Terminating an employee in Bulgaria takes more planning than many foreign employers expect. The country’s Labour Code sets out a strict framework that governs every dismissal, from the required notice period through to the final paycheck. There’s no at-will termination here: every separation must follow a defined legal pathway, and getting it wrong can expose your company to significant liability, including the possibility that a termination is declared void entirely. This guide covers what you need to know as an employer operating in Bulgaria in 2026.
Termination framework in bulgaria
Bulgarian employment law is built around the Labour Code, which applies to all employment relationships in the country regardless of where the employer is incorporated. The code draws a clear distinction between the different grounds for termination, and each ground carries its own procedural requirements and financial obligations.
Employers can’t simply decide to end employment and walk away. Even the simplest separation involves written notices, mandatory waiting periods, and specific payments. Skipping any step creates legal exposure, so it’s worth understanding the framework before you act.
Valid grounds for employer-initiated termination
The Labour Code recognises several valid grounds for an employer to initiate termination, including:
- Business closure
- Workforce reduction
- Decreased workload
- Work stoppage of 15 or more days
- Poor performance
- Failure to meet required education or qualification standards
- Refusal to relocate
- Reaching retirement age
- Disciplinary grounds (covered separately below)
Each of these grounds corresponds to a specific procedure under the Labour Code. Using the wrong procedure for the circumstances, or applying a ground that doesn’t genuinely exist, exposes the employer to an unfair dismissal claim.
Types of termination
Bulgaria recognises four main categories of employment separation that employers will encounter: termination by mutual agreement, termination without cause under Article 331, redundancy and economic termination, and disciplinary termination. Each has different procedural requirements, costs, and timelines.
Mutual termination agreement
At any time during the employment relationship, both parties can agree in writing to end the contract on terms they’ve negotiated together. This is a flexible option that’s commonly used when both sides want a clean, documented separation. The compensation and other terms are agreed between the parties, so the outcome can vary significantly depending on what’s negotiated.
Notice periods
For most employer-initiated terminations, the statutory minimum notice period is 30 days. Contracts or collective agreements can extend this up to a maximum of 3 months (90 days), and either party may give notice. Employers should always check the specific employment contract before issuing notice, since a contractual notice period longer than 30 days is binding.
During the notice period, the employee continues to work and receive their salary as normal unless the employer opts to pay in lieu of notice where permitted.
Article 331: termination without cause
Article 331 of the Labour Code provides a specific pathway for employers who want to end employment without having a substantive reason tied to performance, discipline, or business need. It’s a no-fault route, but it comes with meaningful financial obligations.
The process works as follows: the employer must propose mutual termination in writing to the employee. The employee then has 7 days to accept or reject that proposal, also in writing. If the employee accepts, the employer must pay a minimum of 4 months’ gross salary as compensation. That payment is due within 1 month of the termination date.
There’s an important consequence if the employer misses the payment deadline: if the compensation isn’t paid within 1 month of termination, the termination is legally void. The employee has the right to return to work as if the separation never happened. This is a real risk. Employers using Article 331 must ensure the payment is made on time, without exception.
If the employee rejects the proposal within the 7-day window, the employer can’t proceed under Article 331 and must use a different termination ground.
Redundancy and economic termination
When a termination is driven by genuine business reasons such as workforce reduction, business closure, decreased workload, or an extended work stoppage of 15 or more days, different rules apply. The employer may terminate with 30 days’ notice, and the employee is entitled to severance pay of at least 1 month’s gross salary. The contract or a collective agreement may set a higher amount.
In addition to severance, the employer must pay out all unused accrued annual leave at the time of termination. There’s no option to carry this over or waive it.
Disciplinary termination
Disciplinary termination allows for immediate dismissal without a notice period, but only where specific grounds exist under the Labour Code. Valid grounds include:
- Three or more late arrivals of at least 1 hour each within a single month
- Two or more consecutive unexcused absences
- Repeated breaches of workplace rules
- Breach of the employer’s trust
- Disclosure of confidential information
- Deception regarding goods or services provided
Disciplinary termination must follow a proper procedure, including giving the employee the opportunity to explain their conduct before a decision is made. Skipping that step, or relying on grounds that don’t meet the thresholds set out above, can result in the dismissal being overturned.
Final payments
For terminations with notice, final payment is due on the next regular payday. For immediate terminations, all outstanding amounts must be paid within 30 days. In either case, the final payment must include all outstanding wages and compensation for any unused annual leave.
If you’re terminating a non-EU/EEA national, there’s an additional compliance step: you must notify the relevant immigration authorities within 7 days of the termination date.
How an EOR manages terminations in bulgaria
Terminating a Bulgarian employee as a foreign employer without a local entity means navigating the Labour Code from a distance, in a language that isn’t yours, and within a legal system you may not be familiar with. The margin for procedural error is narrow, and the consequences of getting it wrong are significant.
Working with an Employer of Record (EOR) means the legal employer on record handles every step of the termination process on your behalf. The EOR manages the notice period, prepares the required documentation, calculates the correct severance and compensation amounts, issues final payments on time, and handles immigration notifications where required. Because the EOR is the legal employer in Bulgaria, it carries the compliance risk and ensures the separation follows the Labour Code to the letter.
If you’re considering EOR services for your Bulgarian team, RemotePass handles the full employment lifecycle, including compliant terminations.
Ready to terminate compliantly in bulgaria?
Bulgaria’s Labour Code gives employees strong protections and imposes real obligations on employers at every stage of a termination. Understanding which pathway applies to your situation, meeting every procedural requirement, and making payments on time aren’t optional steps; they’re what keeps a termination legally valid.
If you’re managing Bulgarian employees as a foreign employer and want to make sure every separation is handled correctly, book a demo with RemotePass to see how we support compliant terminations across Bulgaria and beyond.
