In todays’ material we’d like to explain the basics of Agency contracting (staff augmentation) and its specifics set and regulated particularly by the Bulgarian Laws.

Topics covered by the article:

I. Definition of AC (Agency contracting) model

II.  How is AC regulated by Bulgarian legislation

III. Who can perform Agency contracting (staff augmentation) in Bulgaria

IV. Who can benefit from Agency contracting (staff augmentation)

V. How we, ACS BULGARIA, perform the Agency Contracting model

I. What is Agency contracting

Agency contracting model, contracting service, staff augmentation, staff leasing are all terms used to describe the following service:

A hiring practice where businesses can employ and manage people via third party (a licensed agency). These people are called AC employees (Agency contractors). While they work for the business, performing day-to-day tasks under the business organization’s operative mentoring and governance, legally they are employed by a certified Agency via labor contract with all its job-related terms & conditions.

In Bulgaria there is a pre-defined framework of how the staffing service can be provided. There are legal milestones which guide the relations and interactions between Customer (the business), Provider (the Agency) and Employee (the Agency contractor). For example the maximum period of AC employment on the same job, for the same employer set by Bulgarian legislation is 3 years. 

Both business organization (Customer) and Agency share the responsibility of people’s employment under AC. (There’s a roles and responsibilities split for both Customer and Agency when it comes to peoples’ employment).

II.    How is AC (Agency Contracting) defined and regulated by Bulgarian legislation

Hiring people to perform tasks & cover scope outside the business company, via 3rd party (a licensed Agency) is governed by the Agency Contracting regulation in Bulgaria. Agency contracting model is the only legal and safe frame for staff augmentation in Bulgaria.

Here’s how a business organization and a certified Agency divide their roles and responsibilities of people’s employment in general:

1. The Business company

a) Is customer to the Agency. As such, prefers not to hire directly employees within the client’s organization, but needs people to perform tasks for specific project, or needs people with specific skills and experience to provide their input in customer’s project / process temporarily

b) Sets the parameters of employment in their hiring request to the Agency which pretty much reflects on the following recruitment process (candidate profile, experience, languages, certain technical & soft skills, remuneration, working hours, etc.)

c) Approves/ declines candidates for the job

d) Provides working space, hardware, account access within their organization to the new employees

e) Is responsible for the operative onboarding & training of the new hires

f) Is responsible for the day-to-day operative management of the AC employees

g) Approves remunerations, benefits, annual leaves’ usage

h) Pays a pre-agreed monthly fee to the Agency for using their resources – hired AC employees (agency contractors) that perform the day-to-day tasks for the business organization.

2. The Agency

a) Is the AC employee’s official legal Employer

b) Hires on behalf of the Client (business company)

c) Performs HR services like: sourcing, recruitment, headhunting, hiring in accordance to the job-related terms pre-agreed with Customer (business organization) and in line with Bulgarian Law’s regulations

d) Performs administrative work like preparation and storage of all kinds of employment documents (from initial hiring to termination), payment of salaries, taxes, benefits, etc.

e) Monitors the proper execution of the commercial agreement between Agency and Business client regarding people’s terms of employment like: working hours, equality of the AC employees’ working conditions & benefits with client’s inner staff, performance of tasks within the pre-agreed working scope aiming to prevent unapproved overload of the AC employees.

f) Secures fast sourcing and recruitment on free or newly opened positions

g) Upon request provides necessary replacements (if for some reason an AC employee quits or is terminated)

h) Provides consultancy on retention to the client ( the business organization)

i) Generates specific pre-agreed monthly report and invoicing

The AC model helps business organizations focus on their operations and business development while outsourcing all HR and recruitment activities with their accompanying administration to the licensed hiring Agency. 

III.  Who can perform Agency contracting (staff augmentation) in Bulgaria

You’ve probably noticed that on numerous occasions we’ve mentioned a “licensed agency”. That’s because according to the Bulgarian Code only certified by the Ministry of Labor companies can legally hire and manage employees under the Agency contracting model.

N.B. AC Model’s Certification and proper legal execution are both equally crucial. 

Why is this clarification so important?

Because there are certified companies which do not follow completely the legal process of employment. As they don’t incorporate the requirements, such vendors practically hide the AC model under standard employment contracts, as well as commercial contracts which do not refer to the Bulgarian regulation.

Providing “staff augmentation/ body leasing” incorrectly puts the client at legal risk and inconvenience since they also share the responsibility of AC contractors’ employment.

IV.   Who can benefit from Agency contracting (staff augmentation)

The AC model can be very beneficial for businesses that:

1.    Need to hire people for specific tasks temporarily, without any additional risks and costs.

2.    Need to be flexible in terms of scalability and must navigate these changes as save and smooth as possible.

3.    Prefer not to directly hire employees within their organization.

4.    Need people with specific knowledge and skills to provide their input in the company’s projects / processes temporarily (as mentioned before, BG Law has set a maximum of 3 years employment contract under the AC model).

5.    Need to outsource the HR, administrative and legal tasks regarding the governance of new employees.

6.    Need the knowledge and expertise of hiring agency that can provide incentives on labor market and conditions, cost savings, cost avoidance, up-to-date legal consultancy on labor code regulations & requirements.

Agency contracting model is suitable for both start-ups and established national and multinational companies with active business operations or planning to transfer business operations here in Bulgaria.

V. How we, ACS Bulgaria, perform the Agency contracting service

As we’ve already said, our company is a licensed Agency. We have adopted the legal terms and requirements into our “How to do Agency contracting“, designing an versatile “Cookbook” for our partners which secures:

  • Quality of hiring
  • Communication efficiency
  • Legal Compliance and security for all involved parties – customer/ employee/ agency-employer
  • Cost control and transparency

 

Our team has the knowledge and 10+ years of experience in providing a high-class service for local and multinational businesses, establishing various outsourcing operations in Bulgaria.

In our practice with international clients we’ve gathered that sometimes AC regulations may be confusing for foreign line managers as they happen to assume that the AC model in Bulgaria is the same as the relevant regulation in their native countries. Well, often there’re some differences.

Here’s what we do to prevent as much as possible any misinterpretations that may affect the proper execution of Agency contracting service for all parties (customer, vendor, employee).

agency-contracting-acs-bulgaria-staff-augmentation-service

1. Our engagement process in (very) short:

1.1 AC model onboarding

As an AC provider it’s our responsibility to onboard the client on AC model and its specifics in accordance to Bulgarian legislation.

1.2 Provide the “AC equipment”

We equip the customer with all documental prerequisites related to the management of the AC model, cover its end-to-end governance and perform relevant monthly reporting (MBRs).

    1.3 Agency contracting topics – Point on contact

We remain the first point of contact for questions related to employment & legislation topics, AC governance & regulations. Our team also collaborates with customer’s inner HR team during national agency audits, ensuring transparency & compliance for both sides.

agency-contracting-cookbook-staff-augmentation-service-by-acs-bulgaria

2. OUR Company’s AC model Cookbook

To make things clearer and processes easier to follow for both parties (Customer and Agency) we’ve created our company’s Agency contracting model Cookbook. It is a formal framework design in accordance to the business needs and in compliance to Bulgarian legislation.

The AC model Cookbook of ACS Bulgaria gives a simple and structured guidance of how the AC model can work efficiently satisfying the business as well as the law requirements. We provide our customers with this material and also adapt it to the specifics of the very business (when there are such to be taken into account).

3. No additional / unexpected costs

We are fully transparent about our pricing and reference to the code. There are no unexpected, additional or deposit charges taking place. For example some agencies require deposit charges of 2-3 gross salaries on a role upon hiring. Well, we don’t. 

All expenses and taxes are included in the summary of our pricing calculations. We make sure the client fully understands and accepts the details so there are no unpleasant surprises afterwards. 

As a service partner our company counts on clear approach where results speak best. 

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4. Our dedicated AC Manager

In order to perform a high-class service we also provide a dedicated Agency contracting Manager as a SPOC to the client. Customer using the Agency contracting service can rely on their assigned AC manager for:

  • initial forecasting on things like: time of sourcing / hiring, closing a vacancy, pool size and expected applications & specifics, estimation of potential buyout cost or network channels, estimation of monthly charges
  • management of: recruitment reporting, interviews coordination, ongoing governance with customer via established process flow (described in the AC cookbook)
  • Ongoing monthly support: our AC manager provides the monthly invoicing, legislation support, assists the Customer in the legal execution of activities like promotions / recognitions / demotions / terminations

You can find more info about how we perform the AC model here.

Conclusion

In order to establish a successful business operation in Bulgaria under the Agency contracting model, organizations need a competent and trustworthy AC business partner who is:

  • familiar with BG code’s specifics for the business ramp-up
  • capable to prevent legislation risk and capacity changes
  • providing ongoing HR support
  • ensuring stability of the manpower hired and efficiency in souring / recruiting / filling new roles
  • providing incentives on available financial and legal optimizations

We do all that and more (upon request of course:)). The biggest benefit of Agency contracting service model is that when performed properly and inline with both business objectives and legal regulations it gives the organizations more flexibility in terms of overall performance, productivity effectiveness and cost optimizations all at once.

Is your organization considering changes or structural innovations that may benefit from applying the AC model? 

Don’t hesitate to contact us. We’d be happy to help with the process.