Non-compete clauses in Bulgaria: why they fail and what protects your IP

Bulgarian courts will not enforce a promise by a departing employee to stay away from competitors; such a clause is treated as void. The Supreme Court of Cassation has taken that line consistently since 2010, on the basis that such a clause conflicts with the right to choose one’s occupation freely in Article 48(3) of the Constitution.

This surprises companies used to drafting twelve-month restrictions as a matter of routine. A template carried over from a US or UK contract will usually still contain one, and it is worth taking it out rather than leaving it in. A clause the courts treat as void gives no protection, and keeping it suggests to the new hire that the rest of the contract was not written with Bulgarian law in mind either.

The protection that does work in Bulgaria comes from other places: who owns the work from day one, how confidential information is defined and guarded, and what an employee may do while still employed. The rest of this article takes those in turn.

During employment the position is different. As a starting point, a Bulgarian employee may take a second job with another employer, but Article 111 of the Labour Code lets the contract exclude that where it is needed to protect trade secrets or to prevent a conflict of interest. A developer working on your product can therefore be barred from moonlighting for a competitor while on your payroll, provided the clause is tied to those reasons and written into the contract.

Notice is the other lever. Open-ended contracts default to 30 days’ notice; the contract can stretch that to as much as 3 months, provided the employee gets the same period when the employer gives notice. A senior engineer on 3 months’ notice cannot start with a rival the following Monday, and until the last day every term of the contract, confidentiality included, still binds them.

Probation is the one stage where this lever is missing. Probation can last up to 6 months, and whoever it was agreed in favour of may walk away during it with no notice at all. Most employers agree probation in their own favour, which suits a cautious start but means the employee could, in principle, walk away just as quickly if the clause was written for both sides. Read the probation clause with that in mind before a hire gets access to anything sensitive.

If you would rather the person did not work out the notice, you can end the contract and pay gross pay for the notice period not served (Article 220). That does not buy a period of restriction afterwards; it only shortens the time the person spends with access to your systems. Our guide to termination notice in Bulgaria covers grounds, notice and compensation in detail.

The employer does. Article 14 of the Copyright and Related Rights Act (Закон за авторското право и сродните му права) hands the employer the copyright in any program or database an employee produces as part of the job, and only a contrary agreement changes that. The Ministry of Labour publishes the text of the Act on mlsp.government.bg.

For most technology hires this is the rule that matters most, and it is favourable to the employer. Source code, schemas, scripts and the database structures a developer builds in the course of the job vest in the employer automatically. No separate assignment is needed for the rule to apply.

Pre-existing material is the other point to settle early. Developers often bring their own snippets, small libraries or open-source contributions into a new job. List anything the person wants to keep as their own in an annex at the start, and agree on what happens if it ends up in your product. That list is much easier to write on day one than to reconstruct during a funding round or a sale.

That said, the phrase “unless agreed otherwise” cuts both ways. A contract that is vague, or a side email promising the developer rights in a tool, can undo the default. It is also worth stating in the contract which work counts as done under the employment: code written on a personal weekend project with no link to the job is a different matter from a fix pushed at 23:00 to the company repository. A short clause describing the field of work and the use of company equipment and systems removes most of the doubt.

For work that is not software or a database, the rule in Article 41 of the same Act is weaker. Copyright stays with the employee as author, but the employer gets an exclusive right to use the work for its own purposes, without further payment, unless the contract says otherwise. The author can claim extra pay if the reward turns out to be clearly disproportionate to the income the work brings.

That covers a wide range of everyday output: user documentation, product designs, illustrations, marketing copy, training material, research reports. The employer can use them in its business, but the default does not give it full ownership, and the phrase “for its own purposes” may not stretch to selling or handing the work to someone else.

The extra-pay right is narrow but real. It applies where the pay the author received is clearly out of proportion to what the work earns, for example a training course written as a side task that becomes a product sold for years. It is rarely raised, but a contract that addresses rights and pay together leaves less room for the argument.

The fix is in the contract. A Bulgarian labour contract for a designer, writer or product specialist should say expressly how rights in the work are dealt with, including any transfer and how it is reflected in pay. Drafting this at the start costs little; untangling it when a client asks who owns the brand assets costs a lot more.

Unlike a non-compete, a confidentiality duty can survive the end of employment. A former employee can be held to obligations not to use or disclose the employer’s trade secrets and confidential information after leaving, and those duties are the main tool Bulgarian employers rely on once a non-compete is off the table.

A confidentiality clause is only as good as its definitions and the facts behind it. In practice that means:

• Defining what counts as confidential in terms that fit the role: source code, client lists, pricing, roadmaps, security set-up.
• Marking sensitive documents and limiting access to people who need it, so the information is actually treated as secret.
• Writing down the return of laptops, phones and access tokens on the last day, and switching off accounts the same day.
• Reminding the leaving employee in writing of the obligations that continue.

For remote staff the device question is simpler than many expect. Bulgarian law makes the employer pay for the equipment, software and data protection measures used in remote work, so laptops and phones are normally company property from the start. Those cost rules also make the return of devices at the end of the job a straightforward matter.

None of this stops a skilled person from taking their experience to a competitor. It does give you a basis to act if they take your files or your client list with them, which is the risk that most employers are really worried about.

Patentable inventions sit under a separate statute, the Patents and Utility Model Registration Act, administered by the Patent Office at bpo.bg. If your hire may produce inventions rather than code or content, have the contract deal with them expressly and take specific advice before filing anything.

The employer rule in Article 14 is written for works created under an employment relationship. Do not assume it reaches someone who works for you on a civil contract (граждански договор). If you use contractors, the transfer of rights has to be written into their agreement, and you should also check that the arrangement is a genuine service contract rather than employment in disguise. Our article on civil contracts and employment in Bulgaria explains where the line falls.

A related gap appears when a company first works with a person as a contractor and later hires them. Rights in work done before the employment started are not covered by the employment rule, so the hiring paperwork should pick up that earlier work too.

We hold the employer’s position for every hire made via Employer of Record Bulgaria, and the person you choose sits on our payroll, so the rules above bind us first. Our agreement with you sets out how rights in the work pass to your business, and the Bulgarian labour contract we sign with the employee includes clauses on intellectual property, confidentiality and, where you need it, a restriction on parallel work under Article 111. It does not include a post-employment non-compete.

The questions clients raise most often are practical ones. Can the employee commit to your repositories under your organisation’s accounts? Yes, and that is the cleanest way to work. Can we put your confidentiality policy alongside our contract? Yes, as long as the two are consistent. Can we add a twelve-month non-compete because head office insists? We will explain why it would not hold, and what can be written instead.

Before the contract is issued we ask you about the kind of work the role produces, the systems the person will use and any information that needs extra protection. Our overview of the EOR role for Bulgarian hires covers the wider duties, and if you are still choosing a provider, put IP handling on the list of things to test a Bulgarian EOR on. If you have a specific role in mind, tell us what it will produce and we will start from there.