The Bulgarian Labour Code (the “LC”) regulates various different hypotheses and scenarios as to termination of an employment agreements. Reflecting the grounds for termination of an employment agreement, the law also provides for a wide range of compensations in favour of employees. Their type and amount depend on certain legal prerequisites, and they are due upon:
Breach of preliminary termination notice by the employer
According to the LC there are two types of termination notice:
- in the case of employment agreement with indefinite duration a preliminary notice of 30 days, but not more than 3 months should be addressed prior to termination;
- in the case of fixed-term employment agreement – a 3-month notice should be address, unless the agreement expires earlier.
If the employer breached either the statutory notice or the one agreed by the parties, the employee is entitled to compensation equal to the gross remunerations for the term of the notice period that has not yet expired upon the actual termination.
An employee is also entitled to the same compensation if he/she has sent a notice and the employer terminated the agreement prior to expiration of the term.
Termination of employment agreement without preliminary notice by the employee
In such cases, the amount of compensation is:
- in case of employment agreement with indefinite duration, it amounts to the gross wage for the term of notice;
- in case of a fixed-term employment agreement, it amounts to the gross remuneration of the employee for the period during which he/she stays unemployed, but for no more than the remainder of the agreement term.
- The compensation amounts up to 6 times the gross remuneration if the employee remains unemployed for 6 months or more.
- It is payable if the termination of the employment contract has been duly declared illegal – by the competent court or by the employer.
- If an employee has been employed at new job and his/her remuneration is lower than the one received for his/her previous job, the employer who dismissed him/her shall pay compensation equal to the difference between the two remunerations.
Termination of employment agreement with preliminary notice by the employer
- In such cases, the employee shall be entitled to compensation equal to his/her gross remuneration for the period of unemployment, but not exceeding one month.
- If, during this 1 month, the employee finds a job which is lower paid than the previous one, his/her previous employer should pay compensation equal to the difference between the two remunerations.
- Such compensation is due if an employee has been dismissed due to redundancy, reduction in workload, idling of more than 15 days, full or partial closure of the enterprise, etc.
Termination of employment agreement by the employer in return for agreed compensation
- The employer may also initiate termination of an employment agreement in exchange for compensation payable to the employee. The minimum amount of such compensation is four times the amount of the employee’s last monthly gross remuneration.
- A higher amount of the compensation can also be arranged.
Termination of an employment agreement due to illness
On these grounds, when an employee has been dismissed because he/she is unable to perform his/her duties due to illness, the compensation amounts to two monthly gross salaries.
Termination of employment agreement on due to reach of retirement age or length of service
In this case, the compensation amounts to two gross salaries. If an employee has 10 years of service with that employer, the compensation is six gross salaries.
Compensation for unused annual paid leave
The compensation’s amount is formed proportionally to the part of the annual leave that has not been used. The basis for calculation of the exact amount is the gross salary for the month preceding the month of termination of the employment agreement.
Compensation for non-reinstatement of an employee
In case a dismissal has been declared unlawful by the competent court, the employee has the right of reinstatement to work within 14 days as of becoming aware of the reinstatement. In this case, if the employer does not allow the employee back to his/her workplace, compensation is due for the entire period of non-reinstatement, regardless of its duration.
Compensation for retention of a worker’s service record book
Upon termination of an employment agreement, the employer should immediately process the respective employee’s service book and return it to the employee. If the employer breached this obligation, a compensation equal to the employee’s gross remuneration from the day of termination until the date of actual handover of the service record is due.
- It is possible that an employer should pay more than one type of compensation upon termination of an employment agreement.
- All the compensations paid to the employee upon termination of employment agreements should be duly entered with the employee’s service record book.