Bulgarian labour law is heavily procedural and fact-sensitive, and dismissal is one of the most litigated areas. Whether you are an employer managing a workforce in Bulgaria or an employee facing dismissal, the details of how the Labour Code is actually applied matter at least as much as the headline rules. This guide covers the legal grounds for dismissal, notice periods, severance, protected categories, redundancy selection, and the remedies available when a dismissal is challenged.
Under the Bulgarian Labour Code, an employment relationship may be terminated in several ways: by mutual agreement between the parties, by either party with notice, by the employer without notice in disciplinary cases, upon expiry of a fixed-term contract, or upon the occurrence of certain events prescribed by law (such as the employee's death or invalidation of the employment contract).
The most important point for employers to understand is that Bulgarian labour law does not recognise at-will termination. An employer may only dismiss an employee on grounds explicitly set out in the Labour Code. Termination on grounds not listed in the law is unlawful and may be overturned by the courts.
The Bulgarian Labour Code provides an exhaustive list of grounds on which an employer may terminate an employment contract. The grounds themselves are closed, but their interpretation is frequently contested in court, and qualification disputes (whether a given situation truly falls under a specific ground) are a core battleground in dismissal litigation. In broad terms, the grounds fall into three categories:
Bulgarian law does not prescribe a formal performance improvement plan, but for performance-related dismissals courts generally expect employers to demonstrate objective, consistent and comparable assessment criteria, typically supported by documented evaluations. Disciplinary dismissals require the employer to follow specific procedural steps and deadlines set out in the Labour Code, and the sanction must be proportionate to the breach, taking into account the employee's overall conduct and record. The disciplinary sanction must also be chosen and recorded at the time of the decision: an employer cannot subsequently upgrade a lesser sanction into dismissal, and attempts to do so are routinely struck down.
One point is worth underlining from the outset. In our experience, many Bulgarian dismissals fail in court not because the underlying reason was invalid, but because of defects in procedure, documentation, or the qualification of the legal ground. Labour disputes in Bulgaria are highly fact-specific and strongly influenced by court practice, and that is where most cases are won or lost.
The notice period depends on the type of employment contract:
Either party may terminate the contract by paying compensation in lieu of notice: that is, the gross salary the employee would have received during the unserved portion of the notice period. This applies equally to employers and employees.
Bulgaria does not impose a general severance pay obligation on employers. The Labour Code does, however, require severance in specific situations:
In all cases, severance is typically payable at the time the employment relationship ends, together with the employee's final salary and compensation for any unused paid annual leave. Delay in payment is a relatively common practical issue and can give rise to separate claims, although it does not, by itself, automatically invalidate an otherwise lawful termination.
The Bulgarian Labour Code provides enhanced protection against dismissal for certain vulnerable groups. For most of the statutory grounds for termination, the employer must obtain prior approval from the Labour Inspectorate before dismissing:
Pregnant employees and employees on parental leave enjoy the strongest protection. Dismissal is generally limited to exceptional circumstances such as closure of the entire enterprise, and the ordinary Labour Inspectorate approval route is not available as a workaround. The exact boundaries are narrow and highly fact-sensitive, and any attempted dismissal in this group is likely to be scrutinised closely by the courts.
A frequent practical trap should also be flagged. The requirement for prior Labour Inspectorate approval under Article 333 of the Labour Code applies only to specific statutory grounds of dismissal, not to every form of termination. Correctly qualifying the ground, and understanding whether Article 333 bites on that particular ground, is decisive. Employers routinely lose cases because they either sought approval when none was legally required (creating confusion in the paperwork) or, more commonly, failed to obtain approval where it was in fact needed.
An employer may dismiss an employee without notice only for serious violations of labour discipline. The Labour Code lists the grounds exhaustively:
Before imposing a disciplinary dismissal, the employer must request a written explanation from the employee and must act within two months of discovering the breach (and no later than one year after the breach occurred). Failure to follow these procedural requirements renders the dismissal unlawful.
One of the most litigated aspects of business-related dismissals in Bulgaria is the redundancy selection procedure, known locally as подбор. Selection is generally required where positions are reduced within a comparable group of employees, and the employer has to assess those employees against objective criteria such as qualifications and level of performance. It is not, however, required in every reduction: where an entire position or function is genuinely eliminated, with no comparable role remaining against which a selection could be made, a подбор exercise is not mandated. The distinction between "position reduced" and "position eliminated" is heavily fact-specific and frequently contested, and employers who get it wrong lose the resulting dismissal cases regularly.
Where selection is required, a poorly documented or inconsistently applied process is one of the most common reasons dismissals are overturned. The employer should be able to produce the criteria used, the employees compared, the scoring, and a written record explaining why the dismissed employee was chosen over the others. The absence of any of these is often decisive in litigation, even where the underlying economic reason for the redundancy is sound.
When an employer plans large-scale dismissals for economic reasons, additional obligations apply. A collective redundancy is triggered when, within a 30-day period, the employer intends to dismiss:
The employer must consult with trade unions and employee representatives for at least 45 days before implementing the redundancies and must notify the relevant State Employment Agency. The consultation process is expected to be genuine and substantive: purely formal compliance (for example, a nominal meeting with no real exchange on alternatives or mitigation) is frequently treated as insufficient in litigation. Failure to comply with these consultation and notification requirements, or with the selection process described above, can result in the dismissals being declared unlawful.
An employee who believes their dismissal was unlawful may bring a claim before the competent regional court within two months of receiving the termination order. The court may:
A critical procedural point: in dismissal disputes, the burden of proving the lawfulness of the termination lies with the employer. It is for the employer to establish the factual grounds, the correct legal basis, and compliance with the procedural steps. This single allocation of burden drives most employment litigation strategy in Bulgaria. The employee, however, is not passive: the claim must be properly brought within the statutory window, the grounds of challenge have to be framed, and any specific protection relied upon (for example, a protected status under Article 333, or discrimination) must be raised and, where required, supported by the employee.
The employee is not obliged to seek reinstatement and may choose to claim only the monetary compensation. The six-month cap concerns the compensation for unemployment, and it sits alongside other potential exposure for the employer, including the interplay with reinstatement and accrued salary where the case is drawn out. Bulgarian courts scrutinise both the factual grounds and the procedural compliance of dismissals, and long-running cases tend to increase overall employer exposure rather than reduce it. If the employee was dismissed during a probation period and the dismissal is found to be unlawful, the same remedies apply.
Bulgarian law permits a probation period of up to six months, which must be expressly agreed in the employment contract. The right to terminate during probation without notice and without reasons belongs only to the party in whose favour the probation was agreed, and the contract must state clearly in whose favour it is. If the contract is silent or ambiguous on this point, the practical ability to terminate can evaporate, and a purported probation dismissal may be treated as an ordinary termination subject to the full statutory regime. If the contract states that probation is in favour of both parties, either may terminate without notice during the trial period.
The absence of a reason requirement does not make probation termination immune from review. Courts may still scrutinise a probation dismissal for abuse of rights, discrimination, or use of the probation as a disguise for an unlawful termination (for example, where the termination is in reality linked to pregnancy, trade union activity, or a protected characteristic). After the probation period expires, the standard termination rules, including the requirement for statutory grounds and notice, apply in full.
All employment terminations in Bulgaria must comply with the following formal requirements:
Failure to issue a written termination order, to state the correct legal ground, or to ground the stated reason in any factual detail can, by itself, render the dismissal unlawful.
Based on our experience advising both employers and employees in Bulgaria, the most important points to keep in mind are:
This article was prepared by the legal team at YARD Law Co., a full-service law firm based in Sofia, Bulgaria, advising on commercial law, litigation, and cross-border employment matters. This overview is provided for general information only and does not replace case-specific legal advice. Bulgarian dismissal law is heavily fact-sensitive and procedural, and outcomes depend significantly on the particular evidence and the approach of the court before which the case is heard.
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