An apocryphal story about an engaged employee goes: when asked what he does, a NASA janitor answered ‘I’m helping put a man on the Moon!’. Every company would undoubtedly cherish such engagement on their employee’s part, and every employee would be happy to work for a company worthy of such loyalty.

Out of all the tools for attracting good experts, for their retention and increasing staff motivation and fostering of loyalty, there is one tool that is often overlooked by employers – namely, a well-drafted employment contract. Employers often take the employment contract as a formality without ever realizing the potential of the document and how it can be used to bring maximum value to the company. The provisions of the employment contract can be used not only to settle the relationship between employee and employer, they can also serve to increase employee effectiveness by fostering engagement and loyalty.

The IT business is subject to serious competition between employers where each one strives to offer various attractive working conditions. Since salary levels, social benefits and other financial means which employers offer are gradually evening out and reaching the maximum worldwide standard, companies increasingly resort to different non-economic conditions, such as flexible working time, distance employment, in-house and outsourced trainings, options for advanced training, procedural and financial relocation support etc. Felicitous drafting of the employment contract between the parties is a guarantee for these beneficial conditions. Even though at first glance these measures seem ordinary, oftentimes employers and employees alike encounter administrative or contractual pitfalls which the parties have neglected to consider or incorporate into the employment contract.

1. Home Office.

The IT industry is notoriously less dependent on the employee’s presence in a physical office compared to a number of other fields, and the practice of working from home is increasingly gaining ground. For many workers, the possibility to work from home at least part-time is a necessary element of employment; the lack thereof can even lead to refusal to work for an employer who does not offer this opportunity. The existence of this ‘home office’ clause provides the employee with a much greater degree of flexibility and the freedom to manage their time, while the employer often sees this as an opportunity to cut down on office maintenance costs.

Despite the obvious benefits to both parties and that the agreement is entirely consensual in character, it should be noted that the employee is still subject to a number of work-related rules and the employer is responsible for observing the requirements for healthy and safe work environment – therefore the relationships regarding these elements need to be described in detail in the employment contract and the necessary setup be created.

The matters regarding intellectual property rights, data protection and software security are of particular sensitivity during distance work – we recommend they be well regulated by the contract to avoid potential future issues.

2. Remote office outside Bulgaria.

In an increasingly integrated EU valuable experts can choose to work remotely for an employer in one member state while their home is situated in another. Even though rarely utilized, employers still have the possibility to hire workers working in a member state different from the one in which the company is headquartered by respecting the specific rules of domestic legislation. More often than not employers will instead send workers in another member state for a period of up to 2 years to work on shared international projects, while the employees are given the opportunity to acquire new knowledge and experience without losing the security of their long-term employment relationships back home. Posting of workers is suitable for companies who work on temporary international projects within the EU and for employees who value the option of labour mobility within the Union and the opportunities that temporary emigration provides.

Conveniently for the employer, the employment contract is subject to the rules of the employer’s ‘home’ legislation with the caveat that the posted worker is guaranteed a number of minimum standards of work. Generally, the employee is entitled to those conditions of the sending and receiving state which are more beneficial to him. In order to safely offer this attractive opportunity for many employees, we recommend that the employer obtain in-depth knowledge of the market and legislative status quo in the state to which the workers will be posted, and to refer the matter regarding the necessary paperwork needed for the smooth completion of the procedure and the peaceful relocation of the employee to a migrations and labour law expert.

3. Procedural and financial relocation support.

Speaking of postings, it should be noted that few workers would be fascinated by the idea of moving to another country if this required excessive efforts and spending on their part (regardless of whether the matter is temporary movement within the EU or immigration from a third country on work permit grounds). Employers often find it more convenient and secure to take the weight off their employees’ shoulders (and bank accounts) by covering the necessary expenses related to travel as well as to the paperwork for employee relocation. Since this is activity is not per se typical for companies in IT, using the services of jurists specialized in these matters can save the company time and money, while at the same time company directors and HR managers do not have to navigate the complicated and often contradictory regulatory framework of transboundary employment contracts. This is doubly true when hiring specialists from third countries, procurement of the necessary documents and permits for the employees as well as their family members, eventually.

4. NDAs and non-compete clauses.

In a branch such as IT which is built upon sensitive information and know-how the NDAs are an unavoidable element of the employees’ employment contracts which is especially relevant to cases where the employer is unable to directly control third party access to the employee’s work station. Even though the employee is obligated not to disseminate confidential information pursuant to art. 126, p.9 of the Labour Code and the sanctions for the use of such information by third parties is partially governed by the Bulgarian Law for protection of trade secrets, it is recommended that the NDA clauses include penalties in case of breaches which have a deterrent effect on the employee; in any event, these penalties must not be excessive or contravene morality, lest they be deemed null and void.

Employers often resort to non-compete clauses in the employment contracts to safeguard their interests. The practice is entirely understandable given the characteristics of IT, but it is important that these clauses be structured very carefully, under penalty of being null and void and leaving the employer defenseless. For example, a non-compete clause forbidding simultaneous merchant activities or employment with another employer for the duration of the employment contract is entirely fitting, but on the other hand it can be easily refuted by the employee if it encompasses a period after the termination of the employment contract.

5. Vocational training clauses.

When choosing employers, Many IT specialists pay special attention to the technologies employed by their prospective employer and to the opportunities for working with the state-of-the-art programming languages and platforms, as well as the options for familiarization with new technologies, seminars and trainings. Employees often choose employers who are willing to invest in their training and development and who offer opportunities for advanced training and requalification or career advancement. The contracts for training while working pursuant to Art. 230 of the Labour Code and for advanced training and for requalification pursuant to Art. 234 of the Code are a fitting tool for the job. They allow employers to invest in the necessary development of their workers all the while giving the company the assurances that they will be able to reap the harvest of this investment. These contracts offer employees possibilities for career growth within the company which in turn utilizes their skills in its own development.

What the two contracts have in common is that by definition they always incorporate the employee-in-training’s obligation to work for the same employer for a certain period of time (no more than 3 years regarding the contract for training while working pursuant to Art. 230 of the Labour Code and no more than 5 years regarding the contract for advanced training and for requalification pursuant to Art. 234 of the Code) and the worker owes compensation to the employer in the event that the former fails to comply with their obligation. The negotiated penalty acts as a deterrent for employees that wish to terminate their employment prematurely and on the other hand indemnifies the employer for any injury suffered as a result of the employee’s departure.

It should be noted that the improper implementation of this regime towards foreign specialists hired on the grounds of a work permit (most often the Blue Card of the EU) might be fatal for the permit for which employers have gone through a cumbersome and rigorously formalistic procedure usually filled with unforeseen hurdles.

Of course, the aforementioned list is far from exhaustive, and the Labour Code and practice further provide the employer with a number of options through which to directly motivate their employees with financial bonuses and various incentives in kind. Obretenovi Law Firm’s team will gladly consult you regarding any possibilities for incentivizing and developing your employees.