Termination in Bulgaria

Navigating employment termination in Bulgaria requires a thorough understanding of the Labour Code to ensure compliance and avoid legal challenges. Both employers and employees have specific rights and obligations that must be strictly adhered to throughout the termination process. The procedures, notice periods, and severance entitlements vary depending on the grounds for termination and the type of employment contract in place.

Employers considering ending an employment relationship in Bulgaria must follow precise steps, including providing proper written notice, stating valid grounds for dismissal, and calculating any applicable severance pay correctly. Failure to comply with these legal requirements can result in the termination being deemed unlawful, leading to potential reinstatement of the employee and significant financial penalties for the employer.

Notice Period Requirements

The required notice period for terminating an employment contract in Bulgaria depends primarily on the type of contract and the grounds for termination. Providing the correct notice is a fundamental step in the termination process.

Contract Type	Termination Ground (Employer Initiated)	Minimum Notice Period
Indefinite Term	Without Cause (e.g., redundancy)	30 days
Indefinite Term	With Cause (disciplinary)	No notice required
Fixed Term	Before expiry (if allowed by contract)	30 days
Fixed Term	Upon expiry	No notice required
Probationary Period	During or at end of probation	1 day

• The notice period starts running from the day following the date the notice is received by the other party.
• Notice must be given in writing.
• Parties can agree on a longer notice period in the individual employment contract, but it cannot be shorter than the statutory minimums.
• An employer can terminate an indefinite contract without cause by paying compensation in lieu of notice, equivalent to the employee's gross salary for the notice period.

Severance Pay

Severance pay entitlements in Bulgaria are strictly regulated by the Labour Code and depend on the specific grounds for termination. Not all termination grounds trigger a severance payment obligation for the employer.

Termination Ground (Employer Initiated)	Severance Calculation Basis	Minimum Entitlement
Redundancy, closure of part/whole enterprise, reduction of staff	Employee's gross monthly salary	1 month's gross salary
Employee's illness or inability to perform work (after medical assessment)	Employee's gross monthly salary	2 months' gross salary
Retirement (employee becomes eligible for full state pension)	Employee's gross monthly salary	2 months' gross salary (if worked for the employer for at least 10 years of their total service and with the same employer for at least 2 years)
Fixed-term contract expiry	Employee's gross monthly salary	1 month's gross salary (if the employee has worked for the employer for at least 1 year)
Termination due to change in employer/ownership	Employee's gross monthly salary	2 months' gross salary

• Severance pay is typically calculated based on the employee's last gross monthly salary.
• The Labour Code sets minimum entitlements; individual contracts or collective agreements may provide for more favorable terms.
• Severance pay is generally subject to income tax and social security contributions.

Grounds for Termination

Employment contracts in Bulgaria can be terminated on various grounds, initiated by either the employee, the employer, or by mutual agreement. Employer-initiated terminations are broadly categorized as those with cause (disciplinary) and those without cause (non-disciplinary).

Termination Without Cause (Non-Disciplinary):

These grounds are typically related to the employer's operational needs or external factors, not the employee's fault. Common examples include:

• Closure of the enterprise or part of it.
• Redundancy of staff.
• Reduction of staff.
• Decrease in the volume of work.
• Change in the requirements for the position if the employee does not meet them.
• Employee's inability to perform work due to illness (under specific conditions and medical assessment).
• Retirement eligibility.

Termination With Cause (Disciplinary):

These grounds are related to the employee's conduct or performance and are considered disciplinary dismissals. Examples include:

• Gross violation of labour discipline (e.g., absence without leave, showing up intoxicated, theft).
• Repeated minor violations of labour discipline.
• Abuse of employer's trust or disclosure of confidential information.
• Damage caused to the employer's property.
• Failure to perform work duties.

Other grounds for termination include mutual consent, expiry of a fixed-term contract, completion of specific work, and termination during or at the end of a probationary period.

Termination Procedure

A lawful employer-initiated termination in Bulgaria requires strict adherence to procedural requirements. Failure to follow these steps can render the dismissal invalid.

1. Identification of Valid Ground: The employer must have a legally recognized ground for termination.
2. Written Notice: A written notice of termination must be prepared and delivered to the employee. The notice must clearly state the legal ground for termination and the effective date. For disciplinary dismissals, the notice must also describe the specific violation(s).
3. Delivery of Notice: The notice must be personally delivered to the employee, who should sign to acknowledge receipt. If the employee refuses to sign, the notice can be sent by registered mail with return receipt or delivered before witnesses.
4. Issuance of Termination Order: Following the expiry of the notice period (or immediately for disciplinary dismissals where no notice is required), the employer issues a written order for termination. This order formally ends the employment relationship.
5. Documentation: The employer must prepare and provide the employee with necessary documents, including a certificate of employment (Trudova knizhka) with the termination details recorded, and a certificate for income and social security contributions.
6. Registration: The termination must be registered with the National Revenue Agency (NRA) within a specified timeframe.

Common Termination Pitfalls:

• Using an incorrect or invalid ground for termination.
• Failing to provide the statutory minimum notice period or pay compensation in lieu.
• Incorrectly calculating or failing to pay due severance.
• Procedural errors, such as failing to provide written notice, incorrect content of the notice, or improper delivery.
• Lack of sufficient evidence to support disciplinary grounds.
• Failure to consult with trade unions or employee representatives where required (e.g., for collective redundancies).

Employee Protections and Wrongful Dismissal

Bulgarian law provides significant protections for employees against unfair or unlawful dismissal. Employees who believe their termination was unlawful have the right to challenge it in court.

Protections Include:

• Requirement for Valid Ground: An employer cannot terminate an employee without a ground explicitly listed in the Labour Code.
• Procedural Requirements: Strict procedures must be followed; failure to do so can invalidate the dismissal regardless of the ground.
• Protection for Specific Categories: Certain categories of employees, such as pregnant employees, employees on maternity leave, employees with reduced working capacity, and trade union representatives, benefit from enhanced protection and may require permission from the Labour Inspectorate or other bodies before termination.
• Right to Challenge: Employees can file a claim in court to contest the legality of their dismissal within a specific time limit (usually 2 months from receiving the termination order).

Wrongful Dismissal:

A dismissal is considered wrongful if it is carried out without a valid legal ground or if the required legal procedure is not followed.

Remedies for Wrongful Dismissal:

If a court finds a dismissal to be wrongful, it can order:

• Reinstatement: The employee can be reinstated to their previous position.
• Compensation: The employer may be ordered to pay compensation to the employee for the period they were unlawfully unemployed. This compensation is typically limited to a maximum of 6 months' gross salary, although additional compensation may be awarded in specific circumstances.
• Correction of Documents: The court can order the employer to correct the entries in the employee's employment documents.

Understanding and correctly applying the Bulgarian Labour Code provisions on termination is crucial for employers operating in the country. Engaging with local experts or an Employer of Record can help ensure compliance and mitigate legal risks associated with ending employment relationships.