RECENT EMPLOYMENT LAW DEVELOPMENTS - Part II
In recent months, several legislative changes have been adopted, two of which are directly related to employment law. These are the European rules on pay transparency and the latest amendments to the Labour Code concerning the method of calculating length of service. This material is a continuation of our previous publication on pay transparency rules and focuses on the second topic.
II. Amendments to the Method of Calculating Length of Service
On 31 July 2026, the State Gazette, issue No. 69, published the State Budget Act of the Republic of Bulgaria for 2026, the transitional and final provisions of which included amendments to the Labour Code. The changes concern the method of calculating periods recognised as length of service, as well as the rights arising from the accumulation of such service.
Until now, one day of work performed for four or six hours was recognised as one full day of length of service. Under the amendment to the Labour Code, length of service will be calculated proportionally to the hours worked. This means that an employee working four hours per day will accrue one day of length of service after two days of work and, over the course of a calendar year, will accumulate six months of length of service. It is important to note that length of service already acquired will not be affected by the changes.
It is essential to distinguish between length of service for employment purposes and insurance service. The calculation of insurance service and the conditions for acquiring pension rights will not change, as insurance service has already been calculated based on the hours of actual work. The changes concern the calculation of employment service, which is relevant to several employment rights, including the additional remuneration for acquired length of service and professional experience (the so-called “class” allowance). For part-time work, the accumulated employment service will be lower and, consequently, this additional remuneration may increase more slowly.
The consequences of the new method of calculation will also affect other employment rights. These include the minimum entitlement to paid annual leave, which, where employment remains part-time, may be reduced proportionally.
The new rules also provide that employment service will be calculated separately for each employment relationship where a worker or employee works under more than one employment contract. At the same time, when exercising rights under the Labour Code, no period of employment service exceeding the actual elapsed calendar time will be recognised. The implementation of the new regime will be facilitated by the introduction of the electronic employment record and employment register.
One of the reasons for adopting these amendments is Parliament's intention to take measures to reduce the shadow economy and to incentivise employees themselves to insist that their actual working hours are properly declared.