Dismissals in Bulgaria

1. Dismissal of employees

1.1 Reasons for dismissal

An employment contract can be terminated at any time by an employee with notice, without having to justify the termination. In some cases (exhaustively provided in the Bulgarian Labour Code) the employee is entitled to terminate the employment contract in writing without notice.

Termination of employment contracts by an employer can only take place on the exhaustive grounds provided for in the Bulgarian Labour Code. Reasons relate to the employee (e.g. lack of efficient working performance), business (e.g. business closure, reduction of work volume), and conduct (e.g. disciplinary breaches).

1.2 Form

Must be in writing, signed by the employer. Must be registered with the National Revenue Agency within seven days of signature.

1.3 Notice period

For ‘indefinite’ term employment contracts: statutory minimum notice period of 30 days, statutory maximum of three months.

For ‘limited’ term  employment contracts: statutory minimum notice period of three months, but the notice period may not be longer than the unexpired term of the contract.

1.4 Involvement of works council

No works council involvement.

If an employee is an elected employee representative, prior approval for his dismissal must be sought from the National Labour Inspection.

1.5 Involvement of a union

If an employee belongs to the management of an establishment-based union, or a national, territorial or branch union, prior approval for his dismissal must be sought from that union. This protection applies in case the employee is dismissed on certain exhaustively provided grounds and while the employee is a member of the union management, and for up to six months after he ceases to be a part of its management.

Where so provided for in the collective agreement, the employer may dismiss an employee due to downsizing of personnel or reduction in the volume of work after obtaining the advance consent of the relevant trade union body in the enterprise.

1.6 Approval of state authorities necessary

In case the employee is dismissed on certain exhaustively provided grounds the permission of the labour inspectorate should be obtained prior to dismissal for certain groups of employees: pregnant female workers; female workers in an advanced stage of in vitro treatment; mothers of children below the age of three years; occupational rehabilitees; employees suffering from diseases explicitly listed in a regulation of the Council of Ministers; employees on leave; elected workers’ representatives; elected workers’ representatives on health and safety at work matters; members of special negotiation bodies, European works councils or representative bodies of European companies or cooperatives.

Employees on maternity leave (410 days, of which 45 days before giving birth) can only be dismissed in the event of closure of the whole business. This limitation is absolute and cannot be overcome with any approval of state authorities.

1.7 Collective redundancies

Collective redundancies are dismissals within 30 days performed at the sole discretion of the employer, for reasons not related to the dismissed employees, of the following numbers of people:

  1. at least ten employees in establishments of more than 20 and less than 100 employees; or
  2. 10% of the employees in establishments of 100 to 300 employees; or
  3. at least 30 employees in establishments of more than 300 employees.

If at least five dismissals have taken place within a period of 30 days, every new dismissal at the sole discretion of the employer for reasons not related to the dismissed employee shall be added up to the total number of dismissals for the purposes of evaluating whether a collective redundancy has taken place or not.

Certain reporting and consultancy obligations exist for employers in the event of collective redundancies. Consultations with the union representatives and the employees shall start at least 45 days before the collective redundancies. Thirty days before the collective redundancies, employers shall notify the Employment Agency.

1.8 Summary dismissals

Dismissal without notice is possible in the event of a serious breach of duty or for reasons related to the individual (e.g. deprivation of the right to exercise the job based on a court sentence or an administrative act).

1.9 Consequences if requirements are not met

If such a dismissal is challenged in court, it may be declared wrongful and repealed on these grounds, an employee may be reinstated to his previous job, and a court may award compensation (equivalent to no more than six monthly salaries for the period of unemployment resulting from the dismissal).

1.10 Severance pay

Statutory maximum severance payment of one month’s salary for dismissals on specific grounds (e.g. closure of the establishment, partial closure of the establishment, staff cuts, etc.).

Two months’ salary for dismissal due to disability or hazard to the health of an employee, if the employee has worked for at least five years and has not received such severance pay in the last five years.

Two months’ salary for termination of the employment contract of an employee, whatever the grounds, who has reached the required retirement age and length of service.If the employee has worked for the last ten years with the same employer, the severance pay amounts to six months’ salary. Such severance payment shall be due only once.
Compensation for the non-used annual leave.

Where the employment contract is terminated against payment of compensation by mutual agreement on the initiative of the employer, the severance pay is in the amount of at least  four monthly salaries of the employee.

1.11 Non-competition clauses

Employees are entitled to work for other employers outside the working hours of their primary employment contract unless stipulated otherwise in the contract.

Post-contractual non-competition covenants are not regulated by statute. According to Bulgarian case law, such covenants are not considered valid.

1.12 Miscellaneous

Not applicable.

2. Dismissal of managing directors

2.1 Reasons for dismissal

A company may revoke the appointment of a managing director and terminate his service contract without cause at any time. Managing directors are hired under service contracts (called management and representation contracts), and not employment contracts.

2.2 Form

Valid shareholders’ resolution on revocation of appointment as managing director. Termination of the contract must be in writing.

2.3 Notice period

Revocation of appointment by the company: possible without notice.

A managing director can request that the company release him from office. If the company fails to do so within one month (for limited liability companies) or six months (for joint stock companies), the managing director is entitled to deregister himself as a managing director from the Bulgarian Commercial Register, regardless of the lack of revocation of appointment.

2.4 Involvement of works council

Termination of the service contract: no statutory regulation of the notice period; depends on the agreement between the parties.

2.5 Involvement of a union

Not applicable.

2.6 Approval of state authorities necessary

Not applicable.

2.7 Collective redundancies

Not applicable.

2.8 Summary dismissals

Not applicable.

2.9 Consequences if requirements are not met

Not applicable.

The revocation of an appointment as managing director is invalid without a valid shareholder resolution.

2.10 Severance pay

No statutory severance pay. Severance pay is subject to negotiation.

2.11 Non-competition clauses

Unless explicitly waived by the company, non-competition restrictions apply to managing directors for the period of their mandate.

Post-contractual non-competition clauses are not explicitly regulated by statute. Such covenants may be agreed upon in a service contract but their enforceability may be arguable.

2.12 Miscellaneous

Not applicable.