What did Interpretative Decision No. 3/2026 of the Supreme Court of Cassation change?
One of the most widely discussed issues in Bulgarian employment law in recent years has been when the limitation period begins to run for claiming compensation under Article 225(1) of the Labour Code in cases of unlawful dismissal.
With Interpretative Decision No. 3/2026 in Interpretative Case No. 3/2026, the General Assembly of the Civil Chamber of the Supreme Court of Cassation (SCC) provided a definitive answer and unified the previously conflicting case law.
What Was the Dispute?
Before the interpretative decision was issued, two opposing views existed in Bulgarian case law.
According to the first, the limitation period began to run from the date on which the court decision declaring the dismissal unlawful became final.
According to the second, the limitation period began to run from the termination of the employment relationship itself.
This conflicting case law created uncertainty for both employees and employers.
What Did the Supreme Court of Cassation Decide?
The SCC held that the limitation period for claims under Article 225(1) and (2) of the Labour Code begins to run from the date of termination of the employment relationship, rather than from the date on which the court decision declaring the dismissal unlawful becomes final.
The Court therefore held that the dismissal itself constitutes the legal fact giving rise to the right to compensation.
Why Did the Court Reach This Conclusion?
The SCC’s main argument is that the limitation period begins to run from the moment the claim becomes due and the person entitled to it is able to seek judicial protection.
This principle follows both from the general rules of the Obligations and Contracts Act and from the specific provision of Article 358(2)(2) of the Labour Code.
According to the Court, compensation under Article 225 of the Labour Code is intended to compensate an employee for damage caused by the unlawful termination of the employment relationship. Such damage arises upon termination of the employment contract, when the employee ceases to receive remuneration.
Consequently, the right to compensation itself arises at that point.
What Is the Significance of the Court Decision on the Unlawful Dismissal Claim?
The SCC pays particular attention to the legal nature of a claim under Article 344(1)(1) of the Labour Code.
The Court held that a judgment declaring a dismissal unlawful has retroactive effect (ex tunc). It does not create a new right but establishes that the dismissal was unlawful from the moment it occurred.
Therefore, the court decision does not give rise to the right to compensation. It merely establishes the existence of that right with the force of res judicata.
For this reason, the point at which the claim becomes due cannot be linked to the date on which the court decision becomes final.
Why Is the Possibility of Bringing Both Claims Simultaneously Important?
A further argument put forward by the SCC is that the Labour Code allows a claim seeking a declaration that the dismissal was unlawful and a claim for compensation to be brought simultaneously.
This demonstrates that the right to compensation may be exercised immediately following the dismissal, even though the success of the compensation claim depends on the outcome of the dispute concerning the lawfulness of the termination.
The Court emphasised that a claim being due does not mean that its merits have already been established. Rather, it means that the claim can be protected through judicial proceedings.
The Dissenting Opinion
A dissenting opinion was also issued in relation to the interpretative decision.
According to this view, the limitation period should begin to run only after the court decision declaring the dismissal unlawful becomes final.
The argument is that, until that point, the right to compensation remains uncertain because the unlawfulness of the dismissal has not yet been conclusively established.
Supporters of this position also argue that an employee could face adverse consequences if they bring a compensation claim prematurely or if the court proceedings continue for a prolonged period.
Nevertheless, the majority of the SCC held that such an approach would make the commencement of the limitation period dependent on the duration of the court proceedings, which would be inconsistent with the general principles governing limitation periods.
What Does This Mean in Practice?
Following Interpretative Decision No. 3/2026, it is now established that the limitation period for compensation under Article 225 of the Labour Code begins to run from the date of termination of the employment relationship.
The decision ensures consistent application of the law and provides greater legal certainty for both employees and employers.
Conclusion
Interpretative Decision No. 3/2026 of the Supreme Court of Cassation resolves the long-standing conflict in Bulgarian case law concerning the commencement of the limitation period for compensation in cases of unlawful dismissal.
Going forward, courts should consider the limitation period to begin on the date of termination of the employment relationship, rather than on the date when the court decision declaring the dismissal unlawful becomes final.
If you believe that you have been unlawfully dismissed or have questions regarding compensation under Article 225 of the Labour Code, consulting an employment lawyer can be crucial to protecting your rights. The G&P Law team provides legal assistance, representation in court proceedings and online consultations with lawyers, offering an individual assessment of each case.
Author: Ralitsa Tabakova
Images: Canva