Terminating an employee in Bulgaria requires careful adherence to the country's Labor Code to ensure compliance and avoid potential legal challenges. Bulgarian labor law outlines specific procedures, notice periods, and severance pay requirements that employers must follow. Understanding these regulations is crucial for businesses operating in Bulgaria, whether directly or through an Employer of Record (EOR).
Navigating the termination process can be complex, as the rules vary based on the employee's contract type, length of service, and the grounds for termination. Failing to comply with these regulations can lead to costly disputes and reputational damage. This guide provides a comprehensive overview of termination procedures and severance pay in Bulgaria, offering practical insights for employers seeking to manage employee separations effectively.
Notice Period Requirements
The required notice period in Bulgaria depends on the type of employment contract and the reason for termination. Generally, longer service results in longer notice periods.
| Contract Type | Termination by Employer | Termination by Employee |
|---|---|---|
| Indefinite-Term Contract | Minimum 3 months (can be longer if stipulated in the employment contract) | 1 month |
| Definite-Term Contract | No notice required upon expiry of the contract. If terminated early by the employer, compensation may be due. | No specific regulation, but good practice dictates reasonable notice. |
| Probationary Contract | 3 days (during probation) | 3 days (during probation) |
It's important to note that collective bargaining agreements or individual employment contracts may stipulate longer notice periods than the statutory minimums.
Severance Pay Calculations and Entitlements
Severance pay in Bulgaria is primarily determined by the grounds for termination and the employee's length of service.
- Termination due to business closure or staff reduction (redundancy): Employees are entitled to severance pay. The amount is usually specified in the collective agreement or employment contract, but the Labor Code provides a minimum.
- Retirement: Employees are entitled to severance pay upon retirement, typically equivalent to two gross monthly salaries.
- Other reasons: Severance pay is not generally required when termination is due to employee misconduct or poor performance, unless otherwise stipulated in a collective agreement or employment contract.
The minimum severance pay for redundancy is generally one month's gross salary. However, collective agreements or individual contracts may provide for higher amounts, often linked to the employee's tenure.
Grounds for Termination
Bulgarian labor law distinguishes between termination with cause and termination without cause.
Termination With Cause:
- Gross misconduct
- Repeated violations of work discipline
- Inability to perform job duties due to lack of skills or qualifications
- Serious health issues preventing the employee from working
Termination Without Cause:
- Redundancy due to business restructuring or downsizing
- Objective inability of the employee to perform the work
- Expiration of a fixed-term contract
Terminating an employee with cause requires proper documentation of the reasons for termination and adherence to a specific disciplinary procedure. Termination without cause, such as redundancy, typically requires offering the employee another suitable position within the company, if available.
Procedural Requirements for Lawful Termination
To ensure a lawful termination in Bulgaria, employers must follow these procedural requirements:
- Written Notice: Provide the employee with a written termination notice, clearly stating the grounds for termination and the effective date.
- Consultation (for Redundancy): If the termination is due to redundancy, consult with employee representatives or trade unions, if present, to discuss alternatives and mitigate the impact.
- Documentation: Maintain thorough documentation supporting the reasons for termination, including performance reviews, disciplinary records, and evidence of misconduct.
- Final Payment: Pay all outstanding wages, accrued vacation time, and any applicable severance pay on or before the termination date.
- Social Security Notification: Notify the relevant social security authorities of the termination.
- Offer of another position: In case of redundancy, offer the employee another suitable position within the company, if available.
Employee Protections Against Wrongful Dismissal
Bulgarian law provides several protections for employees against wrongful dismissal. Employees can challenge a termination in court if they believe it was unfair, discriminatory, or not in compliance with the Labor Code.
- Reinstatement: If a court finds that the termination was unlawful, it may order the employer to reinstate the employee to their previous position.
- Compensation: In addition to reinstatement, the court may award compensation to the employee for lost wages and other damages.
- Protection for Specific Groups: Certain categories of employees, such as pregnant women, employees on sick leave, and employee representatives, have special protection against termination. Terminating these employees requires prior approval from the labor inspectorate.
Employers should be diligent in following the correct termination procedures and documenting the reasons for termination to minimize the risk of legal challenges and ensure compliance with Bulgarian labor law.
