After years of contradictory case law, on 23 February 2026 the General Assembly of the Civil Chamber of the Supreme Court of Cassation (“SCC”) adopted Interpretative Decision No. 3/2024 (the “Interpretative Decision”), thereby providing a final answer to the following question: from which moment does the limitation period begin to run for an employee’s claim for compensation for unlawful dismissal under Article 225, paragraph 1 of the Labour Code (“LC”) – from the date of dismissal or from the date on which the court decision recognizing the dismissal as unlawful and revoking it enters into force.

With the Interpretative Decision, SCC introduced the necessary clarity and legal certainty, upholding that the initial moment of the special three-year limitation period is the date of termination of the employment relationship. In this way, the court rejected the understanding that the limitation period begins to run only upon the entry into force of the court decision by which the dismissal is recognized as unlawful.

In its reasoning, the SCC first clarified the nature of the limitation period – it constitutes a term upon the expiry of which the creditor’s right to seek judicial protection or compulsory enforcement of its claim is extinguished.

SCC confirmed that pursuant to Article 225, paragraph 1 of the LC, the employee is entitled to compensation in the amount of their gross remuneration for the period during which he/she remained unemployed due to the unlawful dismissal, but for no more than six months. Where, during that period, the person has worked in a lower-paid position, the compensation covers the difference between the two remunerations.

It is undisputed that the damages for the employee arise upon the unlawful termination of the employment relationship, since as of that date the employer ceases to perform its principal obligations – to ensure work and to pay remuneration. Precisely for this reason, the limitation period begins to run from that moment, irrespective of when the dismissal is formally recognized as unlawful by the court.

The position of the SCC, which we consider correct and justified, is that where a dismissal is in breach of the LC, it is unlawful ab initio, and the court merely establishes such unlawfulness with retroactive effect. This is also the logic behind the limitation period for the employee’s compensation claim commencing precisely on the date of dismissal, since from that moment the claim could be brought before the court.

The recognition of the dismissal as unlawful by way of a judicial act is undoubtedly a mandatory element of the factual grounds for the compensation claim to be upheld; however, it has no bearing on the commencement of the limitation period. Moreover, in practice the two claims – for recognition of the dismissal as unlawful and for compensation – are typically filed jointly, and the court rules simultaneously on both claims. Naturally, SCC confirms that there is no legal impediment for the claimant to seek compensation also for a future period.

Attention should also be drawn to another important aspect of the Interpretative Decision – the claim under Article 225 of the LC does not constitute a periodic payment, notwithstanding that it is calculated on a monthly basis. Accordingly, the limitation period does not commence at different times for each individual part of the maximum six-month period for which compensation is due; rather, it begins to run once – from the date of termination of the employment relationship.

The Interpretative Decision is of significant importance for the harmonization of case law and for enhancing legal certainty. By clearly determining the starting point of the limitation period, it introduces predictability in employment relationships both for employees and for businesses, which will now have clarity as to the time limit within which an employee whose employment relationship has been terminated may bring a compensation claim.

This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.