Termination of employment contracts by mutual consent covers all types of contracts, regardless of whether they are fixed-term or open-ended. Employers often prefer to use Article 325(1)(1) of the Labour Code as grounds for termination because of the lower costs and the simplified procedure. This method does not require a statement of reasons, does not require compliance with the protection under Article 333 of the Labour Code, and does not provide for a mandatory selection procedure. Although this ground is frequently abused, it is difficult for employees to challenge the termination in court.
Care with the Documents upon Termination
It is important for employees to check the grounds for termination stated in the documents provided to them. Employers often ambiguously refer to "redundancy", when in fact the termination is by mutual consent. This distinction matters for the employee's future rights and compensation.
Procedure for Terminating an Employment Contract by Mutual Consent
Although in most cases it is the employer who initiates termination by mutual consent, this may also be done at the employee's initiative. No reasons for termination are required, and the party seeking it must send a written proposal to the other party, stating the desired date of termination. Within 7 days of receiving the proposal, the other party must respond in writing. If no consent is expressed within that period, the proposal is deemed to have been rejected.
Agreement and Notification
Where the proposal for termination comes from the employee, the employer often records its consent by a "YES" resolution on the application or issues a termination order. It is important, however, that the employee be formally notified of the consent within the 7-day period, because failure to do so results in a lack of mutual consent and possibly an unlawful termination. Signing the order merely certifies its receipt and does not mean that the employee agrees.
Signing an Agreement
For the termination of an employment contract by mutual consent, it is advisable to conclude a written agreement, particularly in cases where the employee must complete tasks or train a new employee. The agreement provides additional certainty and clarity for both parties.
Compensation upon Termination of an Employment Contract by Mutual Consent
Employees whose employment contracts are terminated by mutual consent are entitled to compensation for unused paid annual leave under Article 224(1) of the Labour Code. If the contract is terminated after the employee has acquired the right to a pension for length of service and age, the employee is entitled to two gross monthly salaries as compensation. Where the employee has more than 10 years of service with the same employer during the last 20 years, the compensation is six gross monthly salaries.
The employer must pay the compensation by the end of the month following that of the termination, and after that period, together with statutory interest.
Unemployment Benefit
Where an employment contract is terminated under Article 325(1)(1) of the Labour Code, employees are entitled to the minimum unemployment benefit for a period of 4 months, provided they were insured against unemployment for at least 12 months during the last 18 months before the termination. The minimum daily amount of the benefit is BGN 12. This period counts towards length of insurance service, and the health insurance contributions are borne by the State, which ensures that health rights are preserved.
Should you require legal advice or assistance in connection with the termination of employment contracts, please contact us on telephone 0887550706 or by e-mail: [email protected]
