Dismissals and Termination of Employment in Bulgaria

An employment contract can be terminated at any time by the employee with prior notice without having to justify the termination. In cases exhaustively listed by law, the employee may terminate the employment contract without prior notice (e.g., acquiring the right to retirement pension, late payment of salary by the employer, etc.).

Termination of the employment contract by the employer can take place on an exhaustive number of grounds provided in the law. In most cases, termination requires prior notice, and in limited number of cases (such as, disciplinary dismissal) termination shall be without prior notice. The grounds for the termination may relate to the employee (e.g., lack of efficient working performance, grieving disciplinary breaches) or not (e.g., closure of the enterprise, reduction of work volume, downsizing of staff).

The termination documents must be in writing. Termination must be registered with the National Revenue Agency within seven days.

The notice period for termination of employment may be between 30 days and 3 months for indefinite-term contracts. For fixed-term employment contracts, the notice period is 3 months but not longer than the remaining term of the contract. EU/EEA/Swizz nationals can work both under fixed-term and indefinite-term employment. However, non-EU/EEA/Swizz nationals work under fixed-term employment contracts, and the notice period is 3 months.

The party terminating the contract and the other party may not observe the whole or part of the notice period. In such cases, compensation in the amount of the employee’s gross salary for the unobserved notice period is due.

If an employee is an elected employee representative, prior approval for their dismissal shall be sought from the National Labour Inspectorate.

Collective redundancies and company changes that may affect the employment within the enterprise, require prior consultation with the employees’ representatives.

Members of the trade union leadership (at company, territorial, sectoral or national level), during the time holding the position and for 6 months afterwards, can be dismissed with the prior agreement of a designated trade union body.

Collective redundancies require prior consultation with the employees’ representatives.

Dismissal on certain grounds (e.g., downsizing, disciplinary dismissal, etc.) require prior permission of the Labour Inspectorate (and in some cases medical authorities) for the following protected groups: (i) mothers of children below the age of three years; (ii) employees for whom special work conditions are provided based on decision of medical authorities in view of disability or health issues; (iii) employees suffering diseases explicitly listed in a dedicated ordinance; (iv) employees using any type of statutory regulated leave; (v) employees’ representatives; (vi) members of special negotiation bodies, European works councils or representative bodies of European companies or cooperatives.

Female employees who are pregnant or in an advanced stage of in-vitro treatment can be dismissed on a restricted number of legal grounds. Where the ground for termination is disciplinary dismissal, prior permission from the Labour Inspectorate is needed. Employees using parental leave (410 days, of which 45 days before birth) can only be dismissed in the event of closure of the whole business. This protection cannot be overcome with any approval of state authorities.

Collective redundancies are dismissals for reasons not related to the individual employee, where the number of dismissals over a period of 30 days is: (i) at least 10 dismissals in enterprises with more than 20 and less than 100 employees; (ii) of at least 10% of the employees are dismissed in enterprises with at least 100 and not more than 300 employees; (iii) at least 30 dismissals in enterprises with 300 or more employees. Where the employer has dismissed at least 5 employees during the 30-day period, any subsequent termination of employment made at the employer's discretion on other grounds and for reasons unrelated to the employee shall be taken in account when counting the number of dismissals.

There are reporting and consultancy obligations for employers in the context of collective redundancies. Consultations with trade unions and/or employees’ representatives shall start at least 45 days before the collective redundancies. The State Employment Agency shall be notified afterwards, consultation groups shall be formed and measures to mitigate the negative effects over the employees might be elaborated.

The concept of summary dismissals does not exist under Bulgarian law. However, dismissal without notice is possible in the event of a serious breach of labour discipline (disciplinary dismissal) or in certain cases related to the employee’s right to perform the work assigned (e.g. deprivation of the right to exercise the job based on a court sentence or an administrative act).  

If a dismissal is challenged in court, it may be declared unlawful and revoked. The employee may be reinstated to their previous position and a compensation may be awarded for the period the employee stayed unemployed due to the dismissal (but for no more than six months).

Statutory severance payment is one monthly gross salary for dismissals on specific grounds related to business (e.g., closure or partial closure of the enterprise, downsizing, etc.).

Employees dismissed due to disability or hazard to their health where no appropriate position was available for their health status, are entitled to severance payment in the amount of two gross monthly salaries if the employee worked for at least five years and had not received this type of severance pay in the last five years.

Employees entitled to retirement pension are entitled to severance pay in the amount of two gross monthly salaries upon termination of employment on any legal ground. The severance pay shall amount to six monthly salaries if the employee worked for ten years from the last twenty years with the same employer or its group of enterprises.

Unused paid leave shall be paid upon termination.

Where the employment contract is terminated by mutual agreement on the initiative of the employer and against compensation, the minimum amount of the severance pay (termination compensation) is in the amount of at least four gross monthly salaries of the employee.

Employees may be prohibited to work for other employers outside the working hours of their primary employment only for reasons related to protection of trade secrets or conflict of interests. Based on the well-established case-law, covenants restricting the right to be employed after termination of current employment are considered void due to violating the constitutional right of labour.

Other types of restrictive covenants (non-competition, non-solicitation, etc.) are permissible and often included in the employment contracts. However, they might be difficult to enforce. Confidentiality provisions can be agreed, noting however, that they are difficult to enforce. Generally worded definitions of confidential information are often considered by the court not to create specific enforceable obligations of confidentiality due to the unclarity of what is the scope of protected information.   

Termination of employment in Bulgaria is subject to very strict material and formal requirements and their violation could easily result in declaring a dismissal unlawful. 

Managing directors are hired under service contracts (referred to as management contracts), and not employment contracts. A company may revoke the appointment of a managing director and terminate their contract without cause at any time. However, if additional requirements for the termination have been agreed in the contract and they are not met, the managing director might be entitled to compensation for damages.

A valid resolution of the competent company body is required for revocation of the appointment as a managing director. The revocation must be registered with the Bulgarian Commercial Register. 

Revocation of the appointment by the company can be done without notice. 

A managing director can request to be released from service and deregistered from the public registers. The company must satisfy the request within one month (for limited liability companies) or six months (for joint stock companies). If not, the managing director is entitled to deregister themselves as a managing director.

Where a notice period for termination is agreed in the management contract and it is not observed in practice, the party not observing the notice may be liable for damages caused to the other party.

Hiring foreign nationals as managing directors is permitted but it does not show specifics in view of termination.

Employees’ representatives are not involved in matters concerning termination of management contracts.

Trade unions are not involved in matters concerning termination of management contracts.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

The revocation of the appointment as a managing director is invalid without a valid resolution of the competent company body.

No statutory severance pay. Severance pay is subject to negotiation between the company and the managing director.

Managing directors have statutory obligations to refrain from competitive activities. Unless explicitly waived by the company, these restrictions apply to the managing directors during their mandate. Additional restrictive covenants may be agreed upon in the management contract.

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.

Termination of management contacts requires carful assessment to mitigate the risks of compensation for damages.