How to Terminate an Employment Agreement when Closing Down an Enterprise

Nowadays, due to the continuing world economic crisis, unfortunately, the business phenomenon of “closing down an enterprise/a part of an enterprise” is a really common practice. This has been the case in Bulgaria too where companies have increasingly had to close down due to economic reasons. This inevitably imposes the need of termination and settlement of the employment relations between the company which is closing down and its employees.

The Bulgarian labour legislation provides for some special rules with regard to company shutdowns which should be strictly observed when a Bulgarian employment agreement is terminated on the grounds of closing down an enterprise/a part of an enterprise in Bulgaria.

Firstly, the employer should prepare and adopt the following documents:

  • a written resolution for closing down the enterprise/a part of the enterprise and for termination of the employment agreements of the company employees
  • a written termination notice which must be served to every employee whose employment agreement will be terminated;
  • a written termination order for every employee whose employment agreement is being terminated.

As a consequence of the termination of the employment agreements each dismissed employee would be entitled to the following compensations:

  • a compensation for unused annual paid leave;
  • a compensation for unemployment due to the closing down the enterprise/a part of an enterprise – the compensation is payable in case the employee has been unemployed during the month following the month of termination of their employment agreement, or in case s/he has started a lower-paid new job;
  • a compensation for non-observing the termination notice – the compensation is payable only in case the employer has terminated the employment agreement with immediate effect without respecting the termination notice period.

Last but not least, the employer is obligated to notify the Bulgarian National Revenue Agency of any lay offs and the employees’ termination of the employment agreements within 7 days as of the date of the termination.



 

Related links and articles: