19.07.2023

DO I HAVE THE RIGHT TO TAKE A LOAN FROM MY EMPLOYER

In Bulgaria, labor relations are regulated only as employment relationships formed by an employment contract. The employment contract is concluded in writing between a worker or an employee and an employer.

The law requires that the contract be concluded before starting work, i.e. before its actual performance begins. As we have already discussed in other texts, there is no obstacle between the two parties to enter into other agreements with each other, the most common example of this being in the form of a civil contract.

Does the law in our country allow the worker and the employer to enter into another type of bond relationship, without this being an obstacle to the employment relationship, are there any restrictions on the ways of settling such relationships?

The parties to the employment relationship may also enter into any other relations with each other that have nothing to do with employment. There are no restrictions in the law, for example, on the employer granting a monetary or other loan to a worker or employee, with the stipulation of returning the amount at certain periods of time or in a manner that both parties have agreed upon.

There is certainly no obstacle in the law for the employer to be at the same time the landlord of the worker or employee who lives in a dwelling owned by the employer. The same applies to other similar examples of such relationships. It is important to specify that these relations are subject to general civil legislation, and if a dispute arises from them, it will be subject to resolution according to the general procedure, and not according to the procedure for resolving labor disputes.

In other words, bond relationships (provision of a loan under certain conditions, provision of housing and payment of rent for its use, etc.) have nothing to do with employment, and in no way can it be a question of any conflict of interest or of any other kind violation of legislation.

However, practice knows many cases of misunderstanding and confusion of these relations. It is common for the employer to make deductions from the worker's or employee's wages in order to repay the amount of the loan or other type of obligation, without the worker's express consent. The law comprehensively specifies the types of deductions that can be made from the labor remuneration without the consent of the worker or employee.

Disciplinary dismissal for failure to fulfill the employee's obligations as a tenant in housing owned by the same employer will also be a violation of the law. The Labor Code states that violations of labor discipline are sanctioned through disciplinary liability, and the given example has nothing to do with that.

In summary, it can also be said that even if simultaneous and parallel bond relations have arisen between the parties to the employment contract, their development and control should not be mixed with the rights and obligations under the employment contract. If such a situation were to be subject to administrative or judicial review, the employer's actions would likely be found to be unlawful because they were undertaken on the basis of the employment relationship.