Termination of Employment Agreement Due to Staff Reduction in Bulgaria

Staff reduction is one of the most common grounds used for termination of employment agreements in Bulgaria by the employers with a termination notice for convenience. The reason for this lies in the statutory right of the employer to organize the workflow and to determine the staff number and schedule at his own discretion.

Prerequisite: Staff schedule adopted by the employer

The presence of a staff schedule adopted by the employer is the corner-stone for the termination of employment agreements in Bulgaria due to staff reduction. The staff schedule represents a list of all job positions and number of people necessary for each position distributed between the departments of the employer. The staff schedule should be adopted by virtue of an order of the employer prior to the commencement of any dismissals.

The adoption of a staff schedule is not mandatory under the current Bulgarian legislation. However, its presence is compulsory as far as termination of labour contracts due to staff reduction is concerned.

Necessary Documents:

  • Order of the employer for reduction of the staff and amendment of the staff schedule – the order should contain information about the positions that will be cancelled or occupied by a reduced number of employees and the date as of which the new staff schedule will become effective. The functions of the position(s) that are cut down must either be distributed among other employees, or cease to be carried out altogether. The staff is considered to not have been actually reduced (respectively the termination of the employment agreement to not have been done in compliance with the Bulgarian legislation) in case only the job title is altered, while the functions of the “new” position remain the same as the functions of the position(s) which has/have been cancelled;
  • Selectionthe employer is obligated to exercise his right to a selection in case of cancellation of only one or few out of certain positions (e.g. in case of cancellation of one or two out of three accountant positions). In other words, the employer must necessarily conduct a selection among the employees who occupy the same and/or similar (if any) positions in order to determine the worst-performing and the least qualified employee(s) who is/are to be dismissed. It is preferable to describe the results of the selection in a written document in order to avoid future disputes in this regard and be able to prove the selection process and its results;
  • Prior written notice to the employee(s) who is/are to be dismissed;
  • Order for termination of the employment agreementit is usually issued by the Bulgarian employer after the expiration of the termination notice period. However, the employer is entitled to terminate the employment agreement prior to the expiration of the notice period against compensation for the notice period which has not been observed.  

Compensations of employees in Bulgaria payable by the employer:

  • Compensation for unused annual paid leave;
  • Compensation for unemployment in Bulgaria following the staff reduction (this compensation is due only in case the employee does not start a new job for a period of one month following the termination, or starts a new job with a lower salary during the same period, and amounts to a maximum of one gross salary).


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