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Source and scope of regulations - 2019    

  • Labour Code [LC], Act I of 2012 in force since July 1st, 2012 (hereafter: "LC")
    Date: 13 Dec 2011 (view in NATLEX »)
  • Act on Equal Treatment and Promotion of Equal Opportunities, No CXXV of 2003 (hereafter:"ETA Act")
    Date: 28 Dec 2003; view website » (view in NATLEX »)
Size of enterprises excluded (≤): 20
  • • Exclusion only applicable to collective dismissals: see definition of collective dismissal in sec. 71 (1) LC. The rules on individual dismissals and all other rules apply to all enterprises.

Workers' categories excluded:
  • • The scope of the LC includes exclusively the non-profit and for-profit sector. Employment at public entities are governed by a set of specific acts.

Types of employment contracts - 2019    

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Maximum probationary (trial) period: 3 month(s)

  • • Pursuant to sec. 45(5) LC, the trial period may not exceed 3 months from the date of commencement of the employment relationship. In the event that a shorter trial period has been stipulated, the parties may extend the trial period once. In either case, the duration of the trial period may not exceed three months. According to sec. 50(4) and 277(2) of the LC, a collective agreement may extend the term of the trial period, but it still may not exceed six months. Such an extension may be included in a works agreement as well provided that the employer is not covered by the collective agreement, or there is no trade union at the employer with entitlement to conclude a collective agreement (LC, sec. 268(1)).

Fixed term contract (FTC):
  • FTC regulated: Yes
  • Valid reasons for FTC use: no limitation
    • The LC does not require any specific reason for resorting to a FTC for the first time. However, a fixed-term employment relationship may be extended, or another fixed-term employment relationship may be concluded within six months from the time of termination of the previous one only upon the employer’s legitimate interests. The agreement may not infringe upon the employee’s legitimate interest (LC, sec. 192(4)).
  • Maximum number of successive FTCs: no limitation
    • In the previous Labour Code sec. 79 (4) provided that a contract renewed without a valid reason ("rightful interest") on the part of the employer and aimed at compromising the interest of the employee shall be deemed established for an indefinite duration. This provision has been repealed in the new Labour Code.
  • Maximum cumulative duration of successive FTCs: 5 year(s)
    • The duration of a fixed-term employment relationship may not exceed five years, including the duration of an extended relationship and that of another fixed-term employment relationship concluded within six months of the termination of the previous fixed-term employment relationship.

      Where an employment relationship is subject to official authorization, it may only be concluded for the duration specified in the authorization. If the authorization is extended, the duration of the new fixed-term employment relationship may exceed five years together with the duration of the previous employment relationship. (LC, sec. 192(2)(3))
  • % of workforce under FTC: 8.7 %
    • Source: Central Statistical Office (Hungary), for the year 2017.
      The figure refers to the percentage of employee with a contract of limited duration (= temporary job) of total number of employee aged 15-74 years.

      Figures are based on the following definition:
      "A job may be considered temporary if employer and employee agree that its end is determined by objective conditions such as a specific date, the completion of a task or the return of another employee who has been temporarily replaced (usually stated in a work contract of limited duration). Typical cases are: (a) persons with seasonal employment; (b) persons engaged by an agency or employment exchange and hired to a third party to perform a specific task (unless there is a written work contract of unlimited duration); (c) persons with specific training contracts."

Substantive requirements for dismissals (justified and prohibited grounds) - 2019    

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Obligation to provide reasons to the employee: Yes
  • Sec. 66(1) LC provides that "employers are required to justify their dismissals". However, there are various exceptions to this principle.

Valid grounds (justified dismissal): worker's conduct; economic reasons; worker's capacity
  • • Pursuant to sec. 66(2) of the LC in connection with his/her ability, his/her behavior in relation to the employment relationship or with the employer's operations. No justification shall be attached to the dismissal if the employee qualifies as a pensioneer (LC, sec. 66(9)) or as an executive employee (LC, sec. 210(1)b)).

    • Pursuant to sec. 66(8) of the LC the termination of an unfixed term employment contract by the employer can be justified
    a) if the employer undergoes liquidation or bankruptcy proceedings; or
    b) for reasons related to the employee’s ability; or
    c) if maintaining the employment relationship is no longer possible due to unavoidable external reasons.
    No justification shall be attached to the dismissal if the employee qualifies as an executive employee (LC, sec. 210(1)b)).

    • The employer is not required to give reasons for terminating any employment relationship without notice during the trial period (LC, sec. 79(1)a)) or, in case of fixed-term employment relationships, if the employer pays the wage for the dismissed employer for twelve months, or if the time remaining from the fixed period is less than one year, for the remaining time period (LC, sec. 79(1)b), (2)).

Prohibited grounds: marital status; pregnancy; maternity leave; race; colour; sex; sexual orientation; religion; political opinion; social origin; nationality/national origin; age; trade union membership and activities; disabilities; financial status; performing military or civil service; language; parental leave; state of health; ethnic origin
  • Sec. 8 ETA provides that "All dispositions as a result of which a person or a group is treated or would be treated less favourably than another person or group in a comparable situation because of his/her
    a) sex,
    b) racial origin,
    c) colour,
    d) nationality,
    e) origin of national or ethnic minority,
    f) mother tongue,
    g) disability,
    h) state of health,
    i) religious or ideological conviction,
    j) political or other opinion,
    k) family status,
    l) motherhood (pregnancy) or fatherhood,
    m) sexual orientation,
    n) sexual identity,
    o) age,
    p) social origin,
    q) financial status,
    r) part-time nature or definite term of the employment relationship or other relationship aimed at work,
    s) membership in an organisation representing employees’ interests,
    t) any other status, characteristic feature or attribute
    are considered direct discrimination."

    Sec. 21 EA provides that "It is considered a violation of the principle of equal treatment in particular if the employer inflicts direct or indirect negative discrimination upon an employee, especially when the following dispositions are defined or applied: (...) c) in establishing and terminating the employment relationship or other relationship related to work;(...).

    - In addition, pregnancy, parental leave; a leave of absence taken without pay for caring for a child (Sections 66(3), 128 and 130 LC).

    -Sec. 271(2) LC provides that no employee shall be dismissed on a ground of being a member of any trade union.

Workers enjoying special protection: workers' representatives; pregnant women and/or women on maternity leave; workers with family responsibilities; workers performing military/alternative service
  • • The LC prohibits the dismissal of specific groups of workers (during pregnancy; during maternity or parental leave, during reserve military service, during the first six month of treatment related to human reproduction procedure) (LC, sec. 63(3)).

    • The LC does not completely exclude but restricts the opportunity of the employer to dismiss other specific groups of workers,
    - by restricting the valid grounds or requiring the employer to offer another, adequate job before the dismissal, if possible (e.g. in case of workers with family responsibilities, workers with disabilities, elderly workers – LC, sec. 66(4)-(7))
    - by extending the period of notice (in case of sick employees or workers taking care of sick/disabled children or other relatives – LC, sec. 68(2))
    - by requiring a consent of the supreme body of workers’ representatives to the validity of the dismissal of specific workers’ representatives (LC, sec. 260(3), 273; Act XCIII of 1993 on Labour Safety, sec. 76(3)).

    • Workers are protected against discriminatory dismissals on a set of protected characteristics including e.g. pregnancy, national or ethnic origin, colour, race, religion, political opinion, disability, health condition, social situation, adherence to trade union, part-time or fixed-term job (LC, sec. 12, ETA Act, sec. 8).

Procedural requirements for individual dismissals - 2019    

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Notification to the worker to be dismissed: written

  • • Sec. 22(3) of the LC

Notice period:
  • • Sec 69 LC provides for a notice period of 30 days, which, in case of dismissal by the employer, shall be extended by:
    * 5 days after 3 years of service;
    * 15 days after 5 years of service;
    * 20 days after 8 years of service;
    * 25 days after 10 years of service;
    * 30 days after 15 years of service;
    * 40 days after 18 years of service;
    * 60 days after 20 years of service.

    By agreement of the parties the notice periods referred to in Subsections (1)-(2) may be extended by up to six months (LC, sec. 68(3)). The period of notice for the termination of a fixed-term employment relationship by notice may not go beyond the fixed term. (LC, sec. 68(5))
    • tenure ≥ 6 months
      • 30 day(s).
    • tenure ≥ 9 months
      • 30 day(s).
    • tenure ≥ 2 years
      • 30 day(s).
    • tenure ≥ 4 years
      • 35 day(s).
    • tenure ≥ 5 years
      • 45 day(s).
    • tenure ≥ 10 years
      • 55 day(s).
    • tenure ≥ 20 years
      • 90 day(s).

    Pay in lieu of notice: No

    Notification to the public administration: No

    Notification to workers' representatives: No

    • • See above: protection of workers’ representatives against dismissals.

    Approval by public administration or judicial bodies: No

    Approval by workers' representatives: No

    • • See above: protection of workers’ representatives against dismissals.

    Procedural requirements for collective dismissals for economic reasons (redundancy, retrenchment) - 2019    

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    Definition of collective dismissal (number of employees concerned):
    At least:
    1) 10 employees in undertakings with 20 to 99 employees;
    2) 10 % of the employees in undertakings with 100 to 299 employees;
    3) 30 employees in undertakings with at least 300 employees within 30 days.

    • Sec. 71 (1) LC

    Prior consultations with trade unions (workers' representatives): Yes

    • Sec. 72(1) LC

    Notification to the public administration: Yes

    • Sec. 72(5) LC and Sec. 74 LC

    Notification to workers' representatives: Yes

    • Sec. 72(1) LC

    Approval by public administration or judicial bodies: No

    Approval by workers' representatives: No

    Priority rules for collective dismissals (social considerations, age, job tenure): No

    • No criteria listed. Selection criteria are mentioned in sec. 72(2) LC as one of the elements to be communicated to the worker's representatives during the consultation process.

    Employer's obligation to consider alternatives to dismissal (transfers, retraining...): Yes

    • • Sec. 72(4) of the LC: potential ways of avoiding of dismissals or possible tools of mitigating of the negative consequences are mandatory topics in the course of the consultation with the workers’ representatives.

    Priority rules for re-employment: No

    Severance pay and redundancy payment - 2019    

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    Severance pay:
    • Sec. 77 LC:
      Severance pay - following a dismissal (including on economic grounds) or the dissolution of the employer - varies according to the length of service, as follows:
      * 1 month's pay for at least 3 years of service;
      * 2 months' pay for at least 5 years of service;
      * 3 months' pay for at least 10 years of service;
      * 4 months' pay for at least 15 years of service;
      * 5 months' pay for at least 20 years of service;;
      * 6 months' pay for at least 25 years.

      • The amount of severance pay:
      a) after at least 3 years of service, shall be increased by one month’s pay,
      b) after at least 10 years of service, shall be increased by two month’s pay,
      c) after at least 20 years of service, shall be increased by three month’s pay, if the employment relationship is terminated inside the five-year period before the date when the employee reaches the age limit for old-age pension. (LC, sec. 77(4)).

      • The employee shall not be entitled to receive severance pay if: a) he/she is recognized as a pensioner at the time when the notice of dismissal is delivered or when the employer is terminated without succession, or b) he/she is dismissed for reasons in connection with his/her behavior in relation to the employment relationship or on grounds related to the employee’s ability but other than health reasons. (LC, sec. 77(5)).
    • tenure ≥ 6 months: 0 month(s)
    • tenure ≥ 9 months: 0 month(s)
    • tenure ≥ 1 year: 0 month(s)
    • tenure ≥ 2 years: 0 month(s)
    • tenure ≥ 4 years: 1 month(s)
    • tenure ≥ 5 years: 2 month(s)
    • tenure ≥ 10 years: 3 month(s)
    • tenure ≥ 20 years: 5 month(s)
    Redundancy payment:
    • • No specific redundancy payment. Severance pay covers any dismissal for economic reasons (sec. 77 LC).
    • tenure ≥ 6 months: 0 month(s)
    • tenure ≥ 9 months: 0 month(s)
    • tenure ≥ 1 year: 0 month(s)
    • tenure ≥ 2 years: 0 month(s)
    • tenure ≥ 4 years: 1 month(s)
    • tenure ≥ 5 years: 2 month(s)
    • tenure ≥ 10 years: 3 month(s)
    • tenure ≥ 20 years: 5 month(s)

    Avenues for redress (penalties, remedies) and litigation procedure for individual complaints - 2019    

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    Compensation for unfair dismissal - free determination by court: No

    • • Sections 82 and 83 LC
      The employer shall be liable to provide compensation for damages resulting from the wrongful termination of an employment relationship. In addition, the employee is entitled to severance pay as well, if: a) his employment relationship was wrongfully terminated by means other than notice; or b) he did not receive any severance pay at the time his employment relationship was terminated.

      In lieu of Subsections compensation described above, the employee may demand payment equal to the sum of his monthly pay due for the notice period when his employment is terminated by the employer.

      At the employee’s request the court shall reinstate the employment relationship:
      a) if it was terminated in violation of the principle of equal treatment;
      b) if it was terminated in violation of statutory protection against dismissals concerning specific workers’ groups; (...)
      e) if the employee successfully challenged the termination of the employment relationship by mutual consent or his own legal statement therefor.

      • As regards entitlements arising after the employment relationship was reinstated in connection with the duration of employment, the time between the termination (cessation) of the employment relationship and the day of reinstatement shall be regarded as time spent in employment. The employee shall be compensated for any lost wages, other benefits and for damages in excess thereof. The employee’s absentee pay shall be taken into consideration as lost wages.

    Compensation for unfair dismissal - Are there legal limits?: Yes

    Compensation for unfair dismissal - Legal limits (ceiling in months or calculation method):
    Compensation (in lieu of reinstatement): max. 12 months' pay

    • Sec. 82 (2) LC

    Reinstatement available: Yes

    • • Sec. 83 of the LC, see in detail above.

    Preliminary mandatory conciliation: No

    • • However, the parties can resort to extra-judicial conciliation provided it is so stipulated in a collective or an individual agreement (sec. 288 of the LC). However, such an agreement may have no effect on the time limits for asserting workers’ rights specified in section 287 of the LC.

    Competent court(s) / tribunal(s): labour court; administrative body

    • • Administrative and labour courts have jurisdiction in the first instance over disputes arising from the employment relationship. (Sec. 20(2) of Act CXXX of 2016 on the Code of Civil Procedure). Appeals are heard by tribunals (in every county); revision of final judgements of tribunals are heard by the Kúria (Act CLXI of 2011 on the Organization and Administration of the Courts, sec. 21(1), 24(1)).

    Existing arbitration: No

    • • No statutory provision. Arbitration mechanisms are provided by private entities, and can be used on a voluntary basis.

    Source of additional information - 2019    

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