Terminating Employment in Bulgaria: A Guide to Notice Periods and Severance

Ending an employment relationship is rarely pleasant, but knowing the rules can make the process smoother and help avoid legal trouble. In Bulgaria, employment termination is regulated mainly by the Labour Code, which sets out specific grounds, notice requirements, and compensation. Whether you are an employer planning a dismissal or an employee considering resignation, this guide explains the essentials.

Grounds for Termination

Bulgarian law recognises several ways an employment contract can end. The most common are:

• Mutual agreement – both parties sign a written agreement to end the contract on a certain date.
• Expiry of a fixed-term contract – the contract ends automatically on the agreed date, unless it is renewed.
• Resignation by the employee – the employee gives written notice and the contract ends after the notice period.
• Dismissal by the employer – this requires a valid legal ground, such as redundancy, lack of qualification, or disciplinary breach.

Employers must be careful: dismissal without a valid ground can be challenged in court and may result in compensation for the employee.

Notice Periods

For contracts of indefinite duration, the standard notice period is 30 days. This applies whether the employee resigns or the employer terminates with notice. However, the parties may agree on a longer notice period in the employment contract, up to a maximum of three months for certain categories of employees (for example, managers or specialists).

For fixed-term contracts, early termination before the expiry date is generally only possible on specific grounds, such as mutual consent or serious breach. In such cases, the notice period may be shorter or not required, depending on the circumstances.

Notice must be given in writing. The notice period starts running from the day after delivery, and the employment relationship ends on the last day of the notice period.

Severance and Compensation

When an employee is dismissed due to redundancy (e.g., closure of the position, reduction in staff), the employer must pay a severance payment. The minimum legal amount is one month's gross salary, but collective agreements or individual contracts may provide for more, especially for long-serving employees.

If an employee is dismissed without a valid legal ground, a court may order the employer to reinstate the employee or pay compensation. The compensation for unlawful dismissal is typically set at the employee's gross salary for the period of unemployment caused by the dismissal, but not more than six months' salary.

Employees who resign are generally not entitled to severance, unless the resignation is due to the employer's breach of contract (e.g., non-payment of wages).

Final Steps for Employers

When terminating an employment contract, employers should:

• Issue a written dismissal order stating the legal ground and the effective date.
• Pay all outstanding wages, unused annual leave, and any severance due on the last working day.
• Provide the employee with the necessary documents, including a certificate of employment (obrazets UP-3) and a certificate of income for social security purposes.
• Notify the National Revenue Agency about the termination within the required deadline.

For employees, it is wise to keep copies of all termination documents and to check that final payments are correct. If in doubt, seeking advice from a labour law specialist or a trade union representative can help protect your rights.

While this guide covers the basics, employment law can be complex, and each situation may have unique nuances. Always consult the current Labour Code or a qualified professional for specific cases.