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Employment Encouragement Act (The Act) was promulgated in the State Gazette issue 112 of 29 December 2001 and was enforced on 1 January 2002. The Act partially repealed Employment Protection and Encouragement Act (promulgated in the State Gazette issue 120 of 16 December 1997 and enforced on 1 January 1998) and thus only its provisions regulating the voluntary unemployment insurance are still in force.

The new Act regulates the relations arising out of protection and support of employment, professional guidance and advising, training designated to gaining professional qualification by both employed and unemployed persons, employment intermediary services rendered with respect to guidance and hiring of Bulgarians in the country and abroad and hiring of foreigner in Republic of Bulgaria.

The Act prohibits both direct and indirect discrimination as well as any privileges and restrictions regarding the execution of the rights and obligations arising out of its provisions. With that respect, the employers are not allowed to consider the age, the sex, the health, the nationality and the ethnical affiliation when defining the terms and conditions related to occupation of vacancies. The only exception is provided for the sex, the age and the decreased working capacity when they are essential component of the job substance.

According to the Act, the Council of Ministers defines the employment policy of the state which financing shall be executed on the basis of the approved applications of the Ministry of Social Affairs in accordance with the terms and conditions regulated by the Rules on Implementation of the Act. For the purposes of bringing into effect of the state policy on employment encouragement, two new bodies are established, namely an Employment Agency set up with the Minister of Social Affairs as a full legal successor of the National Employment Office and a National Council on Employment Protection as a permanently acting advisory body for co-operation when developing the employment policy.

The new Act regulates in detail of the persons seeking for job as well as those of the employers and provides the latter with the opportunity to announce the available vacancies with the local departments of the Employment Agency together with the training needs of their employees. With respect to the above, the Act obliges the employers within 3 days to inform the respective local department of the Employment Agency about the occupied positions and the reduced ones that that have been announced as vacant, about the unemployed persons, who refused to accept the appropriate job offered, and about the employers' refusal to hire unemployed persons sent by the respective local department of the Employment Agency. The employers are entitled to make themselves a selection among the unemployed persons recommended by the respective local department of Employment Agency or upon preliminary request filed with the Agency to request from the latter the fulfillment of such selection.

The Act defines the employment intermediary services and specifies the body and the entities entitled to render such services, namely the Employment Agency as well as natural persons and legal entities duly registered under the Bulgarian legislation and licensed for carrying out such services. The employers as well as the persons seeking for job have the right to benefit from the employment intermediary services while the foreign employers can be rendered such services by the Employment Agency under a procedure determined by the Council of Ministers.

The Act regulates the planning of programmes and measures on employment encouragement including opening of new job positions and encouragement of entrepreneurship. The designing of programmes and measures for employment of young people as well as of programmes and measure ensuring equal opportunities on the labour market by means of social-economic integration of risk groups of people are also regulated. With this respect the Act provides for preferences for those employers who hire certain categories unemployed persons sent by the respective local department of the Employment Agency under which for certain period of time the amounts due for the respective remuneration together with the social security contributions and health insurance payable on behalf of the employer are transferred to the latter on the basis of a contract.

The Act regulates "mass redundancy" and defines them as redundancies undertaken by the employer within a period of 30 days on one or more legal grounds that do not relate to the personality of the employees, when the number of the redundancies exceeds a certain ratio compared with the total number of employees. The employer is obliged to notify in writing the Employment Agency regarding a contemplated mass redundancy not later than 30 days in advance. The non-performance of this obligation by the employer will lead to imposing of sanctions.

The Act makes amendments to the Foreigners Act those related to the employment of foreigners in the country. According to the effective legislation a foreigner can be employed on the territory of Republic of Bulgaria or assigned there within the scope of a service agreement only after obtaining of work permit issued by the Employment Agency upon request of a local employer. The work permit is issued for a period of one year. This term can be prolonged is the grounds for its initial issuance are still valid. Such permit is not needed for foreigners having permanent residence in the country or for those having equal status to whom rights of sanctuary or a refugee status is granted.

The amended regime provides for an opportunity for foreigners to reside on the territory of the Republic of Bulgaria for the purposes of carrying out free lance activities. Such foreigners can be granted a visa or a residence permit if they meet the legal requirements established for entry and stay in the country and submit to the respective embassy and to the authorities exercising administrative control a sample application together with a permission for carrying out free lance activities. The free lancers permits are granted by the Minister of Social Affairs under a procedure defined in an Ordinance issued by the Minister Social Affairs in coordination with the Minister of Internal Affairs and the Minister of Finance.