Lakatos, Köves and Partners

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Employment Tribunal has exclusive jurisdiction over all labour law related claims.


The Main Sources Of Employment Law

Hungary has three major employment acts, which regulate four different categories of employees: employees working in the private sector, in the public sector at independent agencies and in government agencies (ministries, municipals, government offices) and those in state owned entities (hospitals, schools, etc.). This handbook will set out the regulations of the private sector which are governed by the Act 1 of 2012 on Labour Code (“Labour Code”) including the regulations that govern both individual and collective contracts.


National Law And Employees Working For Foreign Companies

The statutory rights granted under national law will apply to all individuals physically working in Hungary regardless of their nationality and regardless of the law governing their contract of employment. National contractual law may also apply in appropriate cases.


National Law And Employees Of National Companies Working In Another Jurisdiction

National Law also applies to employees working abroad temporarily but the EU regulations on secondments are also applicable.


Data privacy

There are strict rules on collecting and processing of employees’ personal data during the recruitment period and the employment relationship as well and in certain cases the consent of the worker is needed.

Employers are be allowed to monitor the behaviour of employees to the extent pertaining to the employment relationship. In that context, the employer may use technical means and shall notify the employee thereof in writing in advance.

Employees are also allowed to use information technology and computing equipment provided by the employer for the performance of work solely for reasons within the framework of the employment relationship, unless there is an agreement to the contrary.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

The employment contract must be in writing.


Mandatory Requirements
  • Trial Period

    • There is no legal obligation to provide trial periods, otherwise known as ‘probationary periods’, when engaging new employees, but it is common in practice to do so. The maximum period is three months; however, the collective bargaining agreement may set out a longer trial period up to a maximum of six months.

  • Hours Of Work

    • Subject to certain exceptions, the employees may only work 12 hours per day and 48 hours per week, including extraordinary hours.

  • Special Rules For Part-time Work

    • The regular daily working time may be reduced in full-time jobs (8 hours/day) pursuant to the relevant employment regulations or by agreement of the parties. The daily working time applicable for a specific full-time job may be reduced only by agreement of the parties (part-time work). The relevant consequence of a part-time working schedule is on the salary. Important is that the general rule is the full-time working schedule, therefore, if the parties intend to agree otherwise, it must be declared in the employment contract (in writing).

  • Earnings

    • There is a restriction prohibiting employees from earning below a minimum hourly/weekly/ monthly wage (which is reviewed annually, for example, in 2021, the hourly minimum wage is HUF 933, the weekly minimum wage is HUF 38490, and the monthly minimum wage is HUF 167400). There are different rates depending on the qualification required for the fulfilment of the position.

    There is an upper limit for the maximum income of executives in the public sector.

  • Holidays/Rest Periods

    • There is a requirement that employees must have 20 days paid holiday per year. The number of paid holidays increases with the age of the employee and other circumstances, i.e. children, young age of the employee, etc. There are also various compulsory daily and weekly rest periods and breaks which have to be observed.

  • Minimum/Maximum Age

    • There is a normal minimum age of 16 (which can be varied in certain cases), below which employees cannot work. Different rules (e.g. on working time) apply to children or young workers. There are no maximum age limits, however in order to receive pension, an employee must terminate its employment relationship. After an employee qualifies as a pensioner he/she may work simultaneously, however there is a maximum limit for the income of the pensioner per each year. If the salary of the pensioner reaches that maximum amount the state suspends the payment of the state pension for the remaining period of the relevant year.

  • Illness/Disability

    • Employees are entitled to 15 days paid sick leave per year. After 15 days the social security and the employer pay proportionally the employees’ sick leave payment until maximum one year.

  • Location Of Work/Mobility

    • The employee’s normal place of work must be specified by the employer in writing. In the absence of such information set out in the employment contract, the place where work–shall be considered as the place of work. Mobility clauses can be included in the contract of employment, but they cannot be applied contrary to their objectives. Where the job requires travel to other locations, it is normal for the employer to reimburse all reasonable travel expenses. The maximum period of secondment ordered by the employer unilaterally is 44 working days per year, though the parties may mutually agree a longer period. ‘Teleworking’ is also acknowledged by the Labour Code, where the activities are performed on a regular basis at a place other than the employer’s premises.

  • Pension Plans

    • Employers do not have to provide their employees with pension schemes.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • A range of “family-friendly” rights exist, including maternity leave (which can be maximum 24 weeks and minimum 2 weeks which is compulsory to take, and mothers are recommended to take 4 weeks before giving birth) and pay, paternity leave (which can be maximum 5 days) and pay, adoption leave and pay, parental leave and pay, time off for dependants and part-time working. Employees who can satisfy the appropriate qualifying conditions for the right in question can enjoy, or can apply for, their statutory rights in this regard

  • Compulsory Terms

    • The employment agreement must include the following data: base salary, position and identity of the parties. The employees must also be informed of the person who exercises the employee’s rights over them. Within 15 days from the execution of the employment agreement an employee must be informed of the following: (i) the regular working hours; (ii) the other component elements of the remuneration; (iii) the date of payment of salaries, the frequency of the salary payment; (iv) the number of days of paid annual leave and the procedures for allocating and determining such leave; (v) the rules governing the periods of notice to be observed by the employer and the employee should their contract or employment relationship be terminated; (vi) whether a collective agreement applies to the employee; and (vii) the employee’s scope of work.

  • Non-Compulsory Terms

    • The employer and the employee are free to agree any other terms in addition to these compulsory provisions (e.g.: non- compete agreement).


Types Of Agreement

Contracts of employment exist in several different forms: fixed term, indefinite term, full-time or part-time. The compulsory terms apply regardless of the type of contract contemplated. The Labour Code prevents employees from being treated less favourably than other employees because of their working part-time or working on a fixed term contract.


Secrecy/Confidentiality

There are rules relating to secrecy and confidentiality that are implied into the employment relationship.

During the employment relationship an employee shall keep confidential all business secrets that came to his/her knowledge during or in connection with the employment. Therefore, information that an employee is expressly told is confidential, and obviously is confidential and business secrets are protected without covenant during employment. Further, the employee may not disclose such data that came to his/her knowledge in connection with the employment and the disclosure of which may be detriment to the employer or other person.

After employment, only business secrets are protected by the duty of confidentiality without any compensation. Business secrets include information which is of a sufficiently high degree of confidentiality to remain confidential after employment.

In addition to the implied duties, employers will often include in the employment contract an express term specifying the type of information that is a trade secret, and therefore protected, to prevent future disclosure. They may also include restrictive covenants (see below).


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of any contractual terms, there are statutory provisions which will apply to determine ownership of IP rights. As a general rule, if the production of works protected by IP rights (e.g. patentable inventions or software protected by copyright) is the job obligation of the employee, such IP rights are automatically transferred to the employer (with exceptions, e.g. moral rights attached to works protected by copyright cannot be transferred).


Pre-Employment Considerations

Employers are required to notify the Tax Authority of the establishment of the employment relationship no later than the first day of the employment relationship, i.e. before the employment starts.

Employment must be conditional on a successful pre-employment medical examination. Employees shall be employed for work of such nature which is not considered harmful with a view to their physical condition, development or health.

If a collective agreement is applicable within the workplace where an employee is to be employed they must be given a copy of it at the time of their appointment.


Hiring Non-Nationals

Employers are obliged to ensure that all employees are entitled to work in Hungary. Different requirements apply depending on the nationality/status of the individual concerned. In broad terms, EEA nationals (subject to certain exceptions) have an automatic entitlement to work in Hungary, no work permit is required. Non-EEA employees require a work permit to work in Hungary.

An employer will be liable to a penalty if he/she employs someone who is not entitled to work in Hungary.


Hiring Specified Categories Of Individuals

There are restrictions on who can be employed to carry out certain hazardous activities and restrictions on the types of work that vulnerable groups (e.g. children or pregnant women) can be required to undertake.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

There are specific rules relating to outsourcing, in-sourcing and where there is a change of the employer. The change of the employer (i.e. the so-called transfer of undertakings) is regulated by the Labour Code. The circumstances of in- and outsourcings shall always be reviewed on a case by case basis, since in- and outsourcing may also result in the application of the transfer of undertaking rules.

In situations where transfer of undertaking rules apply, employees carrying out the work in question automatically transfer with the work and thereby become employees of the new entity carrying out the work. Hungarian law does not allow ‘cherry picking’, i.e. the new employer has to take over all employees affected by the transfer. The employees must generally remain on exactly the same terms of employment as they enjoyed prior to the transfer. The employee has the right to terminate his employment relationship within 30 days from the date of transfer if the transfer involves a substantial change in his working conditions. In this case the employee is entitled to be released from work for at least half of the notice period and severance pay as it is at termination by notice issued by the employer.

The works council shall be informed about the planned transfer at least 15 days prior to the transfer date by the new and the old employer. Further, the employers shall initiate negotiations with the works council. In the absence of a works council, the transferor (old) employer shall inform the affected employees at least 15 days prior to the transfer taking place. The transferring and the receiving employer shall be jointly and severally liable for employees’ demands which arose before the date of transfer, provided that these demands are enforced by the employees within one year from the transfer date. A transfer of undertakings of itself cannot constitute an appropriate basis for the termination of the employment by the employer. Such termination would be considered unlawful.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

In accordance with contractual principles, parties shall be entitled to amend employment contracts by mutual consent under the rules relating to the conclusion of employment. The employee has the right to pursue a claim in connection with any amendment of the employment contract implemented by the employer’s unilateral decisions.

There are new relevant rules in this regard:

In the event of any change in the employee’s health, the employer shall adjust in the working conditions and in the work schedule accordingly.

If the conditions of employment in the original job cannot be modified, the employee shall be offered a job fitting for her/her state of health, if the pregnant women unable to work in her original position according to a medical opinion from the time her pregnancy is diagnosed until her child reaches one year of age. The employee shall be given the base wage normally paid for the job offered, which may not be less than her base wage fixed in the employment contract. The base wage shall be payable for the duration of discharge, except if the job offered is refused without adequate reason.

Employers shall amend the employment contract based on the employee’s proposition to part-time work covering half of the regular daily working time until the child reaches the age of four, or the age of six in the case of employees with three or more children.


Change In Ownership Of The Business

When there is a change in ownership of a business the transfer of undertaking rules do not have to be applied.


Social Security Contributions

Wages, salaries and other types of remunerations (including certain in-kind benefits) are subject to social tax payable by the employer and social security contributions payable on behalf and to be deducted from the remuneration of the employee.

The social tax is 15.5%, it is based on the income paid to individuals for dependent and independent services. The tax is to be assessed, declared and paid by the employer monthly by 12th of the month following the month concerned.

The social security contribution covering both the health care and the pension contribution, payable on behalf of the employee is 18.5%. The employer paying the remuneration is required to assess and withhold the tax due from the payment made to the employee. The tax withheld from the payments of the wages and salaries is to be declared electronically and is payable by 12th of the month following the month concerned.


Accidents At Work

Employers must ensure the safety of their employees by providing a safe working environment (e.g. providing protective equipment). The employer is liable to provide compensation for damages caused in connection with the employment relationship including the damages caused by an accident at work. It is also considered as accident at work if the accident happens while the workers are travelling to or from work. It is not compulsory but recommended for the employer to have insurance to cover potential claims by employees in this regard.


Discipline And Grievance

Disciplinary actions may either be regulated by collective bargaining agreements or by the employment agreement. Disciplinary action may only impose such sanction as amends the terms of the employment for a fixed term. The material consequences may not exceed the employee’s monthly salary. Disciplinary actions must be in writing, and decisions must include reasons.


Harassment/Discrimination/Equal pay

Each natural or legal person has the right to lodge a complaint to the Equal Treatment Authority about the violation of equal rights or to start a legal action at the labour court.

Employees are protected from discrimination on grounds of sex, age, sexual orientation, marital status, race, religion or belief, disability, part-time status and fixed-term status.

Discrimination may occur before the employment relationship commences (for example in advertising the job), during the employment (for example in failing to promote), on termination or even after the employment has ended (for example in writing the reference).

In the case of discrimination on grounds such as sex, race, age or religion, the discrimination may be direct (for example refusing to employ a man or woman), or indirect (for example by imposing a condition which is irrelevant to the job but is such that fewer people of a particular group can qualify). In other instances, such as disability discrimination, there is no specific distinction between direct and indirect discrimination.

The employer is expected to comply with the principle of equal treatment in the following cases:

    1. access to employment, especially in public vacancy advertisements, hiring, and in the conditions of employment;
    2. establishment and termination of employment;
    3. in case of employment equal pay shall be provided for equal work;
    4. in organizing work or public service, the same conditions shall be created at work service, qualification or vocational training, retraining, and work experience for each employee or civil servant;
    5. provisions made before the employment or other relationship related to employment have commenced;
    6. no retribution shall be shown against those who has lodged complaints for discrimination; and
    7. during grievance procedures and processes aiming to define the liability of the employee for damages caused.

The injured party or their representative has to prove the likelihood of that:

  • the injured person or group has suffered disadvantage or the immediate risk of suffering of this exists; and
  • the injured person or group possesses a protected characteristic defined in the Equal Treatment Act.

If the injured party has sufficiently evidenced the above circumstances, the respondent has to prove that:

  • the circumstances that have been proved to be likely by the injured party do not exist, or
  • it has observed, or in respect to the relevant relationship was not obliged to observe, the principle of equal treatment.

If the Equal Treatment Authority has established that the principles of equal treatment have been violated, it may

  • order that the situation constituting the violation of law shall be eliminated;
  • prohibit the continuation of the violation of law;
  • publish its decision establishing the violation of law;
  • impose a fine from fifty thousand (cca. EUR 145) to six million HUF (cca. EUR 17,300).

Damage can only be awarded by the labour court, and so to get compensation the victim has to sue the violator at court.


Compulsory Training Obligations

There are no compulsory training obligations for employees generally, but obviously some trades/professions will impose their own standards/expectations.


Offsetting Earnings

It is possible for employers to offset earnings against an employee’s debts, but not where such offset would reduce the employee’s salary under the statutory minimum pension. However, the employer may only make a deduction from the employee’s wages if it is required by a statutory or contractual provision; or if the employee has given his prior written consent to the deduction.


Payments For Maternity And Disability Leave

Employees will benefit from certain payments subject to satisfying the relevant necessary requirements. To trigger statutory maternity, pay entitlement, a woman must accrue at least 365 days employment during the two years prior to the birth of the child.

The employees are entitled to 15 days/year sick leave payment. During this period, they receive 70% of their wages.

After sixteen days, regarding disability leave/sickness absence, an employee will be entitled to receive statutory sick pay (which is currently 60% or 50% of the average salary) from the sixteenth day of consecutive absence. The statutory provisions established a daily maximum amount of the sick leave payment.

The first 15 days of the sick leave is paid by the employer, after the sixteenth day the employer has to pay 1/3 of the sick leave payment and the remaining 2/3 is covered by the social security system for the duration of the insurance relationship (i.e. the duration of the employment relationship) for the duration of the incapacity for work, but not exceeding a maximum period of one year.


Compulsory Insurance

No compulsory insurance is prescribed by the Hungarian law, other than the statutory social security insurance.


Absence For Military Or Public Service Duties

Employees are entitled to take unpaid leave for military or public service duties.


Works Councils or Trade Unions

There are two different ways to establish a trade union: (i) ten employees may establish an independent trade union, or (ii) they can join an existing external trade union and form a sub section.

An employee who is an official of a trade union (whether independent or external) has certain rights in relation to his employer. For example, dismissal for membership of, or for taking part in the activities of, an independent Trade Union is automatically unfair for the purposes of unfair dismissal and higher awards of compensation may, in some circumstances, be made. Action sort of dismissal of an employee or subjecting an employee to a detriment for membership of, or for taking part in the activities of, an independent Trade Union, gives the employee the right to complain to a tribunal which may award him or her compensation. A Trade Union official has the right to time off work without pay to take part in Trade Union activities. In addition, certain Trade Union officers have the right to take time off with pay for Trade Union duties. The termination of certain Trade Union officers is possible only if the superior body of the local trade union gives it consent.

Under the Hungarian Labour Code employer has a duty to inform the works council regularly on certain issues. In other cases, the prior opinion of the works council shall be sought. The employer shall initiate negotiations with the works council in case of transfer of undertakings and collective redundancies.

Trade unions that are represented in a workplace – meaning that they have a body or representative there - are entitled to exercise various rights including the conclusion of a collective agreement. They also have the right to request information in connection with the employees’ economic and social interests from the employer. In case of an employer’s action or decision from the part of the employer, the trade union is entitled to state its opinion and initiate a consultation in connection thereof.

Employees are entitled to establish a workers’ council if the company has more than 50 employees. In case of 15 employees, employees are entitled to nominate a representative who is called a shop steward.


Employees’ Right To Strike

The Hungarian Constitution provides for the employees’ right to strike, the details are regulated in the Act on Strike. The employees must consult for at least seven days with the employers before going to strike. The seven days period is not required if the employees join a solidarity strike, thus they join a strike of employee working for another employer.


Employees On Strike

Employees on strike may not receive their salary. Members of the works council may neither cooperate in the strike nor encourage the employees on strike. Employees on legal strike are protected, however employers may dismiss the employees if it is proven that the strike was illegal.


Employers’ Responsibility For Actions Of Their Employees

Employers in principle are responsible to a third party for damages caused by their employees related to their employment.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

In all cases, the termination of an employment contract must comply with the terms of the contract. In most cases, there are certain minimum steps, which must be followed before termination to avoid the termination amounting to an unfair dismissal. An employer must be able to demonstrate a “fair, clear and reasonable” reason for dismissal. Whether a dismissal for the reason(s) identified is nevertheless unfair depends on the tribunal’s view as to the reasonableness of the employers’ actions. Currently, a failure to comply with the minimum statutory procedures (see discipline and grievance, above) will result in an unlawful dismissal.


Instant Dismissal

Both the employer and the employee can terminate an employment relationship with immediate effect if the other party (i) wilfully or by gross negligence commits a grave violation of any substantial obligations arising from the employment relationship; or (ii) otherwise engages in conduct rendering further existence of the employment relationship impossible. No deviation from these provisions shall be considered valid. Termination for serious cause with immediate effect must still comply with the requirement to provide “fair, clear and reasonable” reasoning.


Employee's Resignation

The employment relationship can be terminated by the employee’s resignation without reasoning. The minimum notice period is 30 days; however the employment contract may stipulate a longer period. If the employee resigned, he/she shall work during the entire notice period.

The employee may terminate fixed-term employment with a notice period if continuing the employment would cause a serious disadvantage to the employee. In this case, the employee must give reasoning in the termination letter. In the case of permanent employment, the termination need not include any reasoning.


Termination On Notice

Employers can terminate the employment relationship by notice; however they must provide “fair, clear and reasonable” reasoning and there may still be liability for unfair dismissal. The minimum period of notice is 30 days and depending on the period of permanent employment, the period of notice increases with the time of the duration of the permanent employment. The requirement for “fair, clear and reasonable” reasoning must still be complied with. An employee may be dismissed only for reasons in connection with his/her ability, his/her behaviour in relation to the employment relationship or for reasons in connection with the employer’s operations.


Termination By Reason Of The Employee's Age

In Hungary there is no automatic termination of employment relationship if an employee reaches a certain age. Furthermore, it is prohibited to terminate an employment relationship because of the age of the employee. However, if an employee qualifies as pensioner (i.e., if he/she has reached the age of retirement and has the mandatory service time or if he/she receives pension for other reasons) the employer may terminate the employment relationship without reasoning and without paying severances.

If an employee has only 5 years before reaching the age of retirement (currently 62 years for those born before 1952), the employer may only terminate the employment relationship with “justified reasoning” (if the employee a) wilfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship; or b) otherwise engages in conduct that would render the employment relationship impossible).


Automatic Termination In Cases Of Force Majeure

The contract will be deemed “frustrated” where intervening events make its continued performance impossible. Death of the employee or the dissolution of the workplace without succession is one example. However, Force Majeure events do not automatically terminate an employment relationship.


Collective Dismissals

‘Collective dismissals’ mean when an employer, based on the average statistical workforce for the preceding six-month period, intends to terminate the employment relationship:

    1. of at least ten employees, when employing more than twenty and less than one hundred employees,
    2. of 10 per cent of the employees, when employing one hundred or more, but less than three hundred employees,
    3. of at least thirty employees, when employing three hundred or more employees,

in accordance with Subsection (3), inside a period of thirty days, for reasons in connection with its operations.

The employer, if planning to carry out collective redundancies, shall initiate consultations with the works council. This means that the employer shall inform the works council At least seven days before the consultation in writing regarding the reasons of collective dismissals, the number of employees affected by the collective dismissal, the period over which the projected collective dismissals are to be effected, and the timetable for their implementation, the criteria proposed for the selection of the employees to be made dismissed; and the conditions for and the extent of benefits provided in connection with the termination of employment relationships, other than what is prescribed in employment regulations. Such obligation of the employer applies until the conclusion of an agreement or failing this for a period of fifteen days after the beginning of negotiations. The agreement concluded during negotiations shall be made out in writing, a copy of which shall be sent to the government employment agency.

The employer shall notify in writing the employees affected of its decision regarding collective dismissals at least thirty days prior to delivering the notice of dismissal or the dismissal without notice. The notice of dismissal or the dismissal without notice may be delivered after thirty days following the time of notification.


Termination By Parties’ Agreement

The parties are entirely free to agree termination on any grounds they desire. The only requirement is that the agreement should be in writing and must expressly highlight the termination date. This applies to all employment relationship terminations.


Directors Or Other Senior Officers

There are no special rules which relate to the termination of other senior officers’ employment. However, for executive officers (e.g., managing directors) there are special rules set out in the Labour Code for example reasoning is not required for termination on notice. If the senior officer is also a director in a business organisation the rules of the Labour code shall be applied in accordance with the company law rules.


Special Rules For Categories Of Employee

There are no categories of employee to whom special rules apply, but certain categories (e.g., pregnant women, those who take care of his/her child, time for incapacity of work, etc.) benefit from more generous rules for protection from dismissal.

The employer may terminate fixed-term employment with a notice period in certain limited cases (e.g., during the liquidation or bankruptcy process; because of the competence of the employee; or if, owing to serious external circumstances, continued employment cannot be expected from the employer.

The employer may terminate fixed-term employment with immediate effect without reason. However, if it does so, the employee must be given a fee for the period remaining on the fixed term, capped at 12 months.


Specific Rules For Companies in Financial Difficulties

The employment might be terminated by a reason relating the operation of the company.


Restricting Future Activities

There may be an agreement between the employer and the employee for up to two years following the termination of the employment relationship that the employee shall not act against the rightful economic interests of the employer after the termination of the employment. The employer is obliged to pay an appropriate compensation to the employee. The amount of the compensation is at least 1/3 of the employee’s salary applicable on the termination date but depending on the circumstances (e.g., geographical area covered by the restriction) the amount paid by the employer may be higher. The restrictive covenants must be concluded in writing (included in the employment agreement or in a separate agreement), and punitive damages may also be agreed on in case of a breach of such agreement.


Whistleblower Laws

The Act no CLXV of 2013 on complains and whistleblowing provides the current rules of such issues at employers of the public sector (i.e., state and local government bodies). A complaint means any request that aims to resolve an individual infringement of rights or interests and may contain suggestions. Whistleblowing, however, has a communal aspect as well.

The proceeding may be initiated by anyone, and such request shall be arranged within 30 days. Upon a request, the lawful environment shall be repaired. The most important rule regarding whistleblowing rules is that the complainant shall not suffer any disadvantages or punishment, moreover, the Act also provides that any disadvantageous conduct made against the complainant is deemed unlawful, disregarding whether it was normally lawful. A further act also provides rules regarding the safety of such complainants that may face danger because of their whistleblowing activity.

The Hungarian whistle-blower rules are quite strict, however, they shall be reviewed and renewed by the end of 2021 based on a new EU directive (no 2019/1937.), which also intends to extend the whistleblowing rules to private business entities.


Special Rules For Garden Leave

In the event of dismissal, the employer shall excuse the employee concerned from work duty for at least half of the notice period. Any fraction of a day shall be applied as a full day. The exemption from work duty shall be allocated in not more than two parts, at the employee’s discretion. For the period of being excused from his duties the employee shall be entitled to absentee pay, except if he would not be eligible for any wages otherwise. If the employee was excused from his duties permanently and the circumstance precluding payment of wages occurred subsequent to having the employee excused from his duties, the wages already paid out may not be reclaimed.


Severance Payments

Upon certain types of termination employees are entitled to the following amounts: payment for the notice period and mandatory severance payment regulated by the Labour Code or by the employment agreement.

In cases of termination of the employment relationship by succession, termination on notice provided that the reason of termination was not the behaviour or poor performance of the employee), or by the employee with immediate effect, the employee is entitled to severance payment. This does not apply to those employees who are regarded as a pensioner. The amount of the severance payment is regulated by the Labour Code. The minimum amount is one month’s payment after at least three years of employment.


Special Tax Provisions And Severance Payments

There are special tax provisions for severance payments in the public sector. In the private sector the tax and social contributions on severances are the same as those on salaries.


Allowances Payable To Employees After Termination

Employers are not required to contribute to any allowances payable to employees after termination.


Time Limits For Claims Following Termination

Claims must be issued within 30 days from the disclosure of the statements (e.g., termination letter) to the Employment Tribunal. If the party has not met the deadline, a proof might be submitted within 6 months.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

In Hungary, the labour authorities examine the agreement of independent contractors (freelancers) with special care and are entitled to reclassify such agreements by applying serious sanctions simultaneously. This risk can be mitigated if special care is taken when drafting the agreements with freelancers.



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Éva Bognár
Lakatos, Köves and Partners
Hungary


Disclaimer:

© 2021, Lakatos, Köves and Partners. All rights reserved by Lakatos, Köves and Partners as author and the owner of the copyright in this chapter. Lakatos, Köves and Partners has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021