Staff reductions in Bulgaria remain one of the most sensitive and contested areas of employment law. Rooted in legitimate business decisions—such as restructuring, economic downturns, or organisational optimisation—staff reduction provides employers with a legal basis to terminate employment contracts. However, Bulgarian courts and authorities rigorously examine such dismissals to ensure they are genuine and procedurally correct. Understanding the key requirements and potential risks is critical for employers aiming to implement staff reductions lawfully and avoid costly disputes.
Definition and Legal Basis of Staff Reduction
Under Bulgarian labour law, staff reduction can involve:
- Eliminating a specific role entirely; or
- Reducing the number of employees occupying a particular position.
Importantly, the employer’s decision must be real, substantiated, and not serve as a pretext to dismiss an employee for unrelated reasons. Bulgarian courts and the Labour Inspectorate closely scrutinise these cases, especially if the employee challenges the termination.
Key Aspects of Lawful Staff Reduction Implementation
1. Elimination of a Role
The employer must formally document the decision through updated staffing schedules or internal orders. Authenticity is crucial: if the elimination appears fictitious, the dismissal risks being overturned in court.
2. Reducing Headcount for a Given Role
When the role itself remains but fewer employees are needed, employers must carry out a selection process using objective criteria, such as:
- Employee qualifications;
- Performance assessments;
- Professional skills and experience.
A transparent, fair selection process is essential to withstand potential legal challenges.
3. Offering Suitable Alternative Positions
Before proceeding with dismissal, employers must check if any suitable alternative roles exist that align with the employee’s qualifications and health. If available, these roles must be offered in writing. Failure to do so is a common reason for Bulgarian courts to reverse staff reduction-based terminations.
4. Compliance with Collective Redundancy Rules
If a significant number of employees are dismissed within a short period, collective redundancy rules apply. In such cases, employers must:
- Consult with relevant trade unions;
- Notify the Labour Inspectorate and Employment Agency;
- Observe statutory timelines and procedures.
Attempting to stagger terminations or use formal distinctions does not relieve employers of collective redundancy obligations if the overall effect mirrors a collective dismissal.
5. Observing Special Protection Rules
Certain categories of employees enjoy special protection from dismissal, requiring prior approval from authorities such as the Labour Inspectorate or relevant unions. These include:
- Pregnant employees;
- Employees on maternity or parental leave;
- Elected trade union representatives;
- Employees reassigned due to medical conditions.
Employers must ensure they do not attempt staff reductions that circumvent these protections.
Key Risks in Staff Reductions
- Improper Motives: Using staff reduction as a cover to dismiss employees engaged in union activities or perceived as problematic can lead to serious legal consequences.
- Fictitious Eliminations: Eliminating a position only to reinstate it under a different title or assign it to another individual undermines the legitimacy of the process and exposes employers to litigation.
- Legal Consequences: Failure to comply with legal requirements may result in:
- Court-ordered reinstatement of the employee;
- Compensation awards of up to six or more monthly salaries;
- Additional legal and court costs.
Eurofast’s Take: Ensuring Compliance in Bulgarian Staff Reductions
Staff reductions are a legitimate workforce management tool, but Bulgarian labour law requires employers to proceed with caution. Companies should ensure:
- A documented, genuine business justification for the reduction;
- Transparent and objective selection procedures where applicable;
- Written offers of suitable alternative roles;
- Full compliance with collective redundancy regulations;
- Adherence to special protections for certain employee groups.
At Eurofast, our labour law specialists can guide you through the complexities of Bulgarian employment regulations, help you design compliant staff reduction strategies, and minimise legal exposure. We support employers in documenting decisions, conducting proper selection processes, and communicating effectively with employees and authorities.
For additional queries or questions, please, contact us at [email protected]