Quick Answer
Yes — employers can terminate employment in Bulgaria, but termination is highly regulated. A lawful reason alone is not sufficient: procedural compliance is equally critical. Written documents, notice rules, timing, and employee protections all apply. Many terminations fail not because the reason was invalid, but because the procedure was.
Legal Framework: Why Termination Is Procedure-First
Employment termination in Bulgaria is governed primarily by the Bulgarian Labour Code (ENG). The system is built on strong employee protection and formal safeguards.
This does not prevent employers from terminating employment. It does mean that termination must:
- rely on a legally recognised ground, and
- follow a strict, documented procedure.
These termination rules should be understood together with the requirements that apply when employment is created in the first place. If you are reviewing your overall employment framework, see our guide on hiring employees in Bulgaria.
In disputes, courts and labour authorities focus heavily on how termination was executed, not only why it was initiated.
Key misconception for foreign employers:
Bulgaria does not recognise “at-will employment”. Managerial discretion alone is not a valid basis for termination.
Main Grounds for Termination
Termination by Mutual Agreement
When it applies:
Both parties voluntarily agree to end the employment relationship.
Key conditions:
- Must be in written form
- Must clearly state the termination date
Typical risks:
- Treating mutual agreement as a unilateral decision
- Applying pressure or presenting it as the only option
- Failing to clarify final payments and leave settlement
Mutual agreement is effective only when it is genuinely voluntary and properly documented.
Termination With Notice (Employer-Initiated)
When it applies:
Where the employer relies on a lawful ground allowing termination subject to notice (e.g. organisational reasons, lack of required qualities).
Key conditions:
- Written notice
- Correct legal ground
- Supporting documentation
Typical risks:
- Using an inappropriate or weakly supported ground
- Insufficient internal records
- Overlooking additional protections for certain employees
Termination Without Notice (Disciplinary Dismissal)
When it applies:
Serious breaches of work discipline.
Key conditions:
- Formal disciplinary procedure
- Documented breach
- Written termination act
- Compliance with statutory deadlines
Typical risks:
- Treating disciplinary dismissal as an “instant” solution
- Weak evidence or incomplete documentation
- Missing required procedural steps or permissions
Disciplinary dismissal is the most procedurally sensitive termination route and carries elevated dispute risk if mishandled.
Redundancy and Organisational Changes
When it applies:
Genuine role elimination, downsizing, restructuring, or reduced workload.
Key conditions:
- Real organisational change
- Clear link between the change and the affected role
- Internal documentation (management decision, updated structure)
Typical risks:
- Artificial redundancy where the role continues under a new title
- Insufficient internal justification
- Failure to assess protected employee status
Termination During the Probation Period (Up to 6 Months)
Probation is one of the most flexible termination mechanisms under Bulgarian labour law — but only if drafted and applied correctly.
How probation works:
- Maximum duration: 6 months
- Must be expressly included in the employment contract
- Must specify in whose favour probation is agreed
Termination during probation:
If probation is agreed in the employer’s favour, the employer may terminate:
- without notice,
- without stating a reason,
- provided termination occurs within the probation period.
Common risks:
- Probation not validly agreed in writing
- Probation agreed only in the employee’s favour
- Missing the probation deadline
- Assuming probation allows informal termination
Once probation expires, standard termination rules apply in full.
Notice Periods Explained
Notice periods may be statutory or contractually agreed (within legal limits).
Typical practice:
- Indefinite-term contracts: commonly 30 days, extendable up to the legal maximum
- Fixed-term contracts: often up to 3 months, but not exceeding the remaining term
If employment ends without the applicable notice being served, compensation in lieu of notice may apply, depending on the termination ground and circumstances.
Financial Obligations at Termination (Employer View)
Termination triggers mandatory financial and payroll obligations, regardless of the legal ground used. These obligations are closely connected to broader payroll compliance requirements.
Final payroll settlement
The employer must pay:
- salary due up to the termination date,
- earned contractual remuneration,
- statutory taxes and social security contributions.
Final payment is typically processed with the next payroll cycle, unless agreed otherwise.
Unused paid annual leave
All unused statutory paid annual leave accrued up to termination must be paid in cash.
- Applies in all termination scenarios
- Leave cannot be waived
- Accurate leave records are essential
Notice-related compensation
If employment ends without the applicable notice period being served, compensation in lieu of notice may be due, depending on:
- the termination ground,
- contractual notice terms,
- who initiated termination.
Statutory severance (case-specific)
Certain employer-initiated terminations (e.g. redundancy) trigger statutory compensation.
There is no universal severance entitlement — obligations depend on the legal ground and facts.
Documentation and reporting
Employers must ensure:
- proper termination documentation,
- payroll and social security reporting,
- formal closure of the employment record.
Practical takeaway:
Termination is complete only when financial settlement and reporting are finalised, not when the employee leaves.
Procedural Requirements (Critical)
All termination acts must be in written form.
Timing, delivery, documentation, and internal records are decisive.
Procedural errors frequently invalidate otherwise lawful terminations.
Termination should therefore be treated as a compliance process, not an HR formality.
Protected Categories of Employees
Certain employees benefit from enhanced statutory protection. Termination may still be possible, but is often restricted and may require prior permission from the Labour Inspectorate.
Protected categories commonly include:
- pregnant employees,
- employees on maternity or parental leave,
- mothers of a child up to 3 years of age,
- employees on sick leave for illnesses listed in regulations of the Minister of Health,
- employees who have already started using statutory leave,
- employees with certified disabilities,
- union representatives and other legally protected roles.
Protected status is assessed at the time of termination, not when the issue first arose.
Common Mistakes Foreign Employers Make
- Assuming at-will employment applies
- Using mutual agreement incorrectly
- Skipping written documentation
- Relying on verbal warnings
- Misusing disciplinary dismissal
- Ignoring protected employee status
- Seeking advice only after termination
Labour Inspections and Court Risks
Employers face two main risk paths:
- Labour Inspectorate reviews and sanctions
- Employee court claims
Possible outcomes include invalidation of termination, compensation, and in some cases reinstatement. Preventive compliance is significantly more cost-effective than dispute resolution.
Best Practices for Employers
- Plan termination early
- Select the cleanest lawful route
- Document all relevant steps
- Align HR, payroll, and legal actions
- Seek advice before, not after, termination
How Aidos Can Help
Aidos supports foreign-managed companies in Bulgaria with the practical compliance side of employment termination — coordinating HR administration, payroll closure, documentation, and working alongside legal counsel in complex or sensitive cases.
If you need guidance on a specific termination scenario, you can contact us to discuss the situation before steps are taken.
Frequently Asked Questions
Can I terminate an employee without notice?
Only in legally defined situations (e.g. probation or disciplinary dismissal) and only with full procedural compliance.
Is mutual agreement always the safest option?
Only when it is genuinely voluntary and properly documented.
What happens if notice rules are violated?
Compensation exposure and increased dispute risk.
Can an employee be reinstated?
Yes. Reinstatement is a possible remedy in Bulgarian employment disputes.
Do foreign-owned companies follow different rules?
No. The same Labour Code rules apply to all employers.
Disclaimer
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or HR advice. Employment termination is fact-specific and professional advice should be obtained for individual cases.
Last reviewed and updated: February 2026
© 2011–2026 Aidos Accountancy Services. All rights reserved.