The new Hungarian labour code

Posted on 2nd January, 2012

Estimated reading time 3 minutes

A new labour code (the “New Code”) is due to come into force on July 1, 2012.  The New Code makes changes in a number of areas including protection from dismissal and working hours and allowances.

The main provisions of the New Code are described below.

Protection against dismissal

The New Code significantly reduces the protection available to employees on maternity leave and employees approaching retirement age and permits the termination of their employment in certain circumstances.

The New Code continues to protect pregnant employees, employees on maternity leave, employees on unpaid childcare leave, employees undergoing treatment related to human reproduction (“IVF”) and army service volunteers.  However, the period of protection for employees undergoing IVF is reduced to 6 months.

Employees’ representation

Under the New Code the president of the workers’ council and workers’ council members are entitled to prescribed amounts of time off in respect of their workers’ council duties.

The New Code provides that the number of trade union officers entitled to special labour law protection depends on the average size of the employer’s workforce in the preceding calendar year.

Additionally special protection is also available to one other employee, as designated by the trade union’s supreme body.

Requirement of equal treatment

The New Code requires that the principle of equal treatment must be observed in employment relationships, particularly with regard to the issue of remuneration.  The New Code, like the current law, requires that a number of factors must be taken into consideration when determining an employee’s remuneration.

Under the New Code employers will be entitled to pay different wages to employees employed in different premises doing the same job.  However, this is dependent on criteria such as the rate of unemployment or average income in the region in which the other premises are located.

The person exercising employer’s rights

According to the current law, if an employee is dismissed by an unauthorised person the termination of the employment is unlawful, even if the termination takes place on legitimate grounds.  The New Code permits such a dismissal to be treated as lawful if an authorised person approves the ‘unlawful’ dismissal.  The New Code is silent as to whether the approval must be given within a set timeframe.

Release from work

If an employee is guilty of misconduct the employer cannot suspend the employee under current legislation.  However, suspension during the period in which the misconduct is being investigated is permitted.

Working hours and allowances

There are a number of changes to working hours and allowances and these include provisions in relation to the employer changing the hours an employee is due to work, requirements to work on Sundays and Public Holidays and the wage supplements employees are entitled to receive in addition to their salary.

Unlawful termination

Under the current rules there is no upper limit for damages payable by the employer in a case of unlawful termination of employment.  The New Code specifies an upper limit of damages equivalent to 12 month’s salary.

For further information or to discuss any of the issues raised, please contact Jaroslav Skubal, Kinga Zempléni or Tereza Erényi at +420 221 430 111.