End of employment in Bulgaria

Employee Termination Procedures & Guidelines in Bulgaria

Termination procedure

There are four ways of terminating employment:

• With the agreement of the parties (at any time)
• With the employer or the employee initiative and fulfilment of the notice period (termination initiated by the employer requires a specific, justified reason in writing, and the possible reasons are exhaustively listed in the law)
• With the employer or the employee initiative without fulfilling the notice period
• With the expiry of the contract term (for fixed-term contracts)

Any documents related to the termination of an employment contract by either party must be made in writing.

With the agreement of the parties

If the employer and employee agree to end the employment, it can be done at any time and be initiated by either party, irrespective of the type of contract and possible special duration protection. The party who has been approached with the offer shall be obligated to inform the other party on his/her opinion within seven days after receipt of the said offer. Upon failure to do so, rejection of the offer shall be presumed.

Bulgarian law provides one specific option for termination, which also requires an agreement to be reached between the employer and the employee:

• The employer, on its initiative, may offer the employee termination of the employment contract in consideration of compensation. If the employee fails to react in writing to any such offer within seven days, it is presumed that the offer is rejected;
• If the employee accepts the offer, the employer shall owe the employee compensation not less than the four gross monthly salaries unless the parties have agreed on a larger amount of the compensation.

Termination with notice

A contract is terminated with notice when either the employer or employee notifies the other party that they intend to terminate the working relationship with notice. The employment contract is then terminated at the end of the notice period.

The employer can only terminate an employment contract if one of the specific, justified reasons set out in the Labour Code exists.

The most common reasons are:

• Upon closure of the company
• Upon closure of part of the company or downsizing of personnel
• Upon reduction in the volume of work
• Upon suspension of the work process for more than 15 working days
• Where the employee lacks the capacity for efficient execution of the work
• Where the employee does not possess the educational level or professional qualification required for the work executed
• Upon change of the requirements for the position, if the employee does not satisfy the new requirements
• When the performance of the employment contract is objectively impossible

In the event of termination, as per items 2 and 3 above, the employer has the right to select to retain in employment employees who possess higher qualifications and work better.

In the event of termination, as per items 2, 3, 5 and 7 above, some categories of employees can be dismissed only with advance permission from the labour inspection (like a female employee who is the mother of a child who has not attained the age of 3 years, an occupational-rehabilitee employee, an employee suffering from a disease designated in an ordinance of the Minister of Health etc.).

In the event of termination as per items 1, 2, 3, 4 and some other exhaustively listed cases, the employee shall be entitled to compensation from the employer to an amount based on the employee's gross salary for the period of unemployment after the termination but not more than 1 month.

Paying compensation in lieu of notice is allowed, and it is in the amount of the employee's gross salary for the unobserved notice period.

Termination without notice

The employer can terminate the employment contract without notice if one of the specific, justified reasons set out in the Labour Code exists. The most common reasons are:

• In the event of disciplinary dismissal (for a serious breach of basic employee duties (such as drinking alcohol at work, leaving the workplace without justifiable cause, refusing to perform the legal instructions of the employer, etc)
• When an employee has been disqualified, by a sentence or according to an administrative procedure, from practising a profession or from occupying the position to which the employee has been appointed
• When an employee has been detained for the execution of a sentence
• When the employee refuses to accept suitable work offered by the employer in case of occupational rehabilitation

The employee can terminate the employment without notice if one of the specific, justified reasons in the Labour Code exists. The most common reasons are:

• The employee is unable to execute the work assigned thereto because of illness, and the employer fails to provide the employee with another suitable work conforming to the prescription of the health authorities
• The employer delays the payment of the salary or a benefit under the law or social insurance
• The employer changes the place or nature of work or the agreed salary, except when the employer has the right to make such changes

Once the employment is terminated, the employer must complete the employee’s workbook and deliver it to the employee. The termination of the employment is registered with the National Revenue Agency within seven days, and the period of insurance will be over as of the date of termination. The final payment is due in the next pay cycle, as normal, unless otherwise agreed between the parties.

Employees who consider that they have been dismissed unfairly or unlawfully can file an appeal with the competent court and request to be reinstated at work (while being compensated for the period of unemployment caused by the dismissal, but not more than six months).

Unfair Dismissal Guidelines in Bulgaria

Employee termination protection

Under Bulgarian law, selected employee categories are protected against their employment being terminated with notice, particularly the following:

• A female employee, who is the mother of a child who has not attained the age of 3 years;
• A pregnant female employee and a female employee in an advanced stage of in vitro treatment;
• An occupational-rehabilitee employee;
• An employee suffering from a disease designated in an ordinance of the Minister of Health etc.
• An employee who has commenced the use of leave permitted thereto;
• An employee who has been elected an employee' representative in the company’s management, information and consultation for the time he serves in such a capacity;
• An employee who has been elected an employee's representative on health and safety at work for the time he serves in such a capacity;
• An employee who is a member of a special negotiating body, a European Works Council or a representative body in a European Company or a European Cooperative Society for the duration of performance of the functions thereof;
• An employee who is a member of trade union management during the time of occupation of the relevant trade union position and six months after that.

The above protection applies only for the below cases of termination of employment:

• Upon closure of part of the company or downsizing of personnel
• Upon reduction in the volume of work
• Where the employee lacks the capacity for efficient execution of the work
• Upon change of the requirements for the position, if the employee does not satisfy the new requirements

Employees falling within one or more of the protected categories above can be dismissed only with advance permission from the labour inspection for each specific case.

Resignation Procedure in Bulgaria

Resignation

Employees who want to resign must present the employer with a dated statement confirming their intention to leave in writing. Employees must respect the appropriate notice period in the employment contract. The notice becomes effective after expiry of the notice period. If the notice period is not observed, the employee owes the employer compensation in the amount of the employee's gross salary for the unobserved notice period.

Redundancy Pay and Entitlement in Bulgaria

Mass redundancy

Mass redundancy shall be dismissal effected on the employer's initiative for one or more reasons not related to the individual employee concerned, where the number of dismissals is:

• At least ten employees for companies normally employing more than 20 and less than 100 employees during the month preceding the mass redundancies, and the redundancies are carried out over 30 days
• At least 10% of the number of employees in companies normally employing at least 100 but less than 300 employees during the month preceding the mass redundancies and the redundancies are carried out over 30 days
• At least 30 employees for companies normally employing 300 employees or more during the month preceding the mass redundancies and the redundancies are carried out over 30 days

Where an employer is planning mass redundancies, the employer is obligated to begin consultations with the trade union organisations' representatives and with the employees' representatives not later than 45 days before the mass redundancies are to take effect and to make efforts to reach an agreement with the said representatives to avoid mass redundancies or reduce the number of employees affected and to mitigate the consequences of the said redundancies.

Any employer must notify in writing the competent division of the National Employment Agency of any projected mass redundancies not later than 30 days before the redundancy date.

Upon receipt of the notification, teams must be formed, consisting of a representative of the employer, representatives of the employees' organizations at the company concerned, a representative of the competent division of the National Employment Agency, and a representative of the municipal administration.

The teams then have the task to draft the necessary measures aimed at:

• Employment placement intermediation
• Adult training
• Own business start-up
• Employment programs

Other End-of-Employment Guidelines in Bulgaria

Severance

Employees are entitled to the following severance payments:

• The employee is entitled to compensation from the employer for the unused annual paid leave calculated based on the average daily gross salary regardless of the reason for termination of employment;
• The employee is entitled to compensation from the employer to an amount based on the employee's gross salary for the period of unemployment after the termination but not more than one month where the termination of employment is based on one of the following: closure of the company or of a part thereof, downsizing of personnel, reduction in the volume of work, suspension of the work process for more than 15 working days, upon refusal of the employee to follow the company or a division thereof, in which the employee works when the company or division relocates to another town/village or area, or where the position occupied by the employee must be vacated for reinstatement of an illegally dismissed employee who previously occupied the same position;
• The employee is entitled to compensation from the employer amounting to their gross salary for the notice period in case of an employment contract of indefinite duration. In case of a fixed-term contract, the amount due is the actual damages for the following cases:
  • the employer delays the payment of the salary or of a benefit under the law or under social insurance;
  • the employer changes the place or nature of work or the agreed salary, except in the cases where the employer has the right to make such changes; as a result of a change (like merger or acquisition of the employer, change of ownership of the employer, rent or lease of the company and other similar) the working conditions under the new employer deteriorate substantially.

Notice period

The notice periods are:

• 30 days for an employment contract of indefinite duration, unless the parties have agreed on a longer period, but not longer than 3 months
• 3 months for a fixed-term employment contract, but not more than the remainder of the contract term

During the notice period, the employee is entitled to receive a normal salary and is obliged to work as usual.

Unemployment funds

Employees for whom social insurance contributions have been paid or are due with the Unemployment Fund for at least 12 months during the last 18 months preceding the termination of employment are entitled to receive unemployment compensation if they:

• Are registered as unemployed with the National Employment Agency
• Are not granted contributory-service and retirement-age pension in the Republic of Bulgaria or retirement-age pension in another country, or do not receive contributory-service and retirement-age pension in a reduced amount or occupational pension
• Do not perform work for which they are subject to compulsory social insurance according to law

The unemployment compensation is 60% of the average daily pay or the average daily contributory income on which insurance contributions to the Unemployment Fund have been paid or are due for the last 24 calendar months preceding the month in which the insurance was terminated and may not be less than the minimum daily amount and higher than the maximum daily amount of the unemployment benefit. The minimum daily compensation is BGN 18,00 (around EUR 9.20), and the maximum is BGN 85.71 (around EUR 43.79).

Unemployed persons whose employment was terminated at their initiative, with their consent or due to their faulty behaviour on legal grounds exhaustively listed in the law, shall receive the daily minimum as mentioned above for 4 months only.

Unemployed persons who have acquired entitlement to an unemployment benefit before the expiry of 3 years from a preceding enjoyment of the entitlement to an unemployment benefit will receive the minimum amount for 4 months only.

The period for which unemployment benefit is paid depends on the insurance contributions and length of service.

Length of Service	Duration of Benefit Payment
up to 3 years	4 months
from 3 years and 1 day to 7 years	6 months
from 7 years and 1 day to 11 years	8 months
from 11 years and 1 day to 15 years	10 months
over 15 years	12 months

The National Social Insurance Institute pays the unemployment benefit.