Contradictory case law has led to the referral of the Supreme Court of Cassation (“SCC”) – the provision which interpretation is sought is Article 328, paragraph 2 of the Labour Code (“LC”). The provision reads, as follows:

“Employees from the management of the enterprise may be dismissed with notice within the time limits under Article 326, paragraph 2 and due to the conclusion of a management contract for the enterprise. The dismissal may be effected after the commencement of the performance under the management contract, but no later than 9 months.”

Although the provision, adopted as early as 2001, is not distinguished by significant linguistic precision, judicial practice has consistently clarified that it concerns the following hypothesis – where a new manager is appointed in an enterprise, he or she has the right to unilaterally terminate, with notice, the employment contracts of persons in managerial positions.

According to the definition in the LC, the “employees from the management” who may be dismissed under this procedure, include “the head of the enterprise, his or her deputies and other persons entrusted with the management of the labour process, including in a subdivision of the enterprise.”

In this case, the termination of the employment relationship is carried out on grounds of economic efficiency, and not due to fault on the part of the employee. The provision enables the party having concluded the management contract (the new manager) to assess to what extent the persons occupying managerial positions at the time of conclusion of the contract are suitable for achieving the objectives laid down in the management contract. Accordingly, the possibilities for judicial review and protection of the employee in this type of termination are significantly limited.

It is precisely in this context that divergent standpoints exist in judicial practice regarding the application of Article 328, paragraph 2 LC as to whether, in order for the new manager to exercise this power, it is sufficient merely to comply with the 9-month time limit, or whether additional prerequisites must also be present.

The initiation of the interpretative proceedings occurred more specifically following a ruling of 09.10.2025 in civil case No. 1848/2025 of the SCC. It was within the framework of those proceedings that a proposal was made to the General Assembly of the Civil Chamber (“GACC”) of the SCC for the adoption of an interpretative decision due to contradictory rulings by different panels. As a result, by order of 30.01.2026 of the President of the SCC, Interpretative Case No. 2/2026 was initiated.

Within the interpretative proceedings, the GACC of the SCC will answer more specifically the following question:

“Is the existence of a business programme containing a specific business task assigned to the newly appointed manager of the employer’s enterprise necessary in order for him or her to exercise the powers under Article 328, paragraph 2 LC?”

What, in fact, are the alternative views in the  judicial practice on this issue?

● According to the first view, it is not sufficient for a new manager simply to assume office in the enterprise in order to exercise the right of termination under Article 328, paragraph 2 LC. It is also necessary for the management contract (or another document related thereto) to set out specific economic objectives for the new manager – for example, achieving certain economic indicators concerning productivity, turnover volume, profitability, income, maintaining a certain number of jobs, investments and similar targets. Moreover, on the basis of such defined economic objectives, the new manager must prepare and implement, during the term of his or her contract, a business programme upon which his or her remuneration depends. There is no obstacle to using an already prepared business programme – for example, one drawn up by the previous manager – provided, however, that the new manager has expressly accepted and agreed to the parameters of the previous business programme.

It is precisely where specific economic objectives are included in the management contract and a business programme has been prepared, that the new manager acquires the right to form a new management team which, in his or her assessment, is suitable for achieving the set objectives.

● The opposing view shares the understanding that the ground for dismissal under Article 328, paragraph 2 LC consists of only one element – the conclusion of a management contract for the enterprise with a new individual. The existence of a business programme, under which a public enterprise employer is legally obliged to conduct its activity, is relevant solely to the relations between the parties to the management contract itself. In other words, Article 328, paragraph 2, sentence 2 LC does not require the commenced performance under the newly concluded management contract to be linked to the implementation of a specific business programme.

The expected interpretation will harmonize the contradictory case law concerning the application of Article 328, paragraph 2 LC and will ensure legal certainty and predictability in employment relationships – most notably for persons in managerial positions within companies who are currently potentially exposed to dismissal upon any change in the management of the enterprise.

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.