How to Handle Disciplinary Dismissals Situations

Employment contracts can only be terminated on specific grounds listed in the Bulgarian Labor Code. There are over 50 grounds for termination, each with its unique facts, documents, and procedures.

Disciplinary dismissal is both a disciplinary sanction and grounds for employer-initiated termination without notice (Art. 330, Para 2, item 6 of the Labor Code). This is regarded as one of the most problematic and risky grounds for termination under the Labor Code.

This overview provides guidance on the procedure and highlights key considerations.

1.       General guidelines and considerations

a.       Dates (termination date/ serving date/ last working day)

In the case of a disciplinary dismissal, the dismissal has immediate effect – it takes place when the dismissal order is served. However, the order is usually served during the working day and there is a prohibition on retrospective dismissal. Therefore, unless the order is served before or at the beginning of the working day, that day counts as a working day.

b.       Employees may not work for the employer once they have received the notice of termination. As a general rule, employees are released from their employment obligations from the moment of delivery of the notice of termination (although the day of delivery of the notice of termination is recognized as a working day). If they continue to carry out their duties, this could affect the legality of the dismissal.

c.       If termination papers are mailed via post, the employee’s termination date should be the date when they receive the papers.

d.       Execution of termination documents

The person signing on behalf of the employer must be either the registered manager or a proxy authorized by the registered manager with the necessary powers. Proxies (for the specific case of disciplinary dismissal) can only be employees of the employer with managerial duties and cannot be employees from group companies.

The termination documents need to be signed in two hard copies using ink or with an electronic signature. However, the following conditions should be met when using an electronic signature:

  1. The employer must use a qualified electronic signature;
  2. The employee must give written agreement to receive electronic communication;
  3. Тhe employer must have set rules in their Internal Company Rules on which documents will be electronic.

It is unclear whether failure to comply with the above rules will result in the termination being invalid or only in an administrative penalty. We believe that the termination will still be valid, but there is no case law on this.

If the employees sign the document, this will serve as confirmation that they have received it. In this situation, the employer does not need the employee’s consent to terminate his or her employment. If the employee refuses to sign the dismissal papers, two (or preferably three) other witnesses should confirm the refusal in writing. The employee can sign with wet ink or with an electronic signature. The employer’s internal rules will specify the type of electronic signature required from the employee (qualified, advanced, or simple).

Serving of termination papers

NB! Regardless of the method of serving the termination documents, the employer must follow a two-step process: (i) the employer must provide the employee with a protection declaration and wait for the employee to complete and declare that they do not benefit from any protection, and (ii) only then should the employer deliver the termination order.

Serving in person: we recommend serving termination documents in person as it minimizes the risk of the employee successfully challenging the service of the documents. If the employee is working remotely, they should be invited to either the employer`s office or the offices of their accountants or lawyers to receive a hard copy of the documents in person. The termination documents must be signed by the employee during a meeting with the employer’s representatives. The employee should be present on the premises and not allowed to leave until they sign or refuse to sign. If some team members cannot be physically present, an online call via Teams, for example, can be scheduled. If this happens, the employer may ask the employee to visit their location and have representatives present in the same room during the call. Then the representatives will physically deliver the original documents to the employee while they discuss them online. If the employee refuses to sign, the termination papers must be countersigned by two (or better three) witnesses.

Serving online (via email and/or call on Teams/Zoom): – if it is not feasible to serve the documents in person, an alternative could be to send scanned copies of the documents (which were executed by the employer) via email and/or Teams during the call to the employee. However, the termination process involves two steps. Firstly, the employer must provide the employee with a declaration for protection and wait for the employee to complete declaring that they do not benefit from any protection. Only then may the employer deliver the termination order. In other words, the employer cannot simply send the termination documents, but it must first receive feedback from the employee on the protection declaration.

To ensure the legality of termination when serving papers online, we suggest the following steps: (a) record the meeting on Teams / Zoom (with the employee’s consent), including the moment when the employee opens the document, (b) invite additional people to join the call to serve as witnesses, if needed, and (c) request written confirmation of receipt.

Sending documents by courier is an alternative option. In this case, the employer must send the documents twice: first, the declaration for protection (and await its return) and then the dismissal documents. This process can be tedious and leaves room for skilled employees to take advantage of it. For example, once the employee receives the declaration for protection, he can go on long sick leave which protects him from dismissal.

2.       What is a breach of discipline and what are the disciplinary sanctions?

Any intentional or negligent failure to fulfill work duties is considered a disciplinary violation The Labor Code outlines the following acts as breaches of work discipline:

  1. Arriving late, leaving early, absence from work, and the inefficient use of work time.
  2. Coming to work when incapable of fulfilling assigned tasks.
  3. Failure to execute assigned work to observe technical and technological rules.
  4. Production of inferior quality output.
  5. Failure to observe health and safety regulations at work.
  6. Non-compliance with lawful employer orders.
  7. Abusing trust and damaging the reputation of the employer, as well as unauthorized disclosure of data that is confidential in respect of the employer.
  8. Damaging the employer’s property and wasting resources, such as prime and raw materials and energy.
  9. Failure to fulfill other employment obligations stipulated in laws and other regulatory acts, in the internal labor regulations, in the collective labor agreement, or determined at the time of the establishment of the employment relationship.

There exist only three statutory disciplinary sanctions prescribed by law:

  • Reprimand;
  • Warning of dismissal; and
  • Disciplinary dismissal.

When determining the appropriate disciplinary sanction, the employer must consider the severity of the violation, the circumstances surrounding it, and the employee`s behavior. Only one disciplinary sanction may be imposed for a single breach of work discipline.

The following disciplinary breaches are grounds for dismissal:

  1. Employee arriving late or leaving work early on three separate occasions, each lasting no less than an hour, within one calendar month.
  2. Employee is absent from work for two consecutive working days.
  3. Systematic breaches of work discipline (more than two).
  4. Abuse of employer’s trust or disclosure of confidential data of the employer.
  5. Causing damages to citizens by employees involved in the trade and services through overcharging, short weighting, or supplying goods or services of quality inferior to the stated one.
  6. Employee participation in games of chance through telecommunication facilities of the employer, as the costs incurred shall be reimbursed in full.
  7. Other serious violations of work discipline.

The employer’s right to impose disciplinary dismissal in the above-mentioned cases is not unconditional. The employer must always consider the seriousness of the violation, all circumstances, and the behavior of the employee. For instance, an employee cannot be dismissed for “systematic breaches” of labor discipline if they committed three minor breaches. The employee may face disciplinary dismissal for any violation of working discipline that constitutes gross misconduct. This is determined by analyzing the severity of the breach, its consequences, the circumstances, and the employee’s overall conduct.

NB! In Bulgaria, employers often initiate Performance Improvement Plans (PIP) to terminate underperforming employees, even if the poor performance is a result of discipline breaches. PIP must not be used in case of disciplinary breaches. The Bulgarian Labor Code distinguishes between two distinct grounds for termination – inadequate skills for efficient job performance where PIP are applicable (Art. 328, Par. 1, Par. 5 of the Labor Code) and disciplinary dismissal (Art.330, Para 2, item 6 of the Labor Code). They should never be mixed as they require different procedures, different motives, and different types of supporting evidence.

3.       Timeline for the imposition of disciplinary sanctions

Disciplinary sanctions can be imposed within two months of identifying the breach and no later than one year after the violation occurs. The said time limits shall not run during the time in which the employee is on statutory leave or takes part in a strike. For a violation of disciplinary rules that also qualifies as a criminal offense, or an administrative violation regarding assigned work established by a sentence or decree, the time limits mentioned above shall commence on the effective date of the sentence or penalty decree.

4.       Steps of the disciplinary dismissal procedure

No. Step Comment
1. Discovery and investigation of the breach Usually, the manager in charge collects evidence and produces a report for the company`s statutory manager.
2. Disciplinary hearing The employee should be granted an opportunity to defend against the allegations. Typically, the employer will furnish the employee with a written list of questions (accompanied by any pertinent evidence) and request the employee to provide written explanations. The time to respond is usually a few hours, unless the facts are complex, in which case it can take up to a few days.

By exception, a verbal hearing may be held. In this case, it is recommended to prepare meeting minutes that all present parties must sign.

3. Assessment of the case, determination of the sanction The employer reviews the employee`s explanations and collects additional evidence if needed.

The employer determines whether the employee has committed a disciplinary violation, and if so, what the disciplinary sanction must be (refer to the assessment criteria above).

4. Check for special protection against dismissal Please see Section 5 below for a detailed review of this topic
5. (optional) Application for permission for dismissal to the Labor Directorate Please see Section 5 below for a detailed review of this topic
6. Issuance and serving of termination notice If the employee does not enjoy protection against dismissal or if permission for dismissal is granted, the employer issues and delivers a termination order to the employee.

The order must specify the following:

·      The employee who committed the disciplinary breach.

·      The breach and when it occurred.

·      The type of disciplinary sanction (reprimand, warning for dismissal, or dismissal)

·      The legal text of the Labor Code, including the specific article(s) and item(s) that serve as the basis for imposing the sanction.

The order is to be presented to the employee, who must sign a document specifying the date and time of receipt.

If it is not possible to deliver the order in person (physically or electronically), the employer must send it through registered mail or courier, with a return receipt requested. If the employee declines to sign that they have received the order, the refusal must be documented with the signature of 2 (better 3) witnesses.

7. The employer reflects the termination in the labor book of the employee (NB! These rules will change as of 01.06.2025) The labor book is an official document in which the most important facts of the employment history of the employee are reflected. Termination must also be reflected.

Usually, the labor book is kept by the employee, so the employer must request it (such a request can be included in the termination order).

The employer reflects the termination on the last working day and returns immediately the labor book to the employee.

8. The employer notifies the National Revenue Agency for the termination of the employment (NB! These rules will change as of 01.06.2025) The notification must be filed within seven days following termination of the contract via standard notice. This task is typically handled by payroll service providers.
9. The Employer pays compensation (if due at all) The compensation must be paid by the end of the month, following the month of the termination. The employer must compensate the employee for:

·      any unused annual paid leave.

·      (Very rarely) 2 monthly salaries if the employee has acquired rights for pension for age and social security length of service at the time of termination (and 6 salaries if the employee worked at the employer or at the Employer’s group for 10 years within the last 20 years). Such compensation can only be paid once, meaning that if it was already paid by a previous employer, it will not be due again.

The compensation owed by the employee to the employer is for the required notice period.

5.       Special protection against dismissal (Art.333 of the Labor Code)

This protection applies to disciplinary dismissal (and for other specific dismissals), not all types of dismissal. The protected categories of employees include:

  1. Mothers of children up to 3 years of age.
  2. Pregnant employees or employees in advanced stages of in-vitro treatment.
  3. Employees who have been reassigned to lighter positions due to health reasons.
  4. Employees with ischemic heart disease, cancer, active tuberculosis, diabetes, psychiatric disorders, and occupational disease.
  5. Employees who have started using their permitted leave.
  6. Employees are elected as employees’ representatives during the period when they occupy such a position.
  7. Employees elected as employees’ representatives on “safety and health at work” matters during the period when they occupy such a position.
  8. Employees who are members of a special negotiating body, a European Works Council, or a representative body in a European Company or a European Cooperative Society, for the duration of performance of the functions thereof.
  9. Leaders of the trade unions at the company’s level (if any), and 6 months after they are discharged from this position.

To determine if an employee is protected against dismissal, an employer must request that the employee complete a special declaration declaring the presence or absence of protection. If protection is declared, the employee must then provide relevant documents within a reasonable timeframe (typically 3 days as provided by the employer).

If the employee does not declare protection, the employer may proceed with serving the termination order.

If an employee declares protection, the employer cannot serve the termination order and must await the presentation of supporting documents. The employer has three options depending on the type of protection:

  1. If there is absolute protection (e.g., for employees on pregnancy and childbirth leave) – the employer cannot dismiss the employee.
  2. In case of protection based on medical considerations – the employer must (a) ask the Territorial Expert Medical Commission for an opinion on how the dismissal will affect the employee’s health and, after receiving the opinion, (b) apply to the local Directorate “Labor Inspection” for permission for dismissal (the procedure takes several months).
  3. If the protection is not based on medical considerations – apply to the local Directorate “Labor Inspection” for permission for dismissal (the procedure takes 7 days).

The local Directorate “Labor Inspection” decides whether to grant permission for dismissal at its discretion. It does not justify its decision and it is not subject to appeal. During the above procedure, the time limits for imposing disciplinary sanctions (2 months from the date of discovery of the violation and 1 year from the date of its occurrence) do not run.

6.       Exposure of the employer in case of wrongful dismissal

The employee can challenge the dismissal in court within 2 months. If the court finds that the dismissal was unlawful, the consequences for the employer (depending on what the employee requested in the statement of claim) could be as follows:

  1. Annulment of the dismissal and its declaration as unlawful.
  2. Employee reinstatement (the employee must return to work within 14 days after receiving notification from the court; failure to appear results in the automatic termination of the labor contract). It is worth noting that few employees are willing to return, as most have secured alternative employment within the 2–3-year duration of the litigation.
  3. Unemployment compensation. The maximum compensation is limited to 6 monthly salaries. If the employee begins working again within this timeframe but for a lower salary, the employer must pay the difference in compensation for the same six-month period.
  4. Accrual of paid leave between the date of dismissal and the date of their reinstatement to work, or the expiry of the 14 days for reinstatement if the employee does not return to work, if the employee was not hired by another employer, or if the paid leave granted at the other employer was lower.
  5. Social security installments (due by the employer) for the entire period between the date of dismissal and the date of their reinstatement to work or the expiry of the 14 days for reinstatement (if the employee does not return to work). If the employee is working for a lower salary during this time, the employer must make up the difference.
  6. Litigation costs.

Dismissals under Bulgarian law are formal, and we suggest that employers seek legal advice in each specific case. This is also why the details above may seem too extensive, but any omission can make the termination unlawful.