15.01.2025

WHAT BENEFITS DO WE USE IF WE WORK ON AN EMPLOYMENT AND CIVIL CONTRACT?

People are left without unemployment benefits and sick leave because it turns out they were assigned to a civil rather than a labor contract. Therefore, when we start work, it is important to know what our rights are, according to the contract we conclude with the employer.

Each such agreement gives us certain powers, but is also related to the payment of certain insurances in order to use them. Their amount depends on what contract we are assigned to, or simply put - whether we are on an employment or civil contract.

In practice, the concept of "civil contract" does not exist in Bulgarian legislation, but it is widely used and combines several types of contracts.

These are the production contract, the order contract and the commission contract from the Law on Obligations and Contracts and the contract with a commercial manager, the contract with a commercial representative and the contract with a commercial assistant from the Commercial Law.

Differences between employment and civil contracts

Although they are similar, employment and civil contracts have significant differences between them.

In the employment contract, the subject of the contract is the workforce itself, which is provided in a certain time interval, or simply put, "working time". That is, with these contracts it is a matter of hiring labor.

As the main feature is that the worker provides his labor for a certain payment - "salary". The employment contract must be concluded in writing, as the law requires this to be done before a person starts work, i.e. before its actual implementation begins.

The Labor Code specifies exactly what an employment contract should contain: the place of work, the position and nature of the work, the date of its conclusion and the term.

The contract must also specify the amount of the basic and extended paid annual leave and the additional ones, the same period of notice for both parties upon leaving, the basic and additional remuneration, as well as the frequency of their payment and, of course, the working hours.

In addition to these mandatory attributes of the contract, there are those that are not mandatory, but can be included, for example, the scope and access to social benefits, the amount of travel allowances, different bonus systems, determination of additional remuneration, provision of materials, etc.

Here comes the first difference with civil contracts, where these mandatory requisites are missing. In them, most often, it is determined only what must be done, in what time frame and what the corresponding payment will be.

Since civil contracts are governed by general civil law, the parties to them have greater freedom of negotiation and can choose for themselves what to include in the contract.

With civil contracts, we are not talking about payment for a certain working time, but about the performance of a certain task or the achievement of a certain result.

Here comes another significant difference between the two contracts. While in the employment contract the employee is subordinate to the employer, in the civil contract, which is also its main advantage, the contractor has greater freedom how and when to perform the relevant services or tasks assigned to him in the legal relationship.

However, the disadvantage of the civil contract is that the risk of non-performance is borne by the contractor, not by the employer, as in the case of employment. The other downside is that the cost of achieving the final result is borne by the contractor, not at the expense of the employer.

Regarding the term of the contract

The employment contract can be open-ended, but the civil one is necessarily bound by a period for performing the specified work or service.

Payment of remuneration

In the employment contract there is a minimum wage, while in the civil contract there is no limit on the amount of remuneration. Also, the employment contract has regular monthly payments, while in the civil one, the payment is for the performance of a certain job for a certain period.

A civil contract can be both remunerated and non-remunerated, while an employment contract is necessarily remunerated.

Insurance rights

The most significant difference for the worker is in relation to the insurance rights granted to him by the employment contract and the civil contract. Those working under an employment contract must be insured for all social risks. With them, each profession has a precisely defined minimum insurance threshold.

This is the minimum on which the person is generally insured for all insurance risks.

A number of rights arise from the employment contract for the employee, such as the right to guaranteed remuneration, certain sums for time served (the so-called "class"), holidays, vacations, benefits, social and household services, social insurance for all insured social risks, safe and healthy working conditions, etc.

There are significant differences in the civil contract, workers are only insured for disability due to general illness, old age and death, if they receive a monthly remuneration equal to or above one minimum wage, after reducing it by the costs of the activity.

This means that no insurance is paid for occupational accident, occupational disease, general illness and maternity, unemployment, and accordingly contractors under civil contracts are not entitled to compensation from the state on these grounds.

That is, they are not entitled to a certain number of sick days and benefits upon termination of the contract, as well as unemployment benefits. Under it, the contractor cannot take advantage of his right to various types of paid leave.

This is positive for the contractor due to the fact that his obligation to provide financial support for his employee's rest is removed. It is important to note that civil contracts only guarantee insurance length of service, since length of service is considered to be the time for which the employee has been working under a given employment relationship.

The taxes

In terms of taxes payable, according to the Personal Income Tax Act, all non-employment income is considered civil contract income and is subject to declaration in the annual tax return.

Workers can work simultaneously on an employment contract and on a civil contract, as the two contracts are not mutually exclusive. Just as it is possible for a person to work at the same time in both labor and civil legal relationships, it is also possible to work for the same employer.

More and more often in practice, parties between which an employment relationship already exists also conclude civil contracts with each other.

It is important for citizens to know that resorting to civil contracts is impermissible when they are used to essentially disguise the provision of labor in order for the employer to save on the insurance he has to pay for his employees.

In this situation, Art. is violated. 1, para. 2 of the Labor Code, and victims can file a report with the Executive Agency "General Labor Inspectorate" because their labor rights have been violated.