a payroll sheet, payment documents, leave orders and a personnel file for each employee. The NRA never sees these. The Labour Inspectorate asks for them first.

The obligations nobody warns you about

Your first hire pulls the company into regimes that were irrelevant while you were the only person in it:

• Occupational health service. Art. 25 of the Health and Safety at Work Act requires every employer to contract a licensed occupational medicine service. There is no headcount threshold: it applies with one employee.
• Induction safety briefing. The employee must be given a health and safety induction before starting work, recorded in a briefing log (Ordinance No. RD-07-2 of 16 December 2009).
• Risk assessment and workplace rules, even when the workplace is one office or a home desk.
• Work permit if the employee is a non-EU national. The order here is the opposite of what feels natural: the permit comes before the contract, and mistakes cannot be fixed retroactively. EU, EEA and Swiss nationals do not need one, but they still need a Bulgarian personal identification number before you can file the register entry.

How FreeMe.bg helps

Your first employee turns bookkeeping from "a few invoices a month" into a recurring process with hard deadlines, in a language most foreign founders do not read. FreeMe.bg runs that process: payroll, declarations 1 and 6, payment deadlines and the reminders, so you are not tracking a Bulgarian filing calendar yourself. And when the case is less standard, a non-EU hire, a fixed-term contract, a mid-year pay change, you talk to a person instead of guessing from a forum thread. The Payroll module costs €10 + VAT per person a month, and the social insurance of one working owner is included in every plan.

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