CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

1.1 Reasons for dismissal

An employer may not dismiss an employee without a legally valid cause.

Dismissal may be based on personal grounds (e.g. disciplinary dismissal, dismissal due to professional inadequacy, dismissal due to incapacity) or economic grounds (e.g. economic difficulties, technological changes), or subject to specific conditions, without stating a specific motive.

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

The employee must be notified of the dismissal in writing.

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

In the event of dismissal, the law provides that an employee is entitled to a notice of a duration which varies depending on his seniority as follows:

  • Length of service of less than six months: no notice period applicable;
  • Length of service between six months and less than two years: one month;
  • Length of service of at least two years: two months.

For any dismissal, the employer may choose whether the employee works during the notice period.

In either case, employee is entitled to receive the same salary, including any benefits.

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

Works councils do not exist in Monaco. A staff representative (if established) must be properly informed prior to a collective redundancies.

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

No involvement for dismissals.

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

Mandatory for employees with legal protection because of their private life or their mandate.

This protection applies to staff representatives, union delegates, pregnant women, employees taking maternity leave, paternity leave, adoption leave or family support leave, members of the Labour Court, harassment referents.

The relevant Labour Authority has to be informed of projected collective redundancies prior to their dismissal, and grant prior approval.

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

The implementation of collective redundancies is mainly regulated by law and the National Collective Bargaining Agreement, which imposes some procedural steps prior to implementing any such decision.

Three main issues must be considered regarding the preparation and implementation of a collective social plan:

  • Drafting an information document containing all essential elements

regarding the decision to restructure, its motivation, its implementation and the measures taken by the employer to minimise any adverse impacts on employees;

  • Circulating the information to staff representatives, discussing it with them and collecting their comments and choices about measures taken to implement the restructuring (i.e., the measures adopted to minimise the number of dismissals); and
  • Implementing the restructuring plan, by obtaining the required authorisations as the case may be, notifying employees of their terminations and paying termination indemnities.

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 only possible in case of gross misconduct. In such a case, the employee receives no dismissal indemnity or notice period indemnity. The employee is still entitled to unemployment insurance benefits.

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

Should the employer dismiss an employee on personal or economic grounds without a valid cause, the employer would have to pay a dismissal indemnity.

In addition, the employee could claim damages for injuries suffered due to his / her wrongful dismissal.

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

Dismissal indemnity is payable unless the dismissal is for gross misconduct. The amount payable is mainly set by the collective bargaining agreement, but must not be less than the French legal dismissal indemnity (since 27 September 2017: 25% of the monthly gross salary until ten years of seniority and one third of the monthly salary as of the tenth‘s year). A higher indemnity is payable in case of dismissal without a stated motive. Indemnity is also payable for unused accrued paid holidays and for the notice period if the employer chooses to release the employee from performing it.

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

Non-competition clauses are enforceable in Monaco provided they are appropriately restricted.

A non-competition clause must comply with five cumulative conditions:

  • it must be essential to protect the employer’s legitimate interests;
  • it must be limited to a specific time period;
  • it must be limited to a geographical area;
  • it must take the characteristics of the employee’s job into account; and
  • most importantly, it must provide for a financial counterpart.

Independent consideration is required for a non-competition clause.

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.

Not applicable.

2. Dismissal of managing directors

2.1 Reasons for dismissal

A company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. This is particularly the case for limited companies (‘SA‘). However, a just cause is legally required in limited liability companies (‘SARL’) when revoking a managing director who is also a shareholder of the company. In any event, revocation must follow mandatory steps to be declared valid.

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

A resolution is taken by the shareholders and / or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be given the opportunity to explain himself or herself and the revocation must not be made vexatiously.

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

2.3 Notice period

No notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.

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

No involvement.

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

No involvement.

Not applicable.

2.6 Approval of state authorities necessary

For limited liability companies (‘SARL’), appointment of a new director is subject to government approval. For all companies, the change of director must be registered in the Monaco Companies Register.

Not applicable.

2.7 Collective redundancies

Not applicable.

Not applicable.

2.8 Summary dismissals

Not applicable.

Not applicable.

2.9 Consequences if requirements are not met

Damages may be claimed, mainly:

  • for the lack of a just cause, in the event that such reason is legally required to revoke a legal representative; or
  • if the revocation is notified under hurtful circumstances (e.g. is very sudden and unexpected, or is publicly announced before the director is informed), or if the managing director has not been granted a reasonable opportunity to make his / her point before the board’s / shareholders’ decision to revoke him / her (absence of due process). However, the managing director cannot be reinstated.

Not applicable.

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

2.10 Severance pay

Not applicable.

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

2.11 Non-competition clauses

Non competition clauses are only valid insofar as they specify a restricted application in time and space. They also have to include financial compensation in order to compensate the director for the loss of revenue they cause him or her. If the clause does not include those elements, it is null and void. In that case, the director may still be held liable for unfair competition towards the company if it is demonstrated that the director resorted to fraudulent practices intended to disturb the company’s activity such as denigrating it or employing key members of its staff.

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.

Not applicable.