Social partners agree on changes to Labour Code and Social Security Code

Bulgarian workers have until the end of 2011 to take any paid leave they may have accumulated in previous years, under amendments to the Labour Code. The economic crisis has meant that major changes have also been made to the Social Insurance Code concerning unemployment compensation and sick leave. According to the new agreement, for example, the first three days of sick leave will be paid by the employer and the remainder borne by the National Social Security Institute.

Use of paid leave

Government ministers found that, when making redundancies, they had to pay out large, additional and unforeseen amounts to people who had accumulated a great deal of annual leave over many years. Businesses, on a slightly smaller scale, were also facing this problem. To solve it, ministers amended the Labour Code, obliging employers to prepare an annual schedule for the use of paid leave by employees. Employers now also have no right to refuse scheduled leave. Exception is made to this only for important production reasons, in which case the employer can postpone leave for employees for the next year but not for more than 10 working days. From 1 January 2012, workers will receive compensation only for unused paid leave for the relevant year and also for any days postponed until the next year. Employers can now also ‘allow’ workers and employees to take ‘special leave for economic reasons’. Until December 2010, if employers are faced with reduced orders, they can require workers and employees to take unpaid leave without their consent for up to 60 workdays.

Payment of sick leave

Previously, the first day of sick leave was paid as a full day’s wage by the employer. Each successive day was paid by the National Social Security Institute (NSSI) at up to 80% of the person’s wages. The change to the Social Insurance Code was provoked by an unusually large increase in sick leave during the first three months of 2010, compared with the same period in the previous year. There were fears that this increase was caused by tacit agreements between employers and employees to use sickness benefit to pay workers if the company had to decrease production. The amendments to the Social Insurance Code now mean that, until 31 December 2010, employers have to pay the first three days of employees’ sick leave at 70% of normal gross wages, averaged out over that month. NSSI then pays 80% of the sick leave allowance from the fourth day on.

Size of unemployment benefit

Under the Social Insurance Code, the level of unemployment compensation was 60% of a person’s average earnings during the previous nine months. It was set at not less than €3.07 (BGN 6) and not more than €6.14 (BGN 12) a day. The upper limit of unemployment compensation affects the more highly paid employees. In case of dismissals, these workers would receive unemployment compensation that is substantially lower than their wage. The amendments to the Social Insurance Code remove the upper limit of unemployment compensation. The level of benefit is thus fixed at 60% of earnings for all insured workers. This restores fairness and introduces a basic insurance principle – the amount of compensation depends on the size of contributions.

Commentary

During the debates, the trade unions have generally shown flexibility, but have taken a firm stand on sick leave. They do not accept government proposals to introduce the first or third day of the sick leave as unpaid. A good achievement for the trade unions was removing the limits on unemployment benefit. Now, however, they face their most important challenge. This is to stabilise the social security fund with an injection of cash, which they say can only be done by increasing social insurance contributions – something that employers do not want to hear in these difficult economic times.

Lyuben Tomev, Institute for Social and Trade Union Research (ISTUR)

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