US vs Bulgaria termination law: at-will habits meet the Labour Code

Bulgaria has no equivalent of at-will employment. Under the Labour Code (Кодекс на труда), an employer may bring an open-ended contract to an end solely for a reason the Code itself lists, and in most cases only after a notice period. Ending a job without naming any reason, which is the everyday default for most US employers, is simply not available.

That difference catches US hiring managers out more often than tax or payroll does. A team lead used to saying “this isn’t working, today is your last day” will find that a Bulgarian developer on a labour contract (трудов договор) expects a written dismissal naming a specific legal ground, at least 30 days of notice and, depending on that ground, a compensation payment on the way out.

Neither system is easier in every respect. US law has its own exposure around discrimination and retaliation, and Bulgaria lets either side walk away without notice during a probation period. The starting point, though, is reversed. In the US the employer needs no reason unless a statute or a contract says otherwise. In Bulgaria the employer needs a reason the law recognises and has to be able to show that it applies.

Below we set the two systems side by side so you can plan exits before the first hire rather than after the first difficult performance review. For the Bulgarian rules on their own, in more depth, see our guide to notice and dismissal in Bulgaria.

Under the at-will doctrine, employer and employee are each free to walk away whenever they choose, with or without a stated reason, provided the real reason is not an unlawful one, and normally with no notice owed. Most US states start from that presumption, and many offer letters repeat it in so many words.

The limits come from other laws layered on top. Federal and state anti-discrimination statutes forbid firing someone because of a protected characteristic. Retaliating against an employee who reported wrongdoing or took protected leave is unlawful. A written contract or a union agreement can promise dismissal only for cause. Federal law and some states require advance notice before a mass layoff. Severance, although common, usually comes from company policy or a negotiated release of claims rather than from a statute.

In practice this gives a US employer wide room to act quickly, provided the records do not point to an unlawful motive. Plenty of US companies have built their performance process around that freedom: a short improvement plan, a meeting with HR, a final paycheck. Carrying that playbook over to a Bulgarian employee is where the trouble begins, because none of its steps maps onto the Labour Code.

One more US habit worth naming is the quiet resignation request: a manager hints that someone should look elsewhere and hopes they leave on their own. In Bulgaria an employee who resigns still has to give notice, and pressure to resign can later be argued to have been a dismissal in disguise. If the business wants the person to go, it is cleaner to pick the correct route from the start, whether that is a listed ground or an offer of mutual consent with the payment the Code requires.

A Bulgarian employer may dismiss with notice only on a ground set out in Art. 328 of the Labour Code, or without notice for a disciplinary reason under Art. 330. A reason outside those two articles does not support a dismissal.

The Art. 328 grounds most relevant to a foreign business building a small team are:

• closure of the business, or of part of it;
• staff reduction, where the position itself disappears;
• a reduced volume of work;
• the employee lacking the qualities needed for the job;
• the employee acquiring the right to a pension.

Disciplinary dismissal under Art. 330 is the route for serious misconduct and ends the contract without notice. Because it is the harshest outcome, it is also the one most likely to be disputed, so the facts behind it should be written down when they happen rather than pieced together afterwards.

For a US manager the lesson is that “poor fit” is not a ground by itself. A performance concern has to be framed and evidenced as a lack of the qualities the role requires, which takes time and a paper trail: clear objectives, written feedback, a fair chance to improve and a record of the result. A budget decision points to staff reduction or a reduced volume of work, and those grounds bring their own compensation rules, set out in the next section.

On an open-ended contract either side must give 30 days’ notice (Art. 326(2)). The contract may set a longer period, but three months is the maximum. The same period binds both sides, so a developer who resigns owes you as much notice as you would owe them. Notice starts running on the day after it is received.

The employer may shorten the notice by paying for the part not worked. Art. 220 sets that payment at the gross pay for the unserved period. It is the closest Bulgarian equivalent to walking someone out the same afternoon, and it still costs a month or more of salary.

Compensation then depends on which ground ended the contract:

• Closure, staff reduction, a reduced volume of work, work halted for over 15 working days, and comparable grounds: gross pay for the time the person stays unemployed, capped at one month (Art. 222(1)), unless a higher amount was agreed.
• Termination after the employee has acquired the right to a pension: two months’ gross pay, rising to six months’ if at least 10 of their last 20 working years were spent with you or your group (Art. 222(3)).
• Termination by mutual consent, proposed by the employer and accepted by the employee: at least four months’ gross pay (Art. 331).
• Unused paid annual leave: paid out on every termination (Art. 224).

Apply that to the developer on €3,333.33 a month from our Sofia cost example. A staff-reduction exit with 30 days’ notice paid in lieu and up to a month of unemployment compensation adds up to roughly two months’ gross pay, plus any leave balance. An employer-proposed mutual exit starts at about €13,333. By US standards neither figure is large, but both belong in the hiring budget from day one.

Probation is the one stage where Bulgarian law resembles at-will. A probation clause (срок за изпитване) can last up to six months, and is limited to one month on any contract shorter than a year (Art. 70). During that period, the party in whose favour the clause was agreed may end the contract without notice (Art. 71).

Two details deserve attention. The clause states whose benefit it serves: the employer’s, the employee’s or both. If it was agreed only in the employee’s favour, the employer cannot use it to leave early. And six months is a hard ceiling, so a clause that tries to stretch a trial beyond it should not be in a Bulgarian contract at all.

For US companies, the practical advice is to treat probation as a real decision point. Agree clear goals for the first months, review them a few weeks before the period ends, and make the call. Once probation lapses, the Art. 328 grounds and the notice rules apply in full. Our overview of what a Bulgarian labour contract must contain shows how a trial period interacts with fixed-term rules, normal hours and overtime pay.

Some Bulgarian employees carry extra protection with no direct US parallel. For certain dismissal grounds, the employer needs the prior permission of the General Labour Inspectorate (Главна инспекция по труда) under Art. 333. The protected groups include mothers of young children, employees with certain illnesses and employees who are on leave, while pregnant employees and those on maternity leave are shielded more strictly still. Check the specific person’s situation before any notice is drafted.

Group dismissals run on a separate track. Under Art. 130a, an employer planning a mass dismissal must start consulting the staff’s representatives 45 days or more ahead and notify the Employment Agency (Агенция по заетостта). A US company with a handful of Bulgarian staff is unlikely to reach the thresholds, but a reorganisation that affects several people at the same time should be tested against them early.

Every exit also has an administrative tail. Within 7 days, the employer has to update the National Revenue Agency’s employment register (регистър на заетостта) to show that the contract has ended (Art. 62(3)), and the final salary, compensation and leave pay go through the normal monthly payroll, and the tax and contributions on those amounts reach the NRA on the usual monthly deadline, the 25th.

Contracts, currency and the three main hiring routes for American firms are covered in a separate piece for US employers.

Hiring through an EOR does not change which rules apply. On paper the EOR employs your developer, and the Labour Code decides how that contract can end. You make the business decision and supply the facts; the EOR issues the notice or order, calculates what is owed, runs the final payroll and records the exit with the NRA.

That division works best when the ground is settled before anyone talks to the employee. A US manager’s instinct is to have the conversation first and sort out paperwork later. In Bulgaria the sequence runs the other way: agree the ground, the notice period and the cost, then hold the meeting. At Employer of Record Bulgaria we go through those three points with you, so the cost of an exit is a known line rather than a surprise.

It should also shape how you write offers. Boilerplate about at-will status, lifted from a standard US offer letter, cannot displace the Labour Code grounds, so leave it out. A longer agreed notice period, up to three months, can be useful for senior hires where you want a proper handover. If you are still working out what an EOR handles from month to month, read how the EOR role works in Bulgaria before the first offer goes out.

Q01Is a reason needed to let a Bulgarian employee go?+

A.Only during probation, and only if the probation clause was agreed in the employer’s favour. After that, dismissal must rest on a ground in Art. 328 of the Labour Code (with notice) or a disciplinary ground under Art. 330 (without notice).

Q02How long is the notice on an open-ended Bulgarian contract?+

A.For an open-ended contract, 30 days unless a longer period of up to three months was agreed. The employer can instead pay gross pay for the part of the notice not worked (Art. 220).

Q03Does Bulgarian law require a payment when an employer ends a contract?+

A.That turns on the reason for the exit. Closure, staff reduction and similar grounds bring up to one month of unemployment compensation; pension-entitled employees get two or six months; an employer-proposed mutual exit needs at least four months. Any untaken annual leave is paid on top, whatever the ground.

Q04Does an at-will clause in an offer letter work for a Bulgarian hire?+

A.No. The Labour Code grounds and notice rules apply whatever the offer letter says. Use a probation period of up to six months as the trial stage instead.

Q05Who handles a dismissal when we hire through an EOR?+

A.The EOR, as legal employer, issues the notice or order, pays what is owed through final payroll and updates the NRA’s employment register within the 7-day limit. You decide and supply the facts.