Amid the ongoing pandemic and the associated restrictions, many employers are forced to resort to collective redundancies. These actions, however, are accompanied by special requirements laid down in the Labour Code (КТ) and the Employment Promotion Act (ЗНЗ), which employers must strictly observe.

When is there a “collective redundancy”?

Not every dismissal of a significant number of employees constitutes a “collective redundancy”. Pursuant to § 1, item 9 of the КТ, a collective redundancy is deemed to exist where the employer terminates the employment relationships of a certain number of employees unilaterally and on grounds unrelated to the individual employee. In order to determine whether a given dismissal is a collective one, the following factors must be taken into account:

  1. Period of the dismissals
    Under the КТ, the collective redundancy must be carried out within a 30-day period.

  2. Number of dismissed employees
    The various scenarios for the number of dismissals relative to the total number of employees are defined as follows:

    • At least 10 employees in undertakings with between 20 and 100 staff.
    • 10% of the employees in undertakings with between 100 and 300 workers.
    • At least 30 employees in undertakings with more than 300 workers.

  3. Grounds for terminating the contract
    The grounds for terminating the employment relationship must not be attributable to the fault of the worker. For example, disciplinary dismissals and dismissals on grounds of the employee's lack of the qualities needed to perform the work are not included in a collective redundancy. Terminations by mutual consent are likewise not included in the total number for collective redundancies.

Procedures for collective redundancies

The law establishes two mandatory procedures for collective redundancies, which are intended to protect employees and to ensure information and coordination with the State institutions.

  1. Procedure under the Labour Code
    The employer must initiate consultations at least 45 days before the dismissals with the trade union representatives or with the employees' representatives. The consultations are aimed at reaching an agreement in order to avoid or reduce the effects of the dismissals. The employer must inform the employees' representatives in advance of:

    • The reasons for the collective redundancy
    • The number of affected employees
    • The options for applying selection criteria
    • The planned period of the dismissals
    • The compensation due

  2. Procedure under the Employment Promotion Act
    Within 3 working days of informing the employees' representatives, the employer is obliged to send a copy of the same information to the Employment Agency. The collective redundancies may not be carried out earlier than 30 days after notifying the agency.

Consequences of failing to comply with the collective redundancy procedures

If the employer fails to comply with these procedures, this does not automatically render the dismissals unlawful, but it does give rise to administrative liability, which may include:

  • Pecuniary penalties ranging from 1,500 to 5,000 BGN for the company, or a fine of 250 to 1,000 BGN for the responsible person, where consultations with the employees' representatives have not been held or where the provision of information has been omitted.
  • A fine of 200 BGN for each dismissed employee where the employer has failed to comply with the 30-day notification period before the collective redundancy.

Compliance with the procedures set out above is of essential importance, both for safeguarding employees' rights and for avoiding significant financial penalties for the employer.

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