What does an employer owe an employee upon dismissal?

Grounds for terminating an employment contract

Under the Bulgarian Labour Code, the relationship between employer and employee may be terminated on objective grounds listed in the Labour Code, or at the initiative of one of the parties.

Dismissal at the employee’s request is possible:

• By mutual consent, without prior notice or compensation (Art. 325, para. 1, item 1 of the Labour Code). This is the most advantageous option for the employer, who in this case does not have to pay any compensation. Important: in this case the employee can only receive the minimum unemployment benefit if they register with the labour office after the dismissal.
• With prior notice (Art. 326, para. 2, item 1 of the Labour Code). As a rule, the notice period is 30 days; it may also be longer — up to three months. If the employee breaches this condition, they must pay the employer compensation in the amount of their salary for the unworked part of the period.

Dismissal at the employer’s initiative:

• Termination of the employment contract during the probation period (Art. 71, para. 1). The probation period in Bulgaria may not exceed 6 months, not counting days when the employee was on leave, on maternity leave or on sick leave. During the probation period the contract may be terminated without notice and without any additional compensation.
• Dismissal at the employer’s initiative with an agreed severance payment (Art. 331). In this case the employee is entitled to compensation of at least 4 salaries (gross, i.e. the amount of remuneration before taxes), and it is possible to insist on a larger amount. It is calculated on the basis of the last salary received. This is the most advantageous option for the employee. The employer, for its part, can be certain that in this case the dismissal cannot be challenged and overturned in court.
• Dismissal due to poor quality of work (Art. 328, para. 1, item 5). The employer may dismiss an employee with prior notice for not meeting the requirements of the position held. This ground is not related to disciplinary violations. Objective evidence is required of the employee’s persistent inability to perform their functions. The dismissal order must list the specific qualities required for the position that the employee lacks.
• Staff reduction (Art. 328, para. 1, item 2). In this case the employer is obliged to notify the employee of the dismissal in advance (usually one month, but the period may be extended to 3 months). If notice is not given in time, the employer must pay compensation in the amount of the (gross) salary for that period. The employee is also entitled to compensation for the time during which they remained without work or were forced to work for a lower salary, but for no more than one month (Art. 222, para. 1). Usually a staff reduction takes place without prior notice, and the employer pays one salary as compensation. After a month, an employee who has not found work can submit an application and receive another payment in the amount of one salary. Important: the employer chooses whom to make redundant on the basis of an assessment of employees’ skills and knowledge. The employee may challenge this decision in court within two months.

Important: without permission from the Labour Inspectorate, it is not allowed to make redundant or dismiss for disciplinary violations mothers of children under 3 years of age; employees who have gone on leave; trade union officials; those suffering from ischaemic heart disease, active tuberculosis, an oncological, occupational or mental illness or diabetes, as well as certain other categories of employees.

Whatever the reason for the termination of the employment contract, the employee has the right to receive:

• the money earned for all time worked;
• compensation for unused leave;
• an employment record book with correctly stated data, including the reason for the dismissal.

The employer may also be obliged to pay other types of compensation, for example if it has committed some violation (delayed salary, unlawful change of the place and nature of the work, etc.); unlawfully dismissed the employee, or did not allow them to work despite a court decision; withheld the employment record book or entered incorrect information in the documents.

During a state of emergency

After the declaration of a state of emergency, dismissals in Bulgaria became more frequent — especially in the entertainment, tourism and catering sectors. Nevertheless, employers must fulfil their obligations towards their employees.

When closing a business (fully or partially), the employer must give employees one month’s notice before dismissal. If no notice is given, the employer will have to pay employees their salary for that period. If the business has temporarily (for 15 working days or more) suspended its activity, the employer may temporarily transfer an employee to other work without their consent.

In the case of a significant reduction in the volume of work, several conditions must be met in order to dismiss employees:

• the reduction in the volume of work must be lasting — at least one month;
• the number of dismissed employees must be proportionate to the reduction in the volume of work;
• employees must be given advance notice of the dismissal or paid compensation.

How to avoid conflicts

A dismissal, whenever it takes place, must be lawful. If certain rules are not observed, the employee may file a complaint with the Labour Inspectorate. In many cases reinstatement in the workplace through the courts is possible. So the employer needs to make sure that no violations are committed and that it will not have to deal with the Labour Inspectorate later on.

As for employees, they can be advised not to respond immediately to an employer’s offer to submit a resignation “of their own accord” if no other options are in sight. In such a situation it is better to consult a lawyer in order to find a way out of the difficult situation with the maximum benefit for yourself.

The lawyers of Bulgarian Expert are always ready to advise you on the nuances of Bulgarian labour law and help you find the optimal solution. Get in touch with us!

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