Blue-Collar and White-Collar Workers

Under Hungarian law, there is no distinction between blue-collar and white-collar workers. Pursuant to the legal definition, an employee in Hungary is a natural person who works under an employment contract.

Other Employee Statuses

Special regulations apply to the public sector. In some cases, the Labour Code is applicable with derogations provided for in sectoral laws. In other cases, the Labour Code is not applicable at all and is replaced by the specific law entirely. Further, student workers and executive employees are subject to special provisions based on their position, such as working hours, liability, termination, remuneration, etc.

Requirements for Employment Contracts

In most cases, employment contracts are concluded for an indefinite period. If the parties wish to conclude the employment contract for a definite term, this must be agreed specifically. The employment contract must be in writing, however, the failure to do so may only be challenged by the employee and even then, only within 30 days of the commencement of the employment. The statutory elements of the contract are: (i) the name of the parties, (ii) the concerned position and (iii) the base salary of the employee. In general, the freedom of contract prevails in employment relationships. Nonetheless, customary but optional provisions are: (i) the place of work, (ii) the working time and scheduling arrangements, and (iii) the trial period at the beginning of the employment. The language of the contract is not regulated by law, however, it is recommended to have at least a bilingual version where Hungarian is the priority language.

Furthermore, the employer shall inform the employee within seven days of the start of the employment of certain working conditions and related information which is usually provided in the form of an employee notification letter.

Daily and Weekly Working Time

The parties may agree in the employment contract on (i) general full-time employment for eight working hours per day or (ii) part-time for less than eight hours per day (no minimum).

Uneven scheduling is an alternative, in which case the daily working time is scheduled unevenly during the work week. The working hours shall be considered for a specific period, determined by the parties, and the limits apply to this certain period of time, while the hours are calculated on an average daily basis. The daily working time cannot exceed 12 hours regardless.

The time, however, which the employee actually works on a given day, may be different from the above contractual daily working time and is determined by the working time schedule applicable to the employee on the concerned day (scheduled daily working time). In the case of full-time employment, the minimum scheduled daily working time is four hours, and the maximum is in any case 12 hours in uneven scheduling. The maximum weekly scheduled working time is 48 hours. These figures include overtime as well.

Specific Terms for Part-Time Contracts

In the case of part-time employment, there is no minimum daily working time requirement, therefore the employee can work less than four hours a day. The maximum daily limit is 12 hours in this case too, provided that the scheduling is uneven.

Flexible Working Arrangement

The employer may allow the employee to entirely schedule their own working time. In such a case, no working time scheduling and recording is required. The flexible working arrangement is not negated if the employee is instructed to perform certain tasks (eg, client or staff meeting) at a place and time determined by the employer.

Overtime

Hungarian labour law regulates different categories of overtime. The relevant ones are:

• work ordered in excess of the scheduled daily working time;
• work ordered in excess of the schedulable working hours within a specific period, in case of uneven scheduling of working time frame.

Overtime is in any case scheduled by the employer – eg, by modifying the already-communicated schedule. If the employee requests so, overtime shall be ordered in writing. The maximum of overtime in a calendar year is 250 hours. Upon written agreement of the parties, an additional 150 hours of overtime can be scheduled. Depending on the agreement of the parties, overtime shall be either compensated by the applicable wage supplement or with proportionate paid free time. (General supplement rate is 50% or 100% in case it is scheduled on a holiday.)

Minimum Wage Requirements

The minimum wages are regulated annually by government decree. The general minimum wage is gross HUF266,800 per month in full-time employment in 2024. For jobs requiring at least secondary education, a so-called guaranteed wage minimum applies, in the amount of gross HUF326,000 per month in full-time employment in 2024. For part-time employees, the proportionate amount of the above minimums applies.

Government Intervention, Compulsory Wage Increase

There is no government intervention on top of the above-mentioned minimum wages. On compulsory wage increases, the employer shall make an offer to the employee to adjust the wage after the end of the maternity leave. This should be done on the basis of the average annual wage increase that the employer has implemented during the maternity leave for employees in the same job position as the employee.

Other Benefits

The parties may agree on a bonus scheme, including a 13th-month salary, subject to the discretion of the parties without any limitations, save for the general requirement of equal treatment while specifying the conditions thereof.

Vacation

The statutory minimum paid leave is 20 working days in a calendar year (proportional amount in case the employment started mid-year). The statutory vacation time is increased with additional days depending on the age (not the seniority) of the employee with up to ten additional working days. There are also additional annual paid leave in special circumstances, such as employees raising children under 16 in their household, young workers or employees receiving disabled or blind benefits, and employees with at least 50% disability. The general rule is that employees are entitled to take, and the employer must grant the vacation days in the year in which they accrue. The absentee pay (equal to the monthly time-based base salary if no other wage elements are applied) is due to the employee during the time of vacation.

Sick Leave

Sick leave is regulated on two levels, depending on the duration of time when the employee is incapable of working. Employees shall be entitled to 15 working days of sick leave per calendar year for the duration of time during which the employee is incapacitated due to illness. For the duration of sick leave, 70% of the absentee pay shall be paid by the employer. For the period of any sick leave exceeding 15 working days, the employee is entitled to sick allowance. Sick allowance is paid for up to one year, provided that the employee had a legal provision of insurance for at least one year prior to sickness. The amount of sick allowance is 60% of the gross daily pay for the period defined by law, but the daily allowance is a maximum of 1/30 of the double of the gross minimum salary, which is HUF17.786,67 per day in 2024.

Maternity Leave and Parental Leave

Mothers are entitled to a continuous 24 weeks’ maternity leave, with four weeks falling before the anticipated date of the birth. Out of the 24 weeks, the minimum period of time that needs to be taken as maternity leave is two weeks. Upon the birth of his child, a father is entitled to ten paid working days’ leave which shall be taken within two months following the birth or, in case of adoption, following the final resolution approving the adoption. The employee shall be entitled to a parental leave of 44 working days to be taken until the child turns three, provided that the employment relationship exists for at least one year following the birth of the child (or the final resolution approving the adoption). For the first five working days of the parental leave, the employee is entitled to their absentee pay, for the remaining term, for the 40% of their absentee pay.

Additional Annual Paid Leaves in Special Circumstances

The employee shall be entitled to additional vacation days under the following circumstances:

• employees raising one child under 16 in their household: + 2 days (+2 if the child is disabled);
• employees raising two children under 16 in their household: + 4 days (+2 if the child is disabled);
• employees raising more than two children under 16 in their household: + 7 days (+2 if the child is disabled);
• young workers: +5 days; and
• employees receiving disabled or blind benefits and employees with at least 50% disability: +5 days.

Confidentiality and Non-disclosure Obligations

Employees shall maintain confidentiality in relation to business secrets obtained in the course of their work, during and subsequent to the termination of the employment relationship as well. Moreover, employees shall not disclose to unauthorised persons any data learned in connection with their activities that, if revealed, would result in detrimental consequences for the employer or other persons. The requirement of confidentiality shall not apply to any information of public interest or public information, and as such is rendered subject to disclosure requirement.

Liability

Employees are liable for damages caused by any breach of their obligations of the employment relationship stemming from their failure to act as it might normally be expected in the given circumstances. The amount of compensation may not exceed four months’ absentee pay of the employee. Compensation for damages caused intentionally or through gross negligence shall cover the full extent of losses. Further, executives bear full liability for damages caused by “simple” negligence too. Employees are not liable for damages considered unforeseeable or that resulted from the employer’s wrongful conduct, or that occurred due to the employer’s failure to perform its obligations to mitigate the damage.

The parties may agree that the employee is not allowed to engage in any conduct, for up to two years following the termination of the employment, which could infringe or jeopardise the rightful economic interest of the employer. For such a period, the employer shall pay adequate compensation to the employee, which may not be less than one-third of the base salary the employee would be due for the same period, according to their salary applicable at the time of the termination.

Pursuant to the relevant judicial practice, it is a further condition for the enforceability of the non-compete clause to determine the geographical and activity scope to which the above limitation applies as accurately as possible.

The Labour Code offers the opportunity for the employer to set out default penalty provisions regarding the breach of the non-compete clause (under general civil law rules).

Under Hungarian law, non-solicitation and non-compete clauses are not determined separately, but fall under the scope of the same umbrella term of non-competition. Therefore, the same terms apply as set out in 2.1. Non-competes, as they are regarded the same way from a legal point of view.

Both non-compete and non-solicitation clauses may be added to the employment contract or a separate agreement may be concluded thereon between the parties. Either way, the consent of the employee is required for the introduction of these provisions.

The General Data Protection Regulation (GDPR) became mandatory in 2018 in the member states of the European Union, including Hungary. By its general nature, the GDPR also applies to employers’ data processing, as well as Act No CXII of 2011 on Informational Self-Determination and Freedom of Information, and the practice of the National Authority for Data Protection and Freedom of Information. Accordingly, the employer shall prepare the relevant data privacy notifications as well as implement internal policies on the relevant processes and communicate those to the employees.

Data Privacy During Recruitment

The Labour Code does not regulate data protection regarding recruitment specifically, however, it notes that the employee may only be requested to provide any declaration or personal data that is essential to the conclusion, performance, or termination of the employment, further, for the assertion of a labour law or related claim. Background checks are not formalised and regulated by law. Either social media checks or contacting former employers for references are allowed only upon the express consent of the candidate. The circumstances of processing personal data during the recruitment shall be communicated to the candidate and the future employee in writing. Upon unsuccessful recruitment, the employer shall ensure the deletion of the candidates’ data, in particular their resumes.

Key Issues Regarding Data Privacy During Employment

Based on the statutory provisions of the Labour Code and the practice of the relevant authority, the following are the key issues regulated in respect of data privacy during employment:

• the processing of biometric data of an employee;
• monitoring employees, in particular, CCTV surveillance and monitoring e-mails, regarding which the Labour Code determines the following two cumulative conditions:
1. the employer may solely monitor the employee in connection with the employment relationship; and
2. the employees shall be notified of the above in advance and in writing;
• obtaining the written consent of each employee during the marketing activity of the employer (eg photoshoots, company events, social media. etc);
• compliance and special attention to ensuring adequate safety measures during data transfers, especially in case of transfer outside the EU; and
• ensuring the final deletion of unnecessary data or data the processing of which cannot be supported by legal grounds or the valid legitimate interest of the employer.

As Hungary is a member state of the European Union, as well as a party to the Schengen Treaty, differing immigration and work permit regulations and conditions apply to EU/EEA nationals compared to non-EU/EEA nationals.

Non-EU/EEA individuals are required to obtain a valid work permit to legally work in Hungary. In contrast, citizens of EU and EEA countries have the freedom to be employed freely across the EU and the EEA, subject to notification of employment to the competent authority.

To legally employ foreign workers in Hungary, employers must follow specific registration requirements and procedures to comply with Hungarian labour and immigration laws.

As a general rule, when employing non-EU/EEA individuals, the employer must submit a workforce request to the competent branch office of the employment centre prior to initiating the application procedure.

The employer should indicate the job title, salary, and other relevant information on the form, with particular emphasis on the job title, as it determines the classification of the employment relationship. The workforce request is necessary because the competent office must first ascertain whether there are any available Hungarian workers for the position sought by the employer.

Consequently, a third-country individual can only be employed in Hungary if the employer has submitted a valid workforce request beforehand, no suitable Hungarian worker has been identified for the position since the submission, and the third-country individual meets all other relevant legal requirements.

While the Schengen visa procedure and stays under the duration of 90 days are regulated on the EU-level, the regulation of long-term stays of third-country nationals is in the sole discretion of each EU member state.

Foreign nationals from non-EU/EEA countries need to obtain both a work permit and a residence permit to be legally employed in Hungary. Under Hungarian immigration laws, a third-country national is allowed to stay and work in Hungary for more than 90 days within a 180-day period in case:

• they are either granted a residence permit under a title set out in relevant laws (eg, family reunification) after which they can apply separately for a work permit; or
• they obtain a residence permit for the purpose of performing work in Hungary, in the framework of which they obtain the work permit simultaneously with the residence permit, which is the so-called single permit, that can be executed in a single merged procedure.

Guest Worker Permit

Citizens from non-neighbouring countries and outside the European Economic Area can apply for a guest worker residence permit as an option.

However, the law specifies a restricted group of employers eligible to hire guest workers. This group includes employers undertaking investments deemed of national economic importance, those with partnership agreements under the Key Exporter Partnership Programme, and qualified temporary employment agencies.

EU Blue Card

Highly qualified personnel may be hired under special and somewhat favourable terms. The EU Blue Card is a permit that allows one to reside in Hungary and work in a position that demands advanced skills.

White Card

Third-country individuals could receive a White Card residence permit if:

• the individual is in a verified employment relationship in a country outside of Hungary and performs their work using an advanced digital technology solution; or
• they hold a share in a company with a certified profit in a country outside of Hungary and performs their work or manage their company from Hungary using advanced technology.

Generally, each type of permit has limitations on its validity. The duration varies depending on the type of permit. Typically, a work permit is valid for two years and can be renewed. However, for example, the EU Blue Card can have a longer validity period of four years, whereas the White Card has a shorter validity period of one year, which can be renewed only once for an additional year.

Teleworking and Home Offices

Teleworking means that the employee works part or all of the working time at a place separate from the employer’s premises and the parties include this in a contract. Therefore, the specificity of teleworking is its regularity and the fact that it is stipulated in the contract. Teleworking and home offices are not properly separated under Hungarian law, as the Labour Code has blended the two by implementing a lot more flexibility during the past few years since COVID-19. As opposed to telework, it is not mandatory to stipulate the possibility of home office working in the employment contract, and this is subject to far fewer health and safety rules than teleworking. In practice, the details on home offices are usually regulated by internal policies.

Safety Measures in Teleworking and Home Offices

Teleworking can also be carried out using work equipment provided by the employee, however, the employer must ensure that this equipment is safe and in good condition. In case of those who work with computer equipment, the employer shall inform the employee in writing of the rules concerning safe working conditions in advance. In case teleworking is not carried out by a computer device, the location of work shall be previously certified by the employer as suitable in connection with safety and health. In this case, the employee may not change the working conditions at the location without the employer’s consent. Employers are advised to provide employees with rules concerning safe working conditions in case of a home office too, in order to mitigate the safety and health risks of working from home.

Sabbatical (Unpaid) Leave in General

The employer may authorise sabbatical (unpaid) leave at any time at the employee’s request. In this case, the agreement of the parties shall prevail. However, employees are entitled to sabbatical leave in some cases and to some extent provided for in the Labour Code. In case the sabbatical leave is based on the parties’ agreement, the duration of it shall not be considered for the purposes of entitlement to severance pay if the sabbatical leave lasted at least 30 consecutive days.

Mandatory Cases of Sabbatical Leave and Restrictions

Sabbatical leave shall be granted to the employee in the following cases.

• Childcare – employees are entitled to sabbatical leave until the child reaches:
1. the age of three; or
2. until the child reaches the age of ten, during the period of receiving childcare allowance, childcare assistance benefits.
• Care of a close relative – at the employee’s request, sabbatical leave is granted for the duration of care of a relative in person, for a period of up to two years for the purpose of providing personal care, which is expected to exceed 30 days. The long-term care at home and the reasons for it shall be certified by the doctor of the person in need of care.
• Actual voluntary reserve military service – the employee is entitled to sabbatical leave for the duration of actual voluntary reserve military service.

In these statutory cases, the whole duration of childcare and care of a close relative, and the duration of actual voluntary reserve military service not exceeding three months should be considered for the purposes of calculating severance pay.

Reduced Regular Daily Working Time

Regular daily working time means that the daily working time in full-time jobs is eight hours. However, the regular daily working time may be reduced in full-time jobs pursuant to the relevant employment regulations or the agreement of the parties. This means that the employee works only, for example, six hours a day, but the salary is the same as in case of regular daily working time and the employment is considered full-time, not part-time. 

Four-Day Week

As of recently, more and more companies are experimenting with a shorter work week as opposed to the general five-day week. Hungarian labour law is flexible in this respect, therefore it is entirely up to the parties’ agreement to implement such new manifestations, as a deviation in favour of the employee is generally permitted.

In Hungary, a trade union is an independent legal entity, serving as an employee representative body.

Under Hungarian law, a trade union is a type of association, meaning it shall comply with the regulations applicable to associations to be recognised as a trade union. Consequently, its legal status is governed by both labour and civil law regulations.

Under the Labour Code, the rights conferred upon trade unions are available exclusively to those with representation at the employer. Whether a trade union has representation at an employer can be determined based on its articles of association. The most important privilege granted to trade unions is that they are exclusively entitled to conclude collective agreements as specified under 6.3 Collective Bargaining Agreements.

A trade union operates for the benefit of all employees, but its representative rights are only effective concerning its members. It exercises its advocacy rights in matters affecting employees’ financial, social, and working conditions.

Additionally, a trade union has informational rights to ensure it has all the necessary information for its representation activities. This includes requesting information from the employer, expressing opinions on employer decisions, and initiating consultations.

In addition to trade unions, another significant employee representative body in Hungary is the works council, which facilitates employees’ participation in management and employer decisions, but it does not have a separate organisational structure.

One of the most notable differences between trade unions and works councils is that while trade unions tend to have a confrontational nature, works councils operate co-operatively with the employer. Additionally, unlike trade unions, works councils are not independent legal entities. The purpose of a works council is to influence the employer’s decision-making processes for the benefit of employees.

Employees can elect a works council at any employer, or at any branch of an employer, where the number of employees exceeds 50. If the number of employees exceeds 15 but does not reach 50, employees can elect a works representative instead of a works council. The establishment of a works council is not mandatory.

One of the most important rights associated with trade unions is the right to collective bargaining, guaranteed by the Constitution. A collective agreement is an agreement concluded between the employer and the trade union, which regulates the relationship between the parties and the employment conditions of the employees covered by the agreement. The function of the collective agreement is to provide more favourable working conditions for employees, clarify legal provisions, and standardise competition conditions. It is important to note, however, that executives are not subject to collective agreements.

Collective bargaining agreements can be concluded by and between:

• trade unions, having representation of at least 10% of all employees employed by the employer, and the employer;
• associations of trade unions and of employers, usually from the same industry; and
• associations of trade unions and of employers the scope of which is extended to the entire industry by ministerial order, regardless of trade union representation.

Peace Agreement

It is called a peace agreement when, in exchange for better working conditions, the trade unions agree to refrain from striking on issues covered by the collective agreement, so, consequently, any strike conducted during the term of the collective agreement is considered unlawful. This is regulated by Act VII of 1989 on Strikes.

Termination of an Indefinite-Term Employment Agreement

Both the employer and the employee may terminate an employment contract concluded for an indefinite period by notice.

Notice by the Employer

The notice of termination by an employer shall be in writing and based on true, valid, and justifiable reasons. The justification shall clearly indicate the reasons for the termination and failure to meet this criterion may cause the termination to be deemed as unlawful.

The reasons for the termination need to be related to:

• the operation of the employer (eg, restructuring, downsizing);
• the behaviour of the employee (eg, stealing, attitude problems, incompatibility with colleagues); or
• the skills of the employee (eg, lack of necessary qualifications, “quality change” – ie, hiring a more qualified person for the job).

The notice of termination shall include information that the employee is entitled to initiate legal proceedings within a specified period to challenge the termination and shall indicate how to initiate such proceedings. No reasoning is required if the employee qualifies as a pensioner or as an executive employee.

Notice by the Employee

In case of a notice of termination by an employee, no reasons for the termination need to be included in the notice.

Termination of a Definite-Term Employment Agreement

Upon fulfilment of specific conditions, both the employer and the employee may terminate an employment concluded for a definite period by notice.

Notice by the Employer

A definite-term employment agreement may be terminated by the employer by way of notice if:

• the employer is undergoing bankruptcy or liquidation procedure;
• the reason for the termination relates to the lack of skills or abilities of the employee; or
• the employer cannot maintain the employment relationship for external reasons not attributable to the employer.

The employer (and only the employer) may terminate a definite-term employment with immediate effect without reasoning if the employer pays the employee 12 months’ absentee pay (if the remaining term is less than 12 months, the absentee pay due for the remaining term).

Notice by the Employee

The employee may also terminate a definite-term employment relationship by notice, which shall however be based on a justifiable reason. Such reasons shall be related to circumstances:

• which make it impossible for the employee to maintain the employment relationship; or
• which would result in a disproportionate burden on the employee.

Exemption From Work

In case of termination by the employer, the employer shall exempt the employee from the obligation to work for up to one-half of the total notice period (“exemption period”). The purpose of the exemption from work is to enable an employee to seek another job. During the exemption period, an employee shall receive their absentee pay.

Severance Payment

The employee is entitled to a severance payment if the employment is terminated by a notice issued by the employer, as detailed in 7.2 Notice Periods.

Collective Redundancies

The Hungarian Labour Code specifies that a redundancy qualifies as a collective redundancy if:

• at least ten employees at an establishment of 21−99 employees;
• 10% or more of the workforce at an establishment of 100−299 employees; or
• at least 30 employees at an establishment of 300 or more employees,

are made redundant within a period of 30 days, based on a reason related to the operations of the employer.

Employers shall notify the Hungarian Labour Authority 30 days in advance of any collective redundancies. Any failure to comply with these rules renders all pertinent dismissals void.

The employer shall consult with the works council before implementing collective redundancies. The consultation must cover, among other things, possible ways and means to avoid collective redundancies and to reduce the number of affected employees. If an agreement is reached, it must be documented in writing and submitted to the state employment agency.

Notice Period

If the employer terminates the employment relationship by notice, the notice period shall be at least 30 days. This statutory minimum notice period is extended in correlation to the years spent in employment with the same employer. Accordingly, the notice period is as follows:

• less than three years: 30 days;
• at least three years: 35 days;
• at least five years: 45 days;
• at least eight years: 50 days;
• at least ten years: 55 days;
• at least 15 years: 60 days;
• at least18 years: 70 days; and
• at least 20 years: 90 days.

Unless otherwise agreed in the employment agreement, the notice period is a fixed 30-day period in case of termination by the employee. The parties may deviate from the general rules and agree on a longer notice period of up to six months.

In case of terminating a definite-term employment, the notice period may last at a maximum until the end of the definite term.

Trial Period

Either party may terminate the employment with immediate effect and without reasoning during the trial period.

Severance Payment

The employee is entitled to a severance payment if the employment is terminated by a notice of the employer.

Entitlement to severance payment shall only apply upon the existence of an employment relationship with the employer for at least three years at the time when the termination notice is delivered or when the employer is terminated without succession.

The basis of the calculation of the severance payment is the absentee pay. The amount of the severance payment is calculated according to the time the employee has worked for the employer as follows:

• less than three years: zero;
• at least three years: one month’s absentee pay;
• at least five years: two months’ absentee pay;
• at least ten years: three months’ absentee pay;
• at least 15 years: four months’ absentee pay;
• at least 20 years: five months’ absentee pay; and
• at least 25 years: six months’ absentee pay.

If the termination of employment takes place within five years prior to the date when the employee reached the retirement age, the severance payment shall be increased by an amount of one to three months of absentee pay, depending on the length of the employment.

No severance payment is due if the reason for termination is related to the behaviour or ability of the employee, or if the employee has already become entitled to a pension.

General Rules

Both the employer and the employee may terminate an employment relationship by notice with immediate effect if:

• any important obligation arising from the employment is materially breached by the other party intentionally or by gross negligence; or
• the other party acts in a way that makes it impossible to maintain the employment relationship.

The parties may neither extend nor limit the scope of the reasons which may serve as a basis for the notice with immediate effect. However, the parties may give specific examples in the employment agreement which may result in a termination by way of a notice with immediate effect within the scope defined above.

A notice of termination shall include the clear and justified reasons of the terminating party. The party terminating the employment by notice with immediate effect shall exercise this right within 15 days after having become aware of the cause for such extraordinary termination, but the latest within a maximum period of one year from the date when the underlying cause has occurred.

If the employee terminates the employment by notice with immediate effect, then:

• the employer must pay to the employee those statutory payments which would be due to the employee if the employer terminated the employment by notice; and
• the employee may claim damages arising as a result of such termination.

No Notice Period

No notice period applies in case of a termination for serious cause; such termination has an immediate effect.

Severance Payment

The employee is entitled to severance payment under the general rules upon a notice with immediate effect issued by the employee. No severance payment is due if the termination with immediate effect was initiated by the employer.

At any time (also during the protected periods), the employer and the employee may agree to terminate the employment by mutual consent. In case of termination by mutual consent, it is up to the parties to agree on all terms and conditions of the termination, including the termination date and the allowances of the employee. The termination agreement does not contain the reasons for termination. No severance payment is due, however, as an incentive, employers often pay an exit allowance in the same amount as the severance payment applicable in case of a termination by notice. Untaken vacation days shall be reimbursed in any case.

Protection Against Termination With Notice

The employer is not entitled to terminate the employment relationship by notice during:

• a human reproduction treatment of the employee, for up to six months from the beginning of such treatment;
• an employee’s notified pregnancy;
• the maternity leave;
• the paternity leave;
• the parental leave; or
• the unpaid leave taken for nursing and taking care of children.

Limitations on Termination With Notice

During the period of five years before an employee reaches the retirement age, as well as in case of employees returning to work after maternity leave and having a child or children under the age of three (ie, mothers or single fathers), the employer may only terminate the employment by notice if:

• the employer has no vacant position available at the designated workplace of the employee, that is suitable for the employee based on the employee’s skills, education and/or experience, or the employee rejects a job offered by the employer in such position;
• the employee breached, to a material extent, any fundamental obligation arising from the employment wilfully or by gross negligence; or
• the employee acts in a way which renders the maintenance of the employment impossible for the employer.

The employment of those employees who are incapacitated to work due to sickness, caring for a sick child, or a relative, may be terminated by the employer with notice; however, the notice period will only commence once the employee returns to work.

Further, the approval of the trade union or the works council shall be obtained in case of terminated employees who are members thereof.

Grounds for a Wrongful Dismissal Claim

The Labour Code contains a non-exhaustive list of cases that constitute grounds for a claim of wrongful dismissal. The most common cases for wrongful dismissal claims are the following:

• dismissal without mandatory reasoning, or the reasoning does not comply with the legal requirements;
• dismissal in breach of the prohibition on dismissal (eg, dismissal of a pregnant woman);
• abuse of rights; and
• breach of the requirement of equal treatment.

In addition to the list in the Labour Code, the practice has developed, determining for example, what constitutes an abuse of rights, or what constitutes inadequate reasoning. It is therefore essential to be familiar with the practice and case law of the Hungarian courts in order to determine whether a dismissal is wrongful, and thus what consequences may be applied.

Consequences of Wrongful Dismissal Claim

As a consequence of a wrongful dismissal, the employer shall pay compensation for damages resulting from the wrongful termination of an employment relationship. This compensation for loss of income may not exceed 12 months’ absentee pay. In specific cases, the employee is also entitled to severance pay in addition to compensation. On the other hand, the employee can also request the court to reinstate the employment relationship, if it was terminated in violation of equal treatment, prohibition on dismissal (pregnancy, maternity/paternity leave, etc), or in case the employer did not obtain the approval of a trade union, if necessary. The employee must be compensated for any lost wages, other benefits and for damages in excess in this case too.

The Labour Code sets out the requirement of equal treatment as a general principle, in particular with respect to remuneration. However, the detailed rules and claims are laid down in a separate law.

Grounds for Claims on Anti-discrimination Grounds

The cases for claims on anti-discrimination grounds are the following.

• Direct discrimination is seen in any provision which has the effect of treating a person or group less favourably based on their sex, race, nationality, disability, religion or belief, etc, (hereinafter “protected characteristics”).
• Indirect discrimination is seen in any provision which does not constitute direct discrimination and appears to comply with the requirement of equal treatment, however, it places a person or group in a significantly more disadvantaged position based on their protected characteristics than another person or group.
• Harassment is conduct of a sexual or other nature that is offensive to human dignity and is related to a protected characteristic and has the purpose or effect of creating an intimidating, hostile, humiliating, degrading, or offensive environment towards a person.
• Unlawful segregation is any provision that, without being expressively permitted by law, segregates a person or a group from another person or group in a comparable situation on the basis of the protected characteristics.
• Retaliation is any provision that causes, is intended to cause, or threatens to cause legal harm to a person who objects to, initiates, or participates in proceedings on the grounds of a breach of non-discrimination.

Several cases are identified where the requirement of equal treatment in employment law may particularly be breached. Most common cases relate to access to employment, in particular in the advertising of vacancies, recruitment, terms and conditions of employment; to the establishment and termination of an employment relationship; to the application for or taking of paternity leave, parental leave, etc.

Burden of Proof

In proceedings for breach of the requirement of equal treatment, the aggrieved party must establish the probability that (i) the person or group has suffered a disadvantage, (ii) the person or group who have suffered damage had or is believed to have had, at the time of the infringement, a protected characteristic.

In case this probability is established by the aggrieved party, the burden of proof is on the party alleged to have committed the infringement to prove that the circumstances established by the aggrieved party did not exist, or that the requirement of equal treatment has been complied with or was not required to be complied with in relation to the legal relationship in question.

Applicable Damages/Relief

The Labour Code states that the remedy for anti-discrimination must not entail a violation or impairment of the rights of other employees. In case of termination of employment based on discrimination, the same consequences apply as in the case of wrongful dismissal (see 8.1 Wrongful Dismissal). Also, there is a special type of compensation for damages applicable for the infringement in civil rights cases.

If an official procedure is initiated before the relevant authority, and it has established a violation of the requirement of equal treatment, it can:

• order the cessation of the infringing situation;
• prohibit the future exercise of the infringing conduct;
• order the publication in the public interest of the final decision;
• impose a fine; or
• impose other sanctions provided for by a specific law.

Digitalisation of Employment Disputes

In employment disputes, electronic communication with the court or in submissions during litigation is mandatory, save for the case when the employee submits the claim without legal representation. In addition, the possibility of remote hearings via video is also available in Hungarian courts, although the system is not yet set up in every court. Remote hearings can be used for hearing a party, or other person in the proceedings, for the hearing of witnesses, experts and conducting an inspection. However, in civil cases, remote hearings are difficult to conduct and are subject to special conditions if the person to be heard is abroad, making them practically impossible.

Specialised Employment Forums

In Hungary, specialised labour courts ceased to exist in 2020. Since then, employment-related claims have been adjudicated by the competent County Court.

Collective Enforcement of Claims

There are two forms of action for the collective enforcement of claims in Hungary: public interest litigation and class actions. These procedures are regulated by the Act CXXX of 2016 on the Code of Civil Procedure and certain sectoral laws.

Class Actions

A class action is a means of enforcing an aggregated private interest. The basis for this action is the decision and explicit declaration of the entitled individuals to have their claims adjudicated jointly in a single lawsuit.

Class actions can only be initiated in certain cases (the law allows it only in three instances, one of them being certain labour disputes), enabling a minimum of ten plaintiffs to assert their claims against the same defendant in a single procedure rather than in separate proceedings, provided that the facts on which the claims are based are substantially the same for all the plaintiffs.

Representations in Court

As a general rule, legal representation is not mandatory in labour disputes, and this also applies to the first instance, second instance and retrial phases. However, in case of class actions, legal representation is mandatory.

The basic types of alternative dispute resolution are available in Hungary, namely negotiation, mediation, arbitration and conciliation. However, the law expressly excludes arbitration in labour disputes. Mediation is one of the most common alternative dispute resolution methods in the field of labour law, however, statistics show these cases are still rare as opposed to, for example, family disputes or other civil law disputes.

Mediation is available during the pendency of the court proceedings, depending on the willingness of the parties. If the parties reach an agreement with the help of a mediator while the litigation is ongoing, they can request court approval of the agreement. A court-approved agreement has the same binding effect as a court ruling.

Under the rules of the Act CXXX of 2016 on the Code of Civil Procedure, unless otherwise provided by law, the losing party shall reimburse the prevailing party’s litigation costs. During court proceedings, a party may choose to claim the percentage-based attorney’s fee calculated in accordance with the relevant decree, based on the value of the claim, or the fee and costs stipulated in the attorney-client engagement letter for the calculation of litigation costs.

In justified cases, the court may reduce the amount of attorney’s fees claimed, whether based on the attorney-client engagement letter or the percentage rule, if the court finds that the fee is disproportionate to the legal services provided by the attorney.