New rules on work-related accident insurance

In summer 2005, the Bulgarian parliament amended the Law on Health and Safety at Work. The main change is that companies where the rate of work-related injuries exceeds the national average must insure their workers additionally against work-related accidents. The law already provided for such an additional insurance obligation, but this had never been put into operation.

A total of 4,305 work-related accidents were registered in Bulgaria in 2004, according to the General Labour Inspectorate and National Social Security Institute (NSSI) statistics. This continued a downward trend in the number of reported accidents - see the figure below.

Of the work-related accidents registered in 2004, 2,918 (or 67.8%) occurred in the following 16 economic activities:

• construction - 328;

• state government and defence, mandatory public insurance - 312;

• manufacturing of machines, equipment and household appliances - 261;

• metal production and casting - 212;

• production of foodstuffs and drinks - 195;

• healthcare and social activities - 186;

• land transport, including pipelines - 182;

• production and distribution of electric power, gaseous fuels and thermal energy - 173;

• coal and peat extraction - 175;

• education - 144;

• garment production, including leather and fur processing - 134;

• wholesale trade and commercial mediation, excluding car and motorcycle trading - 123;

• metal ores extraction - 120;

• vehicle manufacturing, excluding cars - 115; and

• auxiliary activities in transport, activities of tourist agencies - 109.

During 2004, 111 of the total work-related accidents resulted in death and 101 led to permanent disability. The largest number of fatal accidents occurred in:

• construction - 24;

• wholesale trade and commercial mediation - 12;

• agriculture and forestry and related services - six;

• production of foodstuffs and drinks - six;

• forestry, lumber and related services - five;

• land transport - five;

• other activities in the area of business services, security guarding - five; and

• auxiliary activities in transport; activities of tourist agencies - four.

Compared with 2003, the total number of work-related accidents decreased by 472 in 2004, though the number of fatal accidents increased by 13 and the number of accidents resulting in disability remained unchanged.

At present, victims of work-related accidents (or their heirs) receive payments from the NSSI's 'work-related accidents and occupational diseases' fund. This is financed by employers' contributions, which vary between industries from 0.4% to 1.2% of the monthly wage. Work-related accident insurance covers only accidents that occur in the process of the actual work activity, though not those that occur while going to or returning from work (which would be included in a broader interpretation).

New rules

One of the first acts of the new parliament elected on 25 June 2005 was to amend the Law on Health and Safety at Work. According to the amendment, companies where the rate of work-related injuries exceeds the national average must insure their workers additionally against work-related accidents. This requirement will apply to about 250,000 jobs with a high health risk, in sectors such as construction, wood processing, mining and machine building. The previous text of the law included such a requirement for additional insurance, but this had not been put into practice. For eight years after the Law on Health and Safety at Work came into force, successive parliaments and governments were not able to determine the sectors, occupations and jobs to which the requirement should apply.

The cabinet will determine in an ordinance the procedures related to the new work-related accident insurance. Parliament has obliged the executive authorities, in the process of applying the mandatory insurance scheme, to take into account not only the economic activities of enterprises (as occurs with social insurance contributions to NSSI), but also the average frequency and scale of work-related accidents in the country.

Based on a proposal from employers and trade unions, a proposal for similar mandatory additional occupational diseases insurance was deleted from the text approved by parliament. The reason cited is that, after changing jobs several times, it is difficult to prove which employer should be blamed for an employee’s disease. Moreover, companies already pay a contribution to the NSSI work-related accidents and occupational diseases fund that varies according to the working conditions in their industry, and this might make additional occupational diseases insurance redundant.

In the course of the debate, members of parliament (MPs) removed from the text of the law an exemption from taxes and duties that applied to personal protection equipment and new apparatus improving the working environment. In the face of employers’ and trade unions’ protests, they responded that this exemption will in future be provided by the relevant tax laws.

Other obligations on employers

Another change in the law will oblige companies to provide medical services to workers with fixed-term employment contracts or who are hired on a seasonal basis. Previously, this obligation applied only to workers on open-ended contracts. Simultaneously, MPs refused to discuss a request by employers’ associations for the labour medicine service to bear joint liability with employers regarding the assessment of working conditions and proposed improvement measures. The employer remains the only liable party, even in cases of unprofessional work by doctors from the labour medicine service.

The new amendment of the Law on Health and Safety at Work obliges all employers with more than four workers to organise 'working conditions groups' in their workplaces. Previously, there was no workforce-size threshold, so this obligation was applicable to even the smallest companies with one worker. However, parliament rejected an employers’ proposal that this obligation should apply only to companies with more than 10 workers.

Compensation

The ordinance to be developed by the government will lay down compensation in the event of work-related deaths, linked to the age of the deceased. The heirs of workers who die under the age 35 years will receive a payment worth seven years of the worker's gross wages. The payment falls to five years' gross wages where death occurs from 35 to 50 years, and three years' gross wages for older workers.

Where sick leave due to a work-related accident lasts up to 30 days, the insurance indemnity will be 3% of the monthly wage. The figure rises to 5% for sick leave of up to 60 days, 7% for leave of up to 120 days, and 10% for longer leave.

Parliament has made a commitment to provide employers with high-risk production processes with compensation against the costs of the new mandatory additional work-related accident insurance. The chair of the Permanent Parliamentary Commission on Labour and Social Policy has undertaken to propose a relevant addition to the Labour Code within the coming weeks. This will mean an amendment of Article 200 of the Code, which has been disputed by employers for years. This text imposes on company owners liability for damages caused by a work-related accident, even if a worker causes the accident.

Commentary

According to expert estimates, insurance costs for companies involved in dangerous production will increase by 0.25% and 1% as a result of the legislative changes. This may lead to more employers not insuring their workers. Some MPs and employers are of the opinion that the new amendment creates conditions that may promote corruption among the controlling authorities, and will be the reason for retaining low wage levels for workers. They also predict that the change will increase the scale of the shadow economy. (Ivan Neykov, Balkan Institute for Labor and Social Policy)