site.btaSupreme Court Leaves Standing Government Decree Fixing Minimum Wage

By an unappealable judgment dated June 25, 2025, a five-judge panel of Bulgaria's Supreme Administrative Court (SAC) left standing a Council of Ministers decree of October 23, 2024 fixing the national minimum wage and denied a motion to approach the Court of Justice of the European Union (CJEU) with a request for a preliminary ruling on the compatibility of a Labour Code article with provisions of a EU directive.

The SAC adjudicated on an appeal lodged by the Bulgarian Industrial Capital Association (BICA) against a judgment of a three-judge panel of the same court.

Decree No. 359 set the minimum monthly wage at BGN 1,077, effective January 1, 2025. It was issued pursuant to Article 244 (2) of the Labour Code, which obliges the Council of Ministers to fix the national minimum wage for the next calendar year by September 1 of the current year in an amount equivalent to 50 per cent of the average gross wage for a 12-month period including the last two quarters of the preceding year and the first two quarters of the current year.

The cassation appellant argued that the government had adopted the decree at issue despite the objections of one of the social partners and ignoring their arguments. BICA insisted that the decree violated the International Labour Organization's Minimum Wage Fixing Convention (No. 131), ratified by Bulgaria in 2018, according to which the general level of wages in the country, the cost of living, social security benefits, the relative living standards of other social groups, levels of productivity and the desirability of attaining and maintaining a high level of employment should be taken into consideration in determining the level of minimum wages.

The employers' association also asserted that the CJEU should be requested to rule on whether Article 244 (2) of the Labour Code conforms to Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union, which requires from Member States to establish the necessary procedures for the setting and updating of statutory minimum wages guided by criteria set to contribute to the adequacy of such wages, with the aim of achieving a decent standard of living, reducing in-work poverty, as well as promoting social cohesion and upward social convergence, and reducing the gender pay gap. Member States must define those criteria in accordance with their national practices in relevant national law, in decisions of their competent bodies or in tripartite agreements, taking into account their national socioeconomic conditions.

The appellant argued that the approach underlying Article 244 of the Labour Code does not take into consideration these criteria but, worse yet, it eliminates the role of social partners in the process.

In BICA's opinion, the minimum wage fixing by a "primitive and erroneous formula" gives rise to unfavourable consequences for enterprises, affecting worst those in low value added sectors. Instead, the minimum wage should be fixed on the basis of a realistic assessment of economic conditions, the employers said. They warned that the rise would result in job losses and will put off new investments, with most detrimental impact on small and medium-sized business. "The unwarranted pay rise of the lowest skilled workers will be at the expense of medium-skilled workers, which will demotivate both to upskill and boost their labour contribution," the Association argued.

The Supreme Court found that the Council of Ministers decree was consistent with the purpose of the Labour Code to regulate the price of low-skilled labour, taking into account the across-the-board impact of this income benchmark both with regard to social development and with regard to Bulgarian enterprises' competitiveness. 

The Court quotes a provision in the Constitution, according to which factory and office workers have the right to a minimum labour remuneration and to pay commensurate to the work performed.

The SAC held that the conformity of the national framework to the EU criteria and minimum wage-fixing machinery does not call for a preliminary ruling by the CJEU.