Compensation under the Bulgarian Labor Code — 2026 guide

Overview table

A single employee may be entitled to multiple of these at once — e.g. redundancy with 30 days' notice not observed: Art. 220 (for the notice) + Art. 222(1) (for unemployment) + Art. 224 (for unused leave).

Unobserved notice — Art. 220

When one party terminates an open-ended contract without observing the notice period, it owes the other party compensation equal to the gross salary for the unobserved period. This rule is symmetrical — it applies to the employer at dismissal and to the employee at resignation.

Standard period: 30 days. If a longer period (up to 3 months) is agreed in the individual contract, that applies.

Compensation under Art. 222(1) — unemployment

This is the "classic" compensation for no-fault termination under Art. 328(1)(1)–(11) LC (closure, redundancy, reduced work, etc.). The amount is:

• 1 gross monthly salary — by default;
• Up to 6 salaries — if an individual contract or CLA provides more.

The compensation is owed even if the employee finds new work immediately — it does not depend on actual unemployment. Exception: if the CLA or individual contract states "for the period of unemployment", then actual unemployment must be proven.

Retirement — Art. 222(3)

On termination due to acquisition of the right to a retirement pension, the employee receives a one-off compensation:

• 2 gross monthly salaries — for less than 10 years' service with the same employer;
• Up to 6 gross monthly salaries — for 10 or more years' service with the same employer.

This is the "retirement premium" — a social guarantee for the employee being sent into retirement. Service is computed across all employment contracts with the same employer, even if interrupted.

Unused leave compensation — Art. 224

On termination the employer must pay compensation for all unused and non-time-barred days of paid annual leave. The formula:

Gross is for the last full month before termination. Days of unused leave are all that are not time-barred (3 years).

Unlawful dismissal — Art. 225

On a court declaration that the dismissal is unlawful, the employer owes compensation for the period the employee was unemployed because of the dismissal, but no more than 6 months. The amount is the gross salary for the relevant period.

This compensation is additional to the others — it does not "absorb" them. So on unlawful dismissal the employee may receive: Art. 225 compensation + unpaid amounts + moral damages where proven.

Base for calculation — Art. 228 LC

The whole compensation system rests on the "Art. 228 gross" — the last full month in which the employee worked at least 10 working days. This includes:

• Basic salary;
• Permanent allowances — qualification, length of service, hazardous-conditions;
• Other permanent income agreed in the contract.

Not included:

• One-off bonuses (year-end premiums, performance bonuses);
• Overtime pay (it is accounted for separately);
• Travel allowances, per diems, expense reimbursements.

Payment deadline and late-payment consequences

Under Art. 228(3) LC the compensation and unpaid salary must be paid no later than the day of termination of the contract. On late payment the employer owes statutory interest on the amount (BNB base rate + 10 percentage points per year).

Late payment is also a breach under Art. 414 LC, sanctioned by ИА ГИТ with a fine of BGN 1,500–15,000. For repeat offenses the fine is higher.

Frequently asked questions