Tsvetkova Bebov & Partners 

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

Employment disputes are settled by the Bulgarian courts. The respective competent court is the regional court where the respondent to the dispute has their seat (in case of a company) or permanent address (for individuals). Additionally, the employee may file the claim before the regional court within the employee’s place of work. Arbitration proceedings are not allowed for employment disputes.


The Main Sources Of Employment Law

The Bulgarian Labor Code is the main source of Bulgarian employment law. Yet, a key specific of the Bulgarian employment law is the fragmentation of the legal acts. There is a huge number of regulations, ordinances and special legal acts that govern specific employment law matters (such as working hours and rests, salary formation, paid leave, requirements to the employees, health and safety conditions at work, etc.). Additionally, employment law matters may be governed in a collective bargaining agreement that applies on a company or an industry level.


National Law And Employees Working For Foreign Companies

The Bulgarian law has a general application to employment relations in Bulgaria. In particular, the Bulgarian law applies to employment contracts under which the employee has his/her place of work in Bulgaria; as well as to employment contracts between Bulgarian employers and employees who work outside of Bulgaria. Those general principles apply unless the parties have chosen to apply a different law. Respectively, the employment contracts of Bulgarian employees who work for a foreign company in Bulgaria will normally be governed by the Bulgarian employment law.


National Law And Employees Of National Companies Working In Another Jurisdiction

The parties to an employment contract with an international element may agree on an applicable law as they see fit. Unless agreed otherwise, the Bulgarian employment law will apply while the employee works in another jurisdiction. Regardless of the parties’ choice of the Bulgarian law, the law of the host country will apply to the employment contract if it provides the employee with more favourable working conditions and a better protection in the employment context.


Data privacy

The General Data Protection Regulation is directly applicable in Bulgaria and provides the main framework for data protection in the employment context. Additionally, there are local specific requirements that apply. In particular, they refer to special retention periods in the employment context (e.g. job applicants’ data are to be retained for up to 6 months, unless consented otherwise; payroll documents are retained for a period of 50 years following the end of the employment; etc.). The Bulgarian employment law is also rather employee’ protective so the conduction of background and credit checks, the use of polygraph tests, the general collection of sensitive personal data (such as criminal convictions records) are generally not allowed. The more aggressive processing of personal data in the employment context should also be carefully evaluated prior to implementation (e.g. tracking employees’ activity during working hours; GPS tracking for business cars; video surveillance in the office, etc.).

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

The employment agreement shall be in writing. The minimum required scope of its content is defined in the Bulgarian Labour Code and includes date of execution, position, place of work, term of the agreement, remuneration, duration of the working hours, paid leave allowance and duration of the termination notice. The parties may agree on additional provisions in the employment agreement as long as they do not contradict the mandatory requirements of the Bulgarian employment law and the applicable collective bargaining agreement, if any.

Upon the execution of the employment agreement, the employer shall provide the employee with a job description – a written document that sets the scope of the employee’s job responsibilities. The employer is also obliged to register each employment agreement in the Bulgarian National Revenue Agency. The employee shall be served a copy of this registration document prior to commencing work under the employment agreement.


Mandatory Requirements
  • Trial Period

    • The inclusion of a trial period clause in the employment agreement is not mandatory. Yet, it is a legal option that employers in Bulgaria actively use since it allows termination without cause and without notice. The right of termination applies to the party in whose favour the trial period clause is agreed in the employment agreement – the employer, the employee, or both.

    The maximum duration of the trial period can be 6 months. The trial period can be applied by the employer to the employee’s agreement only once per position.

  • Hours Of Work

    • The standard working week in Bulgaria consists of 5 working days, Monday to Friday. The normal duration of the working day is 8 hours. The parties may agree to part-time work (less than 40 hours per week) in the employment agreement. Subject to certain requirements, the duration of the working day may be extended to 12 hours.

  • Special Rules For Part-time Work

    • Part-time work may be agreed upon by the parties to the employment agreement. There is not a legal minimum of the working hours under a part-time contract.

    From an employment law perspective, employees who work 20 or more hours per week are considered as employees who work full time. Therefore, their length of service and annual paid leave entitlement will be calculated as if they work full time. When the employees work less than 20 hours per week, length of service and paid annual leave entitlement are calculated proportionally to the actual working hours.

  • Earnings

    • The amount of the employee’s remuneration is agreed on by the parties. When the employee works full time, the amount shall not be lower than the minimum salary in Bulgaria. The minimum salary is defined by the Bulgarian Council of Ministers annually and for 2021 it is fixed at BGN 650 (approximately EUR 332) per month.

    The employee’s remuneration in the employment agreement is provided in its gross amount and respectively consists of two components – base salary and additional remuneration for length of service and professional experience. The latter’s purpose is to award the employee’s experience on a specific position. The additional remuneration for length of service is calculated as a percentage of the base salary (at least 0.6% for each year of relevant experience).

  • Holidays/Rest Periods

    • Employees who work full time are entitled to no less than 20 working days of paid annual leave per year. The amount of the entitlement may be increased upon the parties’ agreement.

    Some special categories of employees are entitled to an increased paid leave allowance such as employees who are occupational rehabilitees (at least 26 days) and employees who work on open-ended working hours (5 additional days per year).

    The Bulgarian Labour Code sets some mandatory rules on the minimum duration of the rest periods. Employees are entitled to a rest of 12 uninterrupted hours between two consecutive working days. The standard mandatory rest between two working weeks is set at 48 consecutive hours which should generally be on Saturday and Sunday.

  • Minimum/Maximum Age

    • Individuals may commence employment at the age of 16 as long as their job responsibilities are not dangerous, harmful and/or severe for the employee’s mental and physical health. In exceptional circumstances, children under the age of 16 may be employed. In any case, minors need the prior authorisation of the Labour Inspectorate to commence employment.

    There is not a maximum age for employment. Individuals may enter into employment agreements even after they reach the age for retirement.

  • Illness/Disability

    • The employer has to be sure that the recruited employee is physically fit for the respective job position. Therefore, the employee has to provide a medical certificate that contains the medical authorities’ evaluation to that end.

    Employees who have limited capacity to work are subject to a special protection under the Bulgarian employment law. Such employees are only allowed to perform work that corresponds to their medical status. Additionally, those employees are entitled to a longer period of paid annual leave, special protection in cases of overtime and night work as well as in cases of dismissal.

    Recently, the Bulgarian Persons with Disabilities Act regulated the so called “positive” discrimination as employers with more than 50 employees are now required to employ individuals with disabilities. The purpose of this act is to stimulate the integration of such persons in the Bulgarian employment market.

    If an employee becomes medically unfit for his position during the term of employment, the medical authorities may issue a mandatory prescription to the employer and define the employee as an “occupational rehabilitee”. In such cases, the employer will be generally obliged to relocate the employee to another job position which meets the employee’s medical needs and health status.

  • Location Of Work/Mobility

    • The employee’s place of work is defined in the employment agreement and can be permanently amended solely upon the parties’ mutual consent. Temporarily changes of the place of work made unilaterally by the employer are allowed when the business needs require (the so-called business trips). If the business trip is longer than 30 consecutive calendar days, the employees’ prior consent is required. Consent is also mandatory, regardless of the business trip’s duration, for pregnant employees, employees in advance stage of in-vitro treatment or mothers of children who have not attained the age of 3.

    When the employer needs to send an employee to work in another EU Member State for the provision of a service or to an entity of the same corporate group, the regime on the posting of workers in the framework of provision of services applies. In such cases, an annex to the employment agreement has to be executed.

  • Pension Plans

    • Under the Bulgarian Social Insurance Code, each employee shall make social contributions for a pension. The contributions’ amount is legally defined as a percentage of the employee’s monthly remuneration. According to the law, the contributions are split between the employer and the employee whereby the employer makes the withholding necessary from the employee’s remuneration and transfers the amount of the social contributions to the Bulgarian National Revenue Agency by the 25th of the month, following the month for which they are due.

    The pension contributions are split in two mandatory payments once received by the authorities – one of them is aggregated to the general social contribution pool and the other part is allocated to a personal account of the employee in a pension fund of the employee’s choice.

    The employees may also personally decide to make voluntarily pension contributions which will be in addition to those described above. Such payments will be usually made directly by the employee and allocated to a personal account of the employee.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Bulgarian law is one of the most employee-friendly in terms of parental rights. Those rights may arise for female employees even before they are even pregnant (e.g. the protection of female employees in an advanced stage of in-vitro treatment) and extend in some hypotheses until the child is of full age (e.g. the additional paid leave provided to a female employee who has two or more children who are minors).

    Some of the special rights applicable to employees include:

    -Protection against dismissal of pregnant employees and employees whose children have not attained the age of 3 (the protection is subject to certain legal limitations);

    -Long periods of paid leave applicable to female employees who give birth or adopt a child who has not attained the age of 5. The employees are entitled to an initial 410 days of leave which are paid by the State at 90 percent of the employee’s average daily remuneration for the preceding 24 months. After the expiration of this term, the employees are entitled to an additional one year of maternity leave paid at a fixed amount by the State.

    -Male employees are entitled to 15 days of paid leave upon the birth or adoption of a child;

    -Special rules on leaves, work at night and overtime work apply to pregnant employees, employees in an advanced stage of in-vitro treatment and mothers whose children have not attained the age of 6.

  • Compulsory Terms

    • The Bulgarian Labour Code lists the compulsory terms of each employment contract: place of work, position title and responsibilities, data of execution of the contract, date of commencement of the employment, duration of the contract, duration of the paid leave, notice period, base and additional labour remunerations and the duration of the working day or week.

  • Non-Compulsory Terms

    • Any provisions not listed in the compulsory terms are subject to the parties’ agreement as long as they do not contradict or evade an imperative provision of the Bulgarian employment law and/or a provision in a collective bargaining agreement that binds the parties. Usually, employers prefer to have a more detailed employment contract to govern expressly also matters such as non-compete and confidentiality covenants, intellectual property rights, specific obligations on the parties, etc.


Types Of Agreement

Employment agreements under the Bulgarian law are usually executed for an indefinite period. However, the Bulgarian Labour Code also allows for the execution of fixed-term employment agreements where the most popular are employment agreements for a pre-defined period of time; employment agreements for the substitution of an absent employee and the employment agreements for the performance of a specific task or a project.

Based on the duration of the working hours criterion, the employment agreements are two types – full time and part time agreements

Employers are not allowed to discriminate between their employees who work under the different types of employment agreements.


Secrecy/Confidentiality

The Bulgarian Labour Code imposes an obligation on all employees to preserve the secrecy of their employers’ confidential information. The obligation applies for the duration of the employment relationship. For practical reasons, the employer shall inform the employee what falls in the scope of the confidential information.


Ownership of Inventions/Other Intellectual Property (IP) Rights

The matter of intellectual property rights is governed by the Bulgarian Copyright and Neighbouring Rights Act. The general principle is that the copyrights belong to the employee, unless agreed otherwise by the parties.

As an exception to this general rule, copyrights over computer software and databases developed under an employment contract shall belong to the employer, unless otherwise agreed by the parties.


Pre-Employment Considerations

Recruitment shall be conducted in a manner to comply with the personal data protection requirements as well as in line with the non-discrimination rules. Employers need therefore to be rather strict in collecting solely information that has direct reference to the evaluation of the employee’s fitness for the position and should avoid setting selection criteria that are based on the applicants’ age, sex, disabilities, political views, religion, family status, etc.


Hiring Non-Nationals

Non-nationals are divided in two main groups from a Bulgarian employment law perspective – EU citizens to whom the right to free movement and access to the labour market apply and non-EU citizens. The latter need to obtain a work permit by the Bulgarian Employment Agency in order to access the Bulgarian labour market. Additionally, the non-EU nationals need to obtain a visa D and consequently – a residence permit in order to lawfully stay in Bulgaria.

The type of the work permit depends on the profile of the employee. Highly-skilled employees usually use the Blue Card permit to work in Bulgaria which is issued under a more simplified procedure as opposed to the general regime.


Hiring Specified Categories Of Individuals

Special rules apply to the hiring of individuals who are minors. As a rule, employment of individuals who have not attained the age of 15 is prohibited, unless for artistic works (e.g. circus, theatre, cinema, etc.). Minors also enjoy special protection during the employment. For example, overtime work and work during the night is strictly prohibited. Also, additional paid leave is provided to the employee until he/she reaches full age.

Depending on the working conditions, additional requirements may apply for other categories of individuals as well (e.g. for work under hazardous conditions or work which requires special qualification of the employees).


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Employers may lease staff from temporary agencies which have authorisation by the Bulgarian Employment Agency to conduct such activities. This right is limited by some mandatory requirements of the Bulgarian Labour Code, namely: the leased personnel shall not exceed 30% of the employer’s own headcount; personnel can be leased only temporarily (either for the substitution of an absent employee or for the performance of a project); lease of personnel is not allowed if there is an on-going strike at the employer. The temporary agency may not object to the employee commencing employment directly with the user-company and shall not impose any limitations and/or sanctions to that end.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

Permanent changes to the contract require the parties’ mutual written consent. The only exception is the increase of the employee’s remuneration which can be done by an order of the employer.

Employers are allowed to unilaterally amend the employment contract for a specific period of time subject to the fulfilment of certain legal requirements. In particular, employers are allowed to amend the employee’s working functions where the production needs of the employer demand that (but for no longer than 45 calendar days per year); when the employee is idle (for the period of the idleness) or when force majeure circumstances require that (e.g. in cases of natural disasters). When temporarily amending the employee’s working functions, the employer may also for the same period amend the employee’s place of work to another location in the area.

Employers are entitled to unilaterally send employees to business trips when the needs of the business require it. The employees’ consent will only be required if the business trip will last longer than 30 consecutive calendar days or if the employee is pregnant, in an advanced stage of in-vitro treatment, or is a mother of a child who has not attained the age of 3.

Secondments of employees to other companies of the employer’s corporate group within the European Union are governed by the special posting of workers regulations and required the execution of an annex to the employment contract.


Change In Ownership Of The Business

Bulgaria has transposed the EU Directive relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. Respectively, the change of ownership on the side of the employer does not affect the employment contracts. The employment relations are automatically transferred by the former to the new employer where the terms and conditions of the employment shall in no case be worsened.

The employment contracts are transferred permanently by the former to the new employer in the cases provided by law; e.g. merger of enterprises by the formation of a new enterprise, distribution of the operations of one enterprise among two or more enterprises, or change of ownership.

The rules apply also in cases of a lease of the enterprise or of a self-contained part thereof or when there is a concession agreement in place. In those cases, the transfer is temporary for the term of the lease and the employees are then returned to the initial employer.

The transferred employees have to be notified about the change at least 2 months in advance of the transfer date. The change on the side of the employer does not require the employees’ consent. Yet, a notification has to be made to the National Revenue Agency by the new employer that the employees have been transferred to its payroll.


Social Security Contributions

Social security contributions are due by each employee who works under an employment agreement. Their amounts are fixed as a percentage of the employee’s remuneration and are split between the employer and the employee. The employer has to withhold the employee’s contributions and transfer them to the National Revenue Agency jointly with the amounts due on the side of the employer.

The social security contributions secure employees for a wide range of social insurance risks, including temporary or permanent incapacity to work due to a general or a professional disease, work-related accident, maternity, unemployment, retirement, and death. Payment of social insurance contributions is mandatory and shall be made by the 25th of the month following the month for which they are due.


Accidents At Work

Employers are obliged to secure health and safety conditions at work for their employees. Respectively, the employer is liable for any damages caused to the employee as a result of a work-related accident or of a professional disease, when such an accident has led to the employee’s temporary incapacity to work, the employee’s permanently decreased capacity to work with 50 or more percent, or the employee’s death. The rule will not apply if the employee intentionally causes the work-related accident. As to some professions there is an inherent risk of work-related accidents, in some industries employers may be obliged to conclude a mandatory professional insurance for their employees.

If the work-related accident is a result of the employee’s intentional actions or omissions to act, the amount of the damages due by the employer may be partially reduced.


Discipline And Grievance

Employers are entitled to demand that the employees fully comply with the work discipline as mandated by the Bulgarian Labour Code and the employer’s internal rules on work discipline. Any breach of those mandatory rules will be considered a breach of the work discipline and may be a ground for the imposition of a disciplinary sanction. Under the Bulgarian law, there are three sanctions – reprimand, warning for dismissal and dismissal. No other sanctions may be imposed for a breach of the work discipline (e.g. monetary sanctions are not allowed).

The disciplinary process is strictly formal and requires as a mandatory step that the employer asks the employee to provide explanations on the disciplinary breach. A disciplinary sanction may only be imposed after an internal investigation by the employer and the evaluation of the employee’s explanations.

The sanction, regardless of its type, has to be imposed within 2 months as of the moment when the employer has become aware of the breach but in any case, not later than 1 year after the breach has occurred. The disciplinary sanction is imposed by a written order of the employer that shall be served to the employee.

In some cases, the disciplinary dismissal procedure may be further complicated by the employee’s protection against dismissal (e.g. pregnant employees). The prior approval of the Labour Inspectorate shall be obtained otherwise the dismissal will be rendered invalid. Additionally, the opinion of the medical authorities may be required (when the employee suffers from some legally defined illnesses) or the consent of the trade unions may be needed (for some of their members).


Harassment/Discrimination/Equal pay

The Bulgarian Protection Against Discrimination Act prohibits any direct or indirect discrimination on grounds of gender, race, nationality, ethnicity, human genome, citizenship, origin, religion or belief, education, convictions, political affiliation, personal or social status, disability, age, sexual orientation, marital status, property status, or on any other grounds established by law or by an international treaty to which the Republic of Bulgaria is a party.

This general rule fully applies in the employment context as well. In addition, the Bulgarian Labour Code explicitly prohibits discrimination on the basis of the duration of the working hours (full or part time) and the employment contract (indefinite contracts or for a definite term). Also, male and female employees shall by virtue of an explicit provision receive equal remuneration when they do the same work, or their work is of same or similar value.

If an employee claims to have been subject to harassment on the workplace, including sexual harassment, the employer must immediately conduct an internal investigation and take measures to stop the harassment, including by the imposition of disciplinary sanctions.


Compulsory Training Obligations

Employers are under a general obligation to secure adequate conditions for the employee’s appropriate qualification for the position occupied. The employees are required to participate in the training and educational events as organized by their employer. Additionally, employers have to instruct their employees on an ongoing basis about the appropriate health and safety conditions at work, including by organizing training.


Offsetting Earnings

The employer may offset amounts from the employee’s remuneration either upon the employee’s consent or when there is a specific legal provision authorizing the withholding. There are no limitations on the amount and/or the purpose of the withholding when the employee has provided his/her consent.

To the contrary, when there is no consent on the employee’s side, offsetting is only possible for any of the following purposes of the withholding:

- For advance payments when the remuneration is paid in instalments;

- For salary payments made in an increased amount due to a technical error;

- For the employee’s social insurance contributions and tax payments;

- For the performance of obligations defined by a garnishment of a bailiff;

- For damages incurred by the employer due to the employee’s actions but when the respective legal procedure has been followed.

In all of the cases above, the amount of the offset shall be within what is allowed by the law so that the employee is not fully denied of his right to have the remuneration as a payment to cover ongoing needs and expenses.


Payments For Maternity And Disability Leave

Maternity and disability leave are covered by the social security contributions paid jointly by the employer and the employee.

If an employee is on a sick leave, during the first 3 days of the leave he/she is entitled to 70 percent of his daily remuneration. This is the only compensation payment instead of a remuneration due by the employer in cases of illness.

The employee’s maternity leave is covered by a compensation payable by the Bulgarian National Social Insurance Institute. The amount of the payment is equal to 90 percent of the employee’s average daily remuneration in the 24 months preceding the maternity leave.


Compulsory Insurance

Compulsory insurances under the Bulgarian law apply solely to employees who work on positions with a high level of work traumatism. The evaluation is based by an order of the Minister of Labor and Social Policies – the Minister defines the average level of risk traumatism for Bulgaria for the respective calendar year. All employers who operate in sectors with risk levels on or above the average shall insure their employees against the “Work related accident” risk. The employer shall bear all expenses related to the insurance.


Absence For Military Or Public Service Duties

Bulgaria does not impose a mandatory military service on its citizens. Yet, some of the latest legal amendments are directed to the promotion of voluntarily military service. Therefore, employees who want to explore this option, are allowed to be absent from work and their employers are under the obligation to secure their positions while in the military.

As to the absence for public service duties, the Bulgarian Labour Code provides for a leave in a number of cases such as marriage, death of a close relative, blood donation, participation in court hearings, etc. Depending on the reason for the leave and the agreement between the employer and the employee, the leave may be both paid and unpaid.


Works Councils or Trade Unions

Under the Bulgarian law, employees are entitled to freely form by their own choice work councils as a realization of their constitutional right to gather. Employees can therefore join and leave trade unions they participate in on a voluntary basis. Work councils represent and protect the employees’ interests before state bodies and the employers. The main aspect of the work council’s functions is to negotiate the execution of a collective bargaining agreement.

Employers are also entitled to form legal structures for the protection of their joint interests. The employers’ organizations under the foregoing sentence shall represent and protect their interests through collective bargaining, participation in tripartite co-operation, and through other actions within the law.

The rules on the creation of work councils and trade unions are regulated by the law, where the day-to-day operations of the structures are subject to their internal rules and procedures.


Employees’ Right To Strike

The employees’ right to strike is a constitutionally recognized right in Bulgaria. Strikes are allowed when the employees wish to protect their collective economical and social interests. The participation in the strike is voluntarily and there is an express prohibition according to which employees on a strike shall not impede other non-striking employees in them accessing the workplace or performing their functions.

The strike is considered as a remedy of final resort when amicable dispute settlement is not possible in the relations with the employer.


Employees On Strike

While on a strike, the employees have to be at their workplaces during their working hours. The employees are not allowed to undertake actions that impede the ordinary course of activities which are not within the striking employees’ work functions.

While the strike is ongoing, the efforts on the side of both the employer and the employees shall proceed so that a mutual compromise is reached.

Employees do not receive remunerations by the employer for the duration of the strike. However, the period of a lawfully conducted strike is considered as length of service for the employees. Employees may not be held disciplinary liable by the employer for their participation in a lawful strike.


Employers’ Responsibility For Actions Of Their Employees

Employers under the Bulgarian law are generally responsible for the damages caused by their employees upon or in relation to the performance of the employee’s functions under the employment contract. Deviations from this general rule will apply in cases where the employee has willfully deviated from the employer’s explicit lawful instructions.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

The procedure for the termination of an employment agreement depends on the termination ground.

When the termination occurs as a result of the occurrence of some special events, the employment contract is automatically terminated even absent a special document thereto (e.g. upon the expiration of a fixed term contract; upon the return of a substitute employee; upon the employee’s death; etc.).

When the termination ground requires a notice either by the employee or the employer, the serving of the notice is the first step in the termination process.

If the termination ground does not require a notice, it may be executed when the requirements for it occur on the side of the employer (e.g. the employee has been detained to serve a sentence) or the employee (e.g. if the employer delays payment of the remuneration). A deviation of this rule is regulated in the disciplinary dismissals where the first step in the process is the request for explanations by the employee.

Some termination grounds may require the inclusion of additional steps, such as the obtaining of an approval by the Labour Inspectorate or the trade unions, requesting an opinion by the medical authorities, etc.


Instant Dismissal

Instant dismissal may occur in several situations as envisaged explicitly by the Bulgarian Labour Code. In those cases, “instant” means that there are no preliminary steps to be observed in the implementation of the termination ground.

The first group of instant dismissal termination grounds covers situations where the termination occurs due to an objective reason outside the parties’ scope of control. In such cases, the employer issues a termination order that solely confirms that the termination has occurred at an earlier moment. Those termination grounds are:

- where the dismissal of an employee is pronounced wrongful, or where the employee is reinstated to the previous work thereof by the court, but the said employee fails to report to work within the time limit set by the law;

- upon expiry of the agreed term of the employment agreement;

- by the completion of the work as specified in the employment agreement;

- upon return to work of the replaced employee who is the holder of the position;

- where the position has been designated for occupation by a pregnant woman of an occupational rehabilitee, and an applicant who is entitled to occupy the said position appears;

- if the employee is unable to execute the work assigned thereto by reason of illness which has led to permanently reduced working capacity or because of health contraindications on the basis of a conclusion of the medical expert board for working capacity certification and the employer may not offer a new appropriate position;

- upon the death of the worker or employee.

The second group of instant dismissal termination grounds contains hypotheses where the termination occurs due to the will of either the employer or the employee. In those cases, a written document is to be served to the opposing party to fix the termination moment. The legal grounds can be of various kinds, e.g. if the employee who works under a fixed-term employment contract transfers to another work for an indefinite duration, or if the employer fails to fulfil material obligations agreed under the employment contract or by the collective agreement, or established by a statutory instrument .On the employers side f. e. if the employee is dismissed by reason of breach of discipline (subject to completion of the disciplinary procedure) or the employee refuses to accept a suitable work offered thereto upon occupational rehabilitation;


Employee's Resignation

Employees may decide to terminate their employment at any time and without cause for the termination. The employee has to serve the employer with a termination notice (resignation). The duration of the notice is agreed on in the employment contract. The employee may decide to pay compensation in lieu of the notice and terminate with immediate effect.


Termination On Notice

Termination with a notice on the side of the employee is called “resignation” and the rules thereto apply.

Termination with a notice on the side of the employer may apply in exhaustive list of statutory hypotheses, like e. g. upon full or partial closure of the enterprise, redundancies, or upon reduction in the volume of work.


Termination By Reason Of The Employee's Age

Termination solely by reason of the employee’s age is not governed by the Bulgarian law. For any of the termination grounds to apply, in addition to the age, the employee shall also have the required length of service as well (in 2021, the male employees need to be at least 64 years and 4 months old and have 39 years of service; female employees need to cover 61 years and 8 months and 36 years of experience).

If the age and service requirements are cumulatively met, the employee may terminate his/her employment at any time without notice on that legal ground. The employer may initiate the termination, but a notice has to be served.


Automatic Termination In Cases Of Force Majeure

Under the Bulgarian law, the employer may terminate the employment contract when there is an objective impossibility for its performance. This is a termination ground under which the employer is required to serve a notice or pay compensation in lieu of it. Automatic termination of the employment is therefore not possible – the employer always bears the burden of proof that the performance of the contract was objectively impossible and hence, the termination was lawful.


Collective Dismissals

Collective dismissals can be triggered in companies with 20 or more employees when the employer dismisses a significant number of employees in a period of 30 consecutive days. The number of the dismissed employees depends on the size of the employer’s headcount. In any case, the dismissal grounds for the terminations have to be objective and not related to the individual performance and characteristics of the employees who are affected.

If a collective dismissal procedure is triggered, the Bulgarian Employment Agency shall be notified at least 30 days prior to the commencement of the dismissals. The breach of this obligation on the side of the employer does not affect the validity and lawfulness of each individual termination but may lead to the imposition of administrative sanctions. Further, during the collective dismissals procedure the employer shall consult with its employees to limit and avoid, to the extend possible, the negative consequences of the dismissals. The consultations shall commence at least 45 days prior to the expected termination date.


Termination By Parties’ Agreement

There are two types of mutual consent termination of employment contracts under the Bulgarian law: with or without compensation paid by the employer.

If the option with the payment of compensation by the employer is preferred, the amount of the compensation shall be equal to at least four gross monthly salaries. The payment of a compensation in a lower amount will render the termination invalid and the employee will be considered re-instated back to work. The parties may negotiate a higher amount of the compensation, if they wish so.


Directors Or Other Senior Officers

Managing directors and members of management and supervisory boards of the company execute management agreements with the respective company. Such directors are not considered employees in the meaning of the Bulgarian Labour Code and the provisions related to employment contracts do not apply.

Employees from the company’s management may be dismissed with a notice in cases where the managing director of the company is changed (i.e. there is an official filing in the company’s dossier in the Commercial Register). In such cases, the termination has to be executed within 9 (nine) months following the appointment of the new managing director.


Special Rules For Categories Of Employee

There are some categories of employees who are protected in cases of dismissal on the grounds of position cut-off or partial closure of the enterprise, reduced volume of work, lack of qualities, lack of qualification or disciplinary dismissal.

To terminate the employment contract of the first group of employees, the prior approval of the Labor Inspectorate is required. This group covers female employees whose children have not attained the age of 3, employees who are on a leave regardless of its type, employees who act as representatives before the employer of the general assembly of employees in the company, employees who represent other employees in the health and safety structures at the employer, employee who are representatives in a European work council.

For some employees – occupational rehabilitates and employees who suffer from specific illnesses such as diabetes, heart, and oncology diseases – in addition to the approval of the Labor Inspectorate, the opinion of the medical authorities is required.

Employees who are in the management of trade unions on a national or industry level may not be dismissed unless the union consents to that. This may also extend to employees on a company level, if a collective bargaining agreement stipulates so.

Female employees who are in the first year of their maternity leave may not be dismissed on any legal ground but full closure of the employer’s company or the employee’s consent.


Whistleblower Laws

There are no special general local rules on whistleblowing. In any case, retaliation shall not be allowed for employees who have reported information in good faith.


Specific Rules For Companies in Financial Difficulties

Employers which face financial difficulties may use different legal options, among which are the use of paid leave by their employees and dismissals.

If employees are idle for a period longer than 5 business days, the employer may impose the mandatory use of their paid leave. If the idleness is for a period longer than 15 business days, the employer may dismiss personnel. Dismissal is also an option if the employer has a reduced volume of its work or needs to implement redundancies in order to meet its current needs. In cases of terminations, the legal rules on protected employees, notices, selection among employees on similar positions to choose the better qualified and best performing, will apply.


Special Rules For Garden Leave

Garden leave is not a recognized concept under the Bulgarian employment law. The use of paid leave may be unilaterally imposed by the employer only in some exceptional circumstances (such in cases where the employee has been idle for more than 5 working days). Otherwise. the employee’s consent on the use of the leave is required.


Restricting Future Activities

The employer may not impose non-compete covenants on its employees post termination. Bulgarian courts are consistent in pronouncing such provisions as null and void as they breach the Bulgarian Constitution and hinder the employee’s right to work.


Severance Payments

Regardless of the termination ground, the employer shall pay the employee compensation for any unused days of paid annual leave.

Depending on the termination ground, different severance payments may be payable to the employee:

      
  • Termination upon mutual consent against compensation – the statutory minimum of the compensation payment is 4 (four) gross monthly salaries of the employee.
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  • Unilateral termination by the employer due to full or partial closure of the employer, position cut-off, reduced volume of work, cease of operations for a period longer than 15 working days, upon the employee’s refusal to transfer to the employer’s new location in a different city, or when the employee’s contract is terminated due to the reinstatement of an unlawfully dismissed employee – compensation of up to one monthly remuneration. If the employee commences a new employment in the month following the termination, the compensation is paid proportionally to the period of unemployment.
    •   
  • Termination due to the employee’s health condition (illness) – compensation of 2 (two) monthly remunerations. The compensation is due if the employee has at least 5 (five) years of professional experience in total and if he/she has not received compensation on this legal ground in the 5 (five) years preceding the termination.
    •   
  • Gratitude payment upon termination of employment regardless of the termination ground when the employee has acquired the right of a pension for age and length of service. The amount of the compensation depends on the employee’s length of service with the respective employer as at the time of termination. If the employee has at least 10 (ten) years of experience with the employer or a company of its corporate group during the past 20 (twenty) years, the minimum amount of the severance payment is 6 (six) monthly remunerations. If not, the minim amount is 2 (two) monthly remunerations.

The compensations above could be paid cumulatively if the legal grounds are respectively met.

When the termination ground requires a notice to be served, the party who has to serve it may decide to pay compensation in lieu of it and terminate with immediate effect. In such cases, the amount of the compensation is equal to the employee’s remuneration for the respective unobserved part of the notice period.

In disciplinary dismissal cases, the employee shall pay the employer compensation equal to his/her remuneration for the notice period.

If a dismissal is rendered unlawful by the court, the employee may request compensation for the period of his/her unemployment following the termination date, but for a period no longer than 6 (six) months.

If the employee is reinstated to his/her position by the court due to a successful unlawful dismissal claim, the employer has to secure the employee’s returning to his/her functions. If the employer obstructs the employee’s return to work, the employer shall be liable to pay the employee’s remuneration for each day of the denied access to work.


Special Tax Provisions And Severance Payments

In 2021, the personal income tax for individuals in Bulgaria is fixed at 10 percent.


Allowances Payable To Employees After Termination

All payments due are considered under the “Severance Payments” section.


Time Limits For Claims Following Termination

The employee may challenge the dismissal’s lawfulness within 2 (two) months as of the termination date.

Claims that are related to unsettled matters prior to the termination (e.g. unpaid remunerations) may be brought within 3 (three) years. The term commences from the moment in which the matter has occurred (e.g. as of the last date on which the payment of the remuneration was due).

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

All reviewed in the general summary above.



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Contact a Contributing Author:
Mileslava Bogdanova-Misheva
Tsvetkova Bebov & Partners 
Bulgaria


Disclaimer:

© 2021, Tsvetkova Bebov & Partners. All rights reserved by Tsvetkova Bebov & Partners as author and the owner of the copyright in this chapter. Tsvetkova Bebov & Partners has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021