Carrying out commercial activity as a Temporary Employment Enterprise (TEE) represents a viable business model that is subject to registration and can generate revenue for the enterprise. This model is particularly well-established in sectors such as construction, transport, logistics, manufacturing, hospitality, seasonal work, services, and temporary projects.
It also benefits businesses that need staff but do not wish – or are unable – to hire them directly, as they receive a simple and lawful solution through a registered TEE. In this way, such companies:
- do not sign employment agreements (all employment relations are handled by the TEE);
- reduce administrative burden;
- can “test” workers before potentially hiring them directly.
Clients of TEEs seek to work with reliable partners who operate in full compliance with the law, including:
- adherence to legal regulations;
- fair treatment of employees;
- transparency before regulatory authorities (such as the Labour Inspectorate, National Revenue Agency, etc.).
The model offers both security and flexibility. But what exactly does it involve, how does it start and operate in practice?
1. A TEE is an individual or legal entity that conducts commercial activity and enters into an employment agreement with an employee in order to assign them to perform temporary work at a user enterprise, under the direction and control of that enterprise, following registration with the Employment Agency (EA).
A user undertaking (UU) is an individual or legal entity that conducts commercial activity and under whose direction and control the temporary work, assigned by the user undertaking, is performed by an employee provided by the TEE.
2. TEEs shall meet the following requirements:
- They shall not have any outstanding amounts due to the State or to the municipality, established by a final act of a competent authority, or any obligations related to the payment of social security contributions – the EA verifies this ex officio each year by 30.06.;
- They shall not be in insolvency proceedings or declared insolvent;
- They shall not be in liquidation;
- They shall not be represented by persons convicted of an intentional common crime, unless they have been rehabilitated;
- They shall not have had their registration terminated due to violations specified in the law within a period of three years prior to the date of application for registration;
- They shall not have been subject to administrative penalties for performing activities without registration or for failing to meet any legal requirement for the activity within a period of three years prior to the application date;
- They shall have either a group insurance policy or an unconditional and irrevocable bank guarantee in the amount of 200,000 BGN to secure claims of employees hired for the provision of temporary work;
- They shall have an internal policy for carrying out their activities, including draft agreements with user undertakings and employment agreements with the employees assigned for temporary work.
TEEs shall comply with the above criteria throughout the entire period of their activity.
3. The certificate of registration is issued by the EA for a period of five years and may be renewed.
4. The EA maintains a centralized electronic register of all individuals and legal entities engaged in employment intermediation and/or TEE). Through the information system, applications and documents are submitted, served, and processed for registration, deregistration, and other related actions.
5. An employment agreement is signed between the TEE and the employee, stipulating that the employee will be assigned to perform temporary work at a user undertaking, under the management and control of the latter.
6. An employment agreement with a TEE shall not be signed for employees in first and second category of labour.
7. The employment agreement with the TEE is:
- for the completion of a specific task, or
- for replacing an employee who is absent from work.
8. The assignment of employees is carried out by a written act issued by the TEE, after the employee has been provided with a signed employment agreement along with a copy of the registration submitted to the NRA. This act shall contain: the date on which the employee is to report to the user undertaking, the address of the user undertaking, the place of work, the workstation, the title and nature of the position, and other relevant details.
9. There is a limit on the total number of employees assigned by a TEE to a user undertaking – the number of assigned employees shall not exceed 30 % of the total workforce of the user undertaking.
10. The employee has the right to refuse an assignment to a user undertaking if: the work does not match their professional qualifications, is incompatible with their health condition, or is located in a different town/village.
11. The TEE is obligated to:
- calculate and pay the employee’s remuneration;
- provide social security coverage under the conditions and procedures set out in the social security legislation;
- upon termination of the employment relationship, issue a dismissal order or other relevant document certifying the termination;
- notify the user undertaking in writing of the names of the employees who will be assigned, no later than one working day prior to the commencement of work, etc.
12. The UU is obliged to:
- designate the workplace;
- provide the employee with a job description, against signature, before the commencement of work, and to indicate the date of delivery;
- instruct the employee on the safe and healthy performance of the assigned tasks;
- record the working time and notify both the TEE and the employee, against signature;
- determine the amount of the base remuneration and any additional remuneration, and inform the TEE and the employee, against signature;
- insure the employee at its own expense in compliance with the Healthy and Safe Working Conditions Act;
- notify the TEE about the working conditions applicable to other employees performing the same or similar work or position, as well as any changes to those conditions;
- train the employee and provide visible access to information on available permanent job vacancies and positions;
- not to alter the position or nature of the work for which the employee was assigned;
- ensure equal treatment and basic working and employment conditions, including health and safety, equivalent to those provided to its own employees performing the same or similar work or holding the same or similar positions.
13. In the event of a disciplinary offence committed by the assigned employee, the UU shall immediately notify the TEE, describing the offence, the time, place, and circumstances under which it occurred. The UU may submit a reasoned proposal to the TEE to impose a disciplinary sanction on the assigned employee and may request that another employee be assigned in their place.
14. Employees assigned by a TEE shall not be treated less favourably solely due to the temporary nature of their work, compared to the UU’s employees performing the same or similar work or holding the same or similar positions, unless the law provides that certain rights depend on qualification or acquired skills.
15. The relation between the TEE and UU shall be governed by a written contract with mandatory contents, including rules about the conditions under which the work will be performed, the use of leaves, etc.
The TEE is not entitled to charge any fees to the employee.
16. A UU that has signed the contract with a TEE that is not registered with the EA shall be jointly liable under the Tax and Social Security Procedure Code for all taxes and mandatory social security contributions due by the TEE for the assigned employees, and the value-added tax due on the service. This liability applies up to the amount of the unpaid obligation for the relevant period.
17. Any enterprise that provides temporary employment without registration or in violation of the legal requirements is subject to a fine or pecuniary sanction, which increases with each subsequent violation.
18. The registration of a TEE is terminated, and the TEE is removed from the register of the EA upon:
- a request by the TEE;
- systematic violations of obligations under the Labour Code;
- the TEE carries out activities without registration, established by an enforceable penal order;
- the TEE continues operations while failing to meet any legal requirement, established by an enforceable penal order;
- expiration of the registration period, if it has not been renewed.
The present article is for information purposes only. It is not a (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.
