Sources of regulation

Since the transition period started in 1989, the legal regulation of termination of employment in Bulgaria has undergone numerous changes. They are mainly geared towards adhering to European Union and ILO standards.

The main source of the labour legislation in Bulgaria is the Labour Code, which was originally adopted in 1986 and subsequently amended several times, and most recently in 2005 (“LC”).

Termination of employment provisions are also dealt with in collective agreements and individual labour contracts.

Bulgaria has ratified the European Social Charter, revised in 1996, and is bound by its Article 24 on the right to legal defense in dismissal.

Scope of legislation

The LC regulates the labour relationships between the employee and the employer, as well as other relationships immediately related to them (art. 1(1), LC). It also aims to ensure the freedom and protection of labour, equitable and dignified working conditions, as well as the conducting of social dialogue between the State, the employees, the employers and their organizations, for the purposes of settlement of labour relations and other immediately related relations. (art. 1(3), LC).

The LC applies to all employment relationships with Bulgarian enterprises and joint ventures in Bulgaria. It also covers employment relationships between Bulgarian citizens and foreign enterprises in Bulgaria, as well as Bulgarian enterprises abroad, insofar as not provided otherwise in a law or a treaty to which the Bulgaria is a party (art. 10(1), LC). Moreover, the employment relationships of Bulgarian citizens sent to work abroad in foreign enterprises or joint ventures, and of foreign nationals appointed to work in Bulgarian enterprises or joint ventures are regulated by the LC, insofar as not provided otherwise for in a law or a treaty to which Bulgaria is a party (art. 10(2), LC).

Contracts of employment

The employment contract must contain information that defines, among other things, the equal term of notice for both parties in cases of termination of the labour contract (art. 66(1), LC). The employment contract must be concluded in writing (art. 62(1)), LC). However, employment relations can also arise where no employment contract concluded in writing is available, but the employer has admitted the employee to work, and he/she has commenced the performance of such work. In such cases, the existence of employment relations may be ascertained by all means of evidence (art. 62(2)), LC).

The employment contracts may be concluded for an indefinite period or for a fixed term (art. 67(1), LC). The employment contract is considered concluded for an indefinite period, unless expressly agreed otherwise (art. 67(2), LC). However, an employment contract concluded for an indefinite period may not be transformed into a contract for a fixed term, except where explicitly desired by the employee, and stated so in writing. (art. 67(3), LC).

A fixed term contract may be concluded for:

a definite period, which cannot be longer than 3 years, unless legislation provides otherwise; completion of some specified work; substitution for an employee who is absent from work; completion of a job which is to be taken through a competitive examination; and a certain specified mandate (art. 68, LC).

Yet, as an exception, a fixed term employment contract may be concluded for a period of not less than one year and for works and activities that are not of temporary, seasonal or short-term nature. Such an employment contract may also be concluded for a shorter period upon request, in writing, by the employee (art. 68(3), LC).

Moreover, the employment contract concluded for a fixed term is transformed into a contract for an indefinite period, if the employee continues working for 5 or more working days after the expiry of the agreed period, without the written objection of the employer, provided the job is vacant (art. 69, LC).

Termination of employment

A contract of employment may be terminated, without notice due, from either party in the following cases:

By mutual consent of the parties, expressed in writing within 7 days of receipt of the proposal. Failure to do so will be deemed refusal to accept the proposal; When the dismissal of an employee is found unlawful, or he/she is reinstated to his/her previous job by ruling of the court, but does not report to work within the legal term; Upon expiry of the contractual term; Until the completion of some specified work; When a position is formerly occupied by a pregnant employee or an employee reassigned for rehabilitation, and the employee entitled to that position returns; In case of inability of the employee to perform the assigned job because of illness resulting in permanent disability, or because of health considerations established by an expert medical commission. In such a case, the contract of employment is not terminated if the employer can provide another job, suitable to the employee's health status, and he/she consents to perform it; Upon the death of the person with whom the employee has concluded a contract of employment with consideration of his/her personality; Upon the death of the employee; and When a position is listed to be occupied by a State employee. (art. 325, LC).

An employee may terminate his/her employment contract in writing (without notice), in the following circumstances:

When he/she is unable to perform the assigned job because of illness, and the employer fails to provide him/her with suitable work as per the prescription of the medical authorities; When the employer delays the payment of remuneration or compensation pursuant to the LC or for social security; When the employer changes the place or character of work or the agreed remuneration, except in cases where the employer is entitled to make such changes, and also when he/she fails to meet other obligations, stipulated in the employment contract; When he/she assumes a paid elected office or begins researching work on the basis of a competitive examination; When he/she is enlisted for regular military service. Should an employee, called up for military service, be postponed or released from regular military service, such employee can at request that his/her contract of employment be considered not terminated if within 1 month of the release, but not later than 3 months after leaving work, and he/she can report back to work; When he/she continues his/her education as a regular student at an educational establishment, or as a Ph.D. student; When he/she is employed as a substitute for an absent employee and take up employment elsewhere under a contract of employment for an indefinite term; When he/she is reinstated in the established manner to work as a result of finding his/her dismissal unlawful, in order to perform the work to which he/she is reinstated; and When he/she becomes a State employee. (art. 327), LC)

The employment relationship with the employee will not be considered terminated in case of:

Merger of enterprises; Joining of one enterprise with another; Distribution of the operations of one enterprise between several enterprises; Transfer of an autonomous part of one enterprise to another; Change of the owner of the enterprise or of an autonomous part thereof; and Delivery of the enterprise or an autonomous part thereof for rent, or lease or under concession (art. 123(1), LC).

An employment relationship resulting from an election will be terminated upon expiry of the term for which the person has been elected. Should no new election be provided upon expiry of the term, the employment relationship will be extended until such election is held (art. 337, LC).

Dismissal

An employer may dismiss an employee for disciplinary reasons, such as :

Reporting to work late or early departure on three occasions, each no less than one hour, within one calendar month; Absence from work for two consecutive working days; Systematic violations of the work discipline; Abuse of employer's confidence or divulging proprietary information of the employer; Causing losses to other persons by employees in the trade and services industries by fraud in the price, the weight, the quality of the item or service; Participation in gambling through telecommunication means of the enterprise and the costs incurred will be reimbursed in their full amount; and Other grave violations of the work discipline (art. 190, LC).

An employer may terminate a contract of employment by giving a notice in writing to the employee in the following cases:

Closing down of the enterprise; Partial closing down of the enterprise or staff cuts; Reduction of the volume of work; Work stoppage for more than 15 work days; When an employee lacks the qualities for efficient work performance; When an employee does not have the necessary education or vocational training for the assigned work; When an employee refuses to follow an enterprise or a division thereof, in which he/she is employed, when it is relocated to another community or locality; When the position occupied by the employee must be vacated for reinstatement of an unlawfully dismissed employee, who had previously occupied the same position; When a former employee, who has been released ahead of schedule or postponed from regular military service, returns to his/her former position; When an employee has become eligible for retirement for length of service covered by social security and age; When the requirements for the job have been changed and the employee does not qualify for such position; and When it is objectively impossible to implement the contract of employment (art. 328(1), LC).

In addition, enterprise management employees may be dismissed by advance notice and by reason of conclusion of an enterprise management contract. The dismissal may be effected after the start of the management contract, but not later than 9 months (art. 328(2), LC).

An employer may terminate an employment contract, without notice, when:

an employee has been detained for execution of a sentence (art. 330(1), LC); an employee has been divested by sentence of the court or by an administrative order of the right to practice a profession or to occupy the position to which he/she has been appointed; an employee is divested of his/her academic title or academic degree, if the contract of employment has been concluded in view of his/her holding the respective title or degree; an employee refuses to take a suitable job offered to him/her in case of medically prescribed reassignment; and an employee has been subject to disciplinary dismissal (art. 330(2), LC).

An employer may also propose to terminate an employment contract, but only in return for an agreed compensation with the employee. However, where the employee fails to state his/her position on the proposal in writing within 7 days, the proposal will be deemed not accepted (art. 331(1), LC). If the employee accepts the proposal, the employer must owe such employee compensation to the amount of not less than four times the last gross labour remuneration of the employee, unless the parties have agreed a higher amount of compensation (art. 331(2), LC). Yet, where the compensation has not been paid within one month following the date of termination of the employment contract, the grounds for payment will be deemed invalid (art. 331(3), LC).

The LC does contain a general anti-discrimination provision, which prevents an employer from practicing direct and indirect discrimination, based on nationality, origin, gender, sexual orientation, race, colour of skin, age, political and religious believes, membership in syndicate and other social organizations and movements, family and material situation, existence of psychic or physical disorders, as well as differences in the contract term and duration of working time (art. 8(3), LC).

Notice and prior procedural safeguards

The employment contract must contain information on the notice period for its termination which must be equal for both parties (art. 66(1), LC).

An employee may terminate a contract of employment by giving the employer a notice in writing (art. 326(1), LC). The notice period for termination of an employment contract of indefinite duration is 30 days, unless a longer period has been agreed by the parties, however, this notice period cannot be for longer than 3 months. The notice period for termination of a fixed-term employment contract is 3 months, but not more than the remaining period of the contract (art. 326(2), LC). This notice period begins on the day following receipt of the notice. A notice is considered withdrawn upon the employee's request to do so before or at the time of its receipt. With the consent of the employer, a notice may be withdrawn before the period has expired (art. 326(4), LC).

In case of partial closing down of an enterprise, as well as in case of staff cuts or reduction of the volume of work, the employer is allowed, in the interest of production or business, to selectively dismiss employees whose positions have not been made redundant, in order to retain employees of higher qualifications and better performance (art. 329, LC). While planning to make such structural changes to the enterprise, the employer must, at least two months prior to putting into effect these changes, notify the employees about the:

Anticipated changes and the date of their effect; Reasons for the changes; Eventual legal, economic and social consequences of the changes for the employees; and Measures planned in respect of the employees (art. 123(4), LC).

The employer must also lay efforts to reach an agreement with the representatives of the trade unions and with representatives of the workers and employees regarding the consequences of possible changes (art. 123(6), LC).

Where the employer intends to undertake collective redundancy, he/she is obliged to undertake consultations with the worker and employee representatives not later than 45 days before the redundancy act, and to lay efforts for achieving an agreement in order to avoid or limit the collective redundancy and to relieve its consequences (art. 130(a)(1), LC). The employer must also provide information in writing to the workers and employees’ representatives about the:

Reasons for the forthcoming redundancy; Number of the workers and employees, who will be dismissed and the basic economic activities, qualification groups and professions to which they refer; Number of positions occupied by the basic economic activities, qualification groups, and professions in the enterprise; Envisaged criteria for selection of the workers and employees, who will be dismissed; and Time, during which the redundancy will be done (art. 130(a)(2), LC).

In accordance with provisions of the LC, an employer may dismiss only with prior consent of the labour inspectorate for each specific case:

Employees who are mothers of children younger than 3 years of age, or spouses of persons who have entered their regular military service; Employees who have been reassigned due to reasons of health (opinion of an expert medical commission must be considered); Employees suffering from certain diseases, listed in a Regulation of the Minister of Health (opinion of an expert medical commission must be considered); and Employees who have commenced a period of permitted leave (art. 333(1), LC).

In cases of partial closing down of the enterprise or staff cuts; reduction of the volume of work; where an employee lacks the qualities for efficient work performance; where the requirements for the job have been changed and the employee no longer qualifies; or where the employee has been subject to disciplinary dismissal, an employer may dismiss an employee who is a member of the enterprise trade union leadership belonging to a territorial, industrial or national elected trade union body, throughout the period of occupation of the trade union position and not earlier than 6 months. After that period the employee can only be dismissed with prior consent of the trade union body, specified by decision of the central leadership of the respective trade union organization (art. 333(3), LC). Moreover, if provided for in the collective agreement, an employer may dismiss an employee due to staff cuts or reduction of the volume of work after obtaining a prior consent from the respective trade union body of the enterprise (art. 333(4), LC).

A pregnant employee may be dismissed with a given notice, only when:

the enterprise is closing down; the employee refuses to follow the re-location of an enterprise or division; under certain circumstances, a former employee returns to the currently occupied position; and it is objectively impossible to implement the contract of employment.

The employer may dismiss the pregnant employee without given notice, where the employee has been detained for execution of sentence and in cases of disciplinary dismissal. However, the discharge may come into effect only after preliminary permission, given by the inspection on labour. Moreover, a female employee who uses leave for pregnancy and childbirth may be dismissed only pursuant to the closing down of the enterprise (art. 333(5), LC).

Parties are entitled to compensation if there is a failure to provide notice by the other party entitled to such notice. The party entitled to terminate the labour relationship with notice, as well as the party which has received notice of termination of the employment, may terminate it before the expiration of the notice period. The terminating party then owes the other party compensation equal to the amount of the employee's gross labour remuneration for the remainder of the notice period (art. 220, LC). In cases where the employment relationship is terminated by an employee without notice, the employer will owe compensation to the extent of the gross labour remuneration for the notice period in case of an employment contract for an indefinite period; and to the amount of the real damages in case of an employment contract for a fixed term (art. 221(1), LC). In the case of disciplinary dismissal, the employee will owe the employer compensation to the extent of his/her gross labour remuneration for the notice period in case of an employment contract for an indefinite period; and to the amount of the real damages in case of an employment contract for a fixed term (art. 221(2), LC).

As a procedural safeguard, prior to imposing a disciplinary sanction, the employer must hear the employee or accept a written statement, and gather and assess the indicated evidence (art. 193(1), LC). If the employer fails to hear the employee or to accept his/her written report prior to the imposition of the sanction, the court may revoke the disciplinary sanction without reviewing the case on its merits (art. 193(2), LC). However, these safeguards will not apply if the employee was not heard or his/her report not received through his/her own fault (art. 193(3), LC). The disciplinary sanctions must be imposed within two months of the discovery of the violation and no later than 1 year of its perpetration (art. 194(1), LC). Detailed procedures such as the need for the disciplinary order to be signed by the employee and a requirement for registered mail are imposed under Article 195 of the LC.

Severance pay

The LC provides detailed provisions covering compensation for dismissal.

Upon dismissal due to closing down of the enterprise or part of it, staff reduction, reduction of the volume of work and work stoppage for more than 30 days, the employee is entitled to compensation from the employer. The compensation will be in the amount of his/her gross labour remuneration for the period of unemployment but not for more than one month. A compensation for longer periods may be stipulated by an act of the Council of Ministers, by a collective agreement or by the labour contract. If within this period the employee starts work with a lower remuneration he/she must be entitled to the difference for the said period (art. 222(1), LC).

Upon termination of the employment relationship due to an illness, the employee is entitled to a compensation from the employer in the amount of his/her gross labour remuneration for a period of two months, provided his/her length of service is at least 5 years and during the last 5 years of service he/she has not received any compensation on the same grounds (art. 222(2), LC).

Upon termination of the employment relationship after the employee has acquired the right to a pension (evaluated by length of service covered by social security and age), then irrespective of the grounds for the termination, he/she is entitled to compensation by the employer in the amount of his/her gross labour remuneration for a period of two months. Where the employee has worked with the same employer for the last ten years of the length of service then the compensation is equal his/her gross labour remuneration for a period of six months. Yet, the compensation for the above circumstances is paid only once (art. 222(3), LC).

Avenues for redress

The LC provides provisions that seek to protect the employee against unlawful dismissal. An employee is entitled to contest the lawfulness of dismissal before the employer or in a court and demand:

Recognition of dismissal as unlawful and its repeal; Reinstatement to his/her previous position; Compensation for the period of unemployment due to dismissal; and Revision of the grounds for dismissal, entered in his/her service record or other documents (art. 344(1), LC).

The above considerations are considered by the district court within three months following the receipt of the claim and by the regional court - within one month following the receipt of the appeal (art. 344(4), LC).

An employer may, however, cancel an order of dismissal prior to the bringing of the action before the court by the employee (art. 344(2), LC). In cases where the consent of the labour inspectorate or a trade union body is required prior to dismissal, and no such consent has been requested, then the court may cancel the order of dismissal as unlawful, without considering the merits of the labour dispute (art. 344(3), LC).

Trade union organizations and their divisions are entitled, upon the request of employees, to represent them as attorney before the Court. However, they are not entitled to conclude agreements, to recognize claims, to renounce, withdraw, or reduce the claims of employees, and to collect amounts on behalf of the represented persons, unless they have been expressly authorized to do so (art. 45, LC).

The proceedings in labour dispute cases are free of charge for employees. They do not pay fees and expenses for proceedings, including for applications for repeal of effective rulings on labour cases (art. 359, LC). However, there are strict time limitations for bringing labour disputes before the court. Labour dispute actions must be brought within:

one month for disputes on limited financial liability of an employee and for repeal of the administrative sanction "reprimand"; two months for disputes on the repeal of the disciplinary sanction "dismissal notice", changes in the location and nature of work, and termination of employment relationship; and three years for all other labour disputes (art. 358, LC).

If the court finds the employee unlawfully dismissed and requires the employer to reinstate the employee to his/her previous position, the employee may assume the position provided he/she reports to work within 2 weeks of receipt of the reinstatement notice, unless this term is exceeded for valid reasons only (art. 345, LC).

In case of unlawful dismissal, the employee is entitled to a compensation by the employer in the amount of his/her gross labour remuneration for the period of unemployment caused by that dismissal, but not for more than six months (art. art. 225(1), LC). If during this period the employee has worked on a lower paid job, he/she is entitled to the difference in the remuneration. The same right will also apply to unlawful reassignment of the employee to another lower paid job (art. 225(2), LC). If an unlawfully dismissed employee is reinstated to his/her former position and he/she is prevented from taking that position, the employer and the guilty officials are liable jointly and severally to the employee in the amount of his/her gross labour remuneration from the day of reporting to the day of his/her actual admission to work (art. 225(3), LC).