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The essence and functioning of European Works Councils

Employment, labour law, News / / , , , , ,

Reading time: 7 minutes

The role of works councils regulated by the Labor Code is well known to many domestic companies, as employees are entitled to elect a works representative or works council if the number of employees reaches a certain threshold. The works council is a kind of representative body for employees, whose main task is to monitor compliance with the rules governing employment relationships. In performing this task, the works council is entitled to request information and consultation, and in certain cases (e.g., TUPE, collective redundancies, other employer measures affecting a larger group of employees), the employer is obliged to involve the works council, provide it with appropriate information and, where appropriate, seek its opinion.

Many companies operate not only in one but in several European Union countries. In order to ensure that the role and importance of local works councils is not diminished, the EU has provided for the establishment of so-called European works councils in cases where companies have a certain level of presence in the EU.

In the following article, we provide a comprehensive overview of the concept and purpose of European works councils, when companies are required to ensure the election of a European works council for their employees, and the basic functioning of such councils. We will also discuss future, already known changes to the regulations governing European works councils.

The concept and purpose of the European Works Council

The essence of the European Works Council is to ensure the right of employees of Community-level companies (or groups of companies, hereinafter collectively referred to as “companies”) to information and consultation on so-called transnational, international issues. In this context, it is important to note that a Community-level company is defined as a company which

employs at least 1,000 employees through its companies in the Member States and

has employees in at least two Member States

it employs at least 150 employees in each Member State.

Any issue that affects a Community-scale company as a whole, or at least two of its establishments or undertakings belonging to its group of companies in two different Member States, is considered transnational (and furthermore, under Hungarian law, any issue that has a significant impact on employees, regardless of the number of Member States concerned). It is clear, for example, that a reorganization affecting several organizations of a group of companies operating in the European Union, or, for example, (group-level) collective redundancies, may be considered a transnational issue, in which case the European Works Council must be informed and consulted in accordance with the law before specific decisions are taken.

Initiating the establishment of a European Works Council

If a company operating within the European Union qualifies as a Community-scale company on the basis of the above, on the initiative of the central management or at the request of at least 100 employees employed in at least two undertakings or establishments in at least two Member States or at the request of the bodies representing these employees, negotiations must be initiated to establish a European Works Council or to set up negotiations for the purpose of informing and consulting employees.

The role and prominent position of the special negotiating body

In order to initiate and conduct negotiations, a special negotiating body must first be established, whose task is to consult and reach agreement with the central management on the procedure for informing and consulting with the works council or employees.

Both the European Union directive on European works councils and the Hungarian law transposing it lay down rules for the election and functioning of the special negotiating body, which, although they leave many questions unanswered, are very similar to those for the election of local works councils.

The mission of the special negotiating body is therefore to agree with the central management on the tasks, powers, composition and term of office of the European Works Council, or to establish a procedure other than the establishment of a European Works Council that allows for the information and consultation of employees.

Functioning of the European Works Council

The functioning of the European Works Council is determined by a written agreement concluded by the parties following successful negotiations between the central management and the special negotiating body.

It should be noted that in many cases negotiations often fail to produce results. However, unsuccessful negotiations must not result in infringement of employee’s rights. For this reason the legislation contains rules on the functioning of the European Works Council.

The model rules governing the operation of European works councils do indeed bear many similarities to the rules governing Hungarian works councils (method of election, active and passive voting rights, termination of mandate, meetings, etc.).

Review

Over the years, a number of difficulties of interpretation and regulatory gaps have arisen in the practice of law enforcers in relation to the rules currently in force for European works councils, as confirmed by the European Commission.

For those of our clients who are in the process of electing members to the special negotiating body, we see that there are a number of practical issues that are not covered by either EU or domestic regulations. In such cases, we strive to provide advice on the specific implementation, keeping in mind the general purpose of the regulations.
Of course, practical challenges have also been identified in other Member States, which is why the directive has been revised and supplemented.

Under the new regulations, the concept of transnational issues has been defined more broadly (similar to Hungarian legislation), the legislation seeks to ensure gender balance through specific provisions, and the special negotiating body will be able to involve experts (e.g. legal and economic experts) if necessary, furthermore, Member States must introduce effective provisions to enforce the rules on European Works Councils and to sanction violations thereof.

As a result of the review, Member States will have to transpose and implement the necessary amendments by 1 January 2028. However, given that, based on our practical experience, the establishment of a European Works Council requires significant coordination on the part of all Member States and member companies involved, it may be advisable to take the amendments to the directive into account in the meantime in order to ensure adequate preparation and proper functioning.

Photo source: pexels.com, Jonas Horsch

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Changes to Occupational Safety Rules at the Beginning of the Year

Employment, labour law, News / / , , , , , ,

Reading time: 7 minutes

As we reported in our extraordinary newsletter, Act XCIII of 1993 on Labour Safety (“Labour Safety and Health Act”) introduces new rules as of 1 January 2026 for employer organizations regarding the provision of conditions for occupational safety and health. In this article, we summarize the requirements necessary to comply with these obligations.

Principles and requirements

The Labour Safety and Health Act sets out in detail the requirements that employers must take into account to ensure occupational safety and health. In this context, employers must strive to avoid hazards, assess risks that cannot be avoided, and combat hazards at their source. Furthermore, undertakings are required to take human factors into consideration when designing workplaces and selecting work equipment and work processes, to apply the achievements of technical progress, to replace hazardous solutions with less hazardous ones, and to provide appropriate instructions to employees. Companies must develop a coherent and comprehensive prevention strategy covering work processes, technology, work organization, working conditions, social relationships, and the effects of workplace environmental factors.

The role of risk assessment

One of the employer’s most important obligations is the preparation and maintenance of a risk assessment, including risk management and the determination of preventive measures. The assessment is carried out by a specialist, who identifies the hazard sources, determines the group of employees exposed to risks, and assesses the nature of the hazards and the extent of exposure. The risk assessment must be carried out before the commencement of the activity and reviewed when justified—at least every five years. Justifiable cases include changes in technology, work equipment, the method of work, or the scope of the employer’s activities. A risk assessment is likewise justified and required if a work accident or occupational disease occurs in connection with deficiencies in the applied activity, technology, work equipment, or method of work. These tasks qualify in all cases as occupational safety and occupational health professional activities and may only be performed by persons with the prescribed qualifications.

Persons authorized to carry out risk assessments

The Labour Safety and Health Act also contains differentiated rules regarding the qualifications required to carry out risk assessments and to define the occupational safety and occupational health content of the prevention strategy, with particular regard to the hazard class and the number of employees. The detailed rules are set out in Decree 5/1993. (XII. 26.) MüM (hereinafter: “MüM Decree“), which classifies employers into hazard categories and stipulates the qualifications required to perform the tasks accordingly.

In the case of employers classified in hazard class III with a maximum of 50 employees (e.g., labour market service providers, IT infrastructure providers, and wholesale and retail trade in general), there has been no change since 1 July 2025, in accordance with the MÜM Decree, the activity may also be carried out by a person holding a specialist medical qualification in occupational medicine, industrial medicine, occupational hygiene, public health and epidemiology, preventive medicine and public health, or by a person holding a qualification as a public health or epidemiological inspector or supervisor.

As of 1 January 2026, a new rule provides that, for employers employing at least 50 employees, the occupational safety content of the prevention strategy must be developed by a person with higher-level occupational safety qualifications in the case of activities classified under Hazard Classes I and II pursuant to the MüM Decree, such as paper manufacturing, pharmaceutical manufacturing, machinery manufacturing, computer, electronic and optical product manufacturing, and tobacco product manufacturing.

Also introduced as of this year is the rule that, for activities classified under Hazard Class I pursuant to the MüM Decree—such as paper manufacturing, pharmaceutical manufacturing, and machinery manufacturing—the preparation of the risk assessment at employers employing at least 50 employees must be carried out by a person with higher-level occupational safety qualifications.

Special rules for teleworking

In the case of teleworking, the employee performs work for part or all of their working time at a location separate from the employer’s premises. In such cases, work may be performed using equipment provided by the employer or, by agreement, by the employee. Where equipment is provided by the employee, the employer must, as part of the risk assessment, ensure that the work equipment is in a safe condition that does not endanger health, while maintaining this condition is the employee’s responsibility.

If work is not performed using IT equipment, it may only be carried out at a remote workplace that has been preliminarily assessed by the employer as appropriate from an occupational safety perspective, and the employer must regularly monitor working conditions and compliance with the applicable rules.

The situation differs when work is performed using IT equipment. In such cases, the employer is not required to conduct a risk assessment; it is sufficient for the employer to inform the employee of the rules for ensuring safe and healthy working conditions and to oblige the employee to comply with these rules, and the employer may obtain a declaration from the employee acknowledging this obligation. The employer may keep a register of work equipment. The employee is required to select the place of remote work in compliance with these conditions. Compliance with the rules may, of course, be monitored remotely by the employer through the use of IT tools. Although an individual risk assessment is not required in this case, proper employee information and regular monitoring remain part of the employer’s occupational safety obligations.

Employer obligations and liability

The employer’s ongoing responsibility does not end with the preparation of documentation. Employers must ensure proper information and instruction for employees, regularly monitor working conditions and compliance with regulations, provide safe work equipment, and promptly investigate irregularities and reports. In addition, employers must ensure the proper usability and condition of personal protective equipment, as well as the lawful investigation of work accidents and occupational diseases.

Compliance with occupational safety regulations is also of outstanding importance from the perspective of employer liability for damages, as under Act I of 2012 on the Labour Code the employer bears objective liability for damage caused to employees in connection with the employment relationship. To be exempted from liability, the employer must prove that the damage was caused by a circumstance beyond its control that it could not have foreseen and that it was not reasonably expected to prevent or mitigate. Under this strict regulatory framework, any failure to comply with occupational safety regulations is necessarily assessed to the detriment of the employer. For these reasons, it is particularly important that employers always have up-to-date occupational safety measures in force and that these are properly and verifiably documented.

Summary

Occupational safety regulations make it clear that ensuring occupational safety and health is not merely a formal obligation, but one of the most important elements of employer responsibility. Failure to properly prepare and regularly review the risk assessment and prevention strategy, as well as failure to actually comply with occupational safety requirements, entails not only regulatory sanctions but also significant compensation risks, given the employer’s objective liability. Our firm is pleased to assist in preparing for regulatory changes and in establishing operations that comply with applicable legislation.

Photo source: pexels.com, suntorn somtong

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The most important things to know about mothers and employees with young children returning to work

Employment, labour law, News / / , , , , , , , ,

Reading time: 5 minutes

The birth of a child is a significant event in a human ‘s life, which also has a major impact on the professional and work-related life of employees. Given the importance of becoming a parent, the Hungarian labour law contains numerous provisions aimed at promoting the proper development and care of children and protecting mothers and parents with young children.

According to Act I of 2012 on the Labor Code („Labour Code“), mothers are entitled to 24 consecutive weeks of maternity leave (CSED) and parents of young children (until the child reaches the age of 3) are entitled to unpaid leave (GYED, GYES) for the purpose of caring for their children.

During the care and upbringing of a child, there may come a point when the desire to return to work arises. However, it is important to note that during the parent’s absence, numerous changes may occur in the employee’s personal circumstances and in the employer’s organization, because of which the employee’s previous employment conditions may no longer be guaranteed or may no longer be appropriate. The Labor Code contains detailed rules for reconciling the differing interests of employees and employers and for protecting social objectives. In this article, we summarize the most important rules related to this topic.

General rules applicable in all cases

Announcement of return

According to the Labor Code, the employee may specify the date of his/her return, but when indicating the date, to comply with the obligation to cooperate, the employer must be given at least 30 days’ notice. Therefore, the employee must give notice of his/her intention to end unpaid leave taken for the purpose of caring for a child at least 30 days before the end of the leave.

Wage adjustment

Given the wage increases that occur during the employee’s absence, a situation may arise where the wages of the employee with young children are less than their colleagues. This situation clearly violates the requirement of equal treatment, thus the Labor Code stipulates that the employer is obliged to make an offer to adjust the wage after the absence has ended. For the purposes of making an offer, the average annual wage increase applied by the employer to colleagues working in the same position as the employee must be considered. If there are no other employees in the same position, then the average annual wage increase implemented by the employer on a company level shall be the reference point.

Granting leave

The entire duration of maternity leave and the first six months of unpaid leave taken for the purpose of caring a child are considered leave-entitling periods, meaning that the employee’s leave entitlement accrues even during his/her absence. As a general rule, the employer must grant this accumulated leave within 60 days of the employee’s return (typically before the employee actually returns to work).

Changes in terms and conditions of employment

Generally, the employer is obliged to employ the employee upon his/her return in accordance with the original conditions (e.g., working hours, job description, place of work). However, it is easy to see that during the employee’s absence, changes may occur on both sides (e.g., the employee relocates, termination of his/her position), which would make employment (under the same conditions) no longer possible or would cause the parties to temporarily deviate from it (e.g., part-time employment). The parties may, of course, amend any terms and conditions or terminate the employment relationship by mutual agreement, but in certain cases and under certain conditions, they may also be entitled to do so unilaterally.

Modification of employment conditions upon the request of the employee with young children

In order to facilitate the appropriate development of young children, the Labor Code provides employees with young children with the opportunity to request changes to their employment conditions (e.g., place of work, remote work, part-time work) under certain conditions.

In the context of changes to employment conditions, we would like to point out that employers are often subject to a prior notification obligation, i.e. they must inform employees about the availability of part-time and remote working positions.

In certain cases, employers are obliged to comply with requests from employees with young children without consideration, while in other cases, the feasibility of the request and its acceptability by the employer may be examined.

The employer is obliged to respond to requests that are subject to employee justification or employer discretion within 15 days. If the employer fails to do so or rejects the request without justification, the employee has the right to challenge the decision before a court, so it is advisable for employers to prepare in advance for the return and employment of parents with young children and to establish appropriate procedures.

Special rules relating to termination of employment

Employees are forbidden to be dismissed during pregnancy, maternity leave, paternity leave, parental leave and leave of absence taken without pay for caring for a child. After the employee’s return, this absolute prohibition no longer applies, but until the child reaches the age of three, the employer has limited rights to terminate the employee’s employment in certain cases. Termination on grounds related to the employee’s abilities or the employer’s operations (e.g., cessation of the employee’s position) may only be given if there is no other suitable vacant position or if the employee has rejected an offer of the position. It is also important to note that the fact that the employer filled the employee’s position by a way of hiring another employee in the meantime does not in itself constitute a legal basis for termination of employment, as the employee has the right to be employed in their original position. Termination based on conduct may only be given if it meets the requirements for termination without notice.

Summary

Overall, it can be stated that the Labour Code contains numerous restrictions regarding the return to work and employment of mothers/parents with young children in order to take into account the individual circumstances of employees. However, it is important to emphasize that the interests of employees are not exclusively protected, as the legislator considers the economic aspects of employers in many respects.

Photo source: pexels.com, Yan Krukau

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General obligations of the employer in the event of a change in the employee’s health

Employment, labour law, News / / , , , , , , , , ,

Reading time: 5 minutes

During the course of employment, situations may arise where an employee’s health condition changes, either temporarily or permanently. This may result, for instance, from an accident-related injury, post-surgery rehabilitation, treatment of a chronic illness, or even partial loss of working capacity. In such circumstances, a key question for the employer is to what extent and in what manner they are required to adapt work organisation and working conditions to the employee’s altered health status.

In this respect, the employer bears not only legal but also social responsibility — the way an employer handles changes in employees’ health conditions is a key indicator of responsible employment. However, it is important to define the limits of the employer’s duty to adjust and take appropriate measures, as this obligation may vary depending on the specific case and circumstances (e.g. the employer’s available resources). The following article provides guidance on situations where the employee is still considered fit for work but experiences a change in their state of health.

General Obligations

Pursuant to Act I of 2012 on the Labour Code (hereinafter: the “Labour Code”) and occupational safety regulations, employees may only be employed for work that, in view of their physical constitution, development, and state of health, do not have adverse consequences for them. Furthermore, it is the employer’s fundamental responsibility to ensure that work is performed under safe and healthy conditions that do not pose a risk to the employee’s well-being. This obligation applies throughout the entire duration of the employment relationship and includes continuous assessment. Accordingly, if an employee’s health condition changes over time, the employer is required to take appropriate measures in response to the situation.

In practice, this may involve temporary adjustments (e.g. part-time work, reduction of physical strain) or minor organisational changes (e.g. reassignment of certain tasks, review of working logistics).

Limits of the employer’s obligations – the principle of reasonableness

It is important to emphasise that the employer’s obligation to take measures is not unlimited. According to Section 6 of the Labour Code, which sets out the “principle of reasonableness”, the employer is only required to modify working conditions or reorganise work to the extent that is realistically and fairly expected under the given circumstances — that is, as long as doing so does not impose a disproportionate economic or organisational burden on the employer. The assessment of this obligation must always be based on the specific circumstances of the individual case, considering the employer’s economic and organisational capacity, as well as the nature of the employee’s health-related limitations.

In general, the employer is not required to:

create a new position,

hire additional staff, or

make significant investments

solely to ensure the continued employment of the affected employee.

The case law of the Curia (Supreme Court of Hungary) also confirms that the extent of the employer’s obligation must always be determined by the specific circumstances of the case. For example, if an office employee temporarily cannot type due to a broken hand, the employer is obliged to provide lighter or alternative administrative tasks during recovery but is not required to establish a new position.

The situation differs, however, when a professional driver is subject to a medical opinion imposing (not merely temporary) restrictions on their ability to perform driving duties. In such a case, even by modifying the working conditions, the employee would not be able to perform the essential functions of their role. Considering the principle of reasonableness — as a limitation on the employer’s duty to adapt and take measures — the continued employment of the worker would impose a disproportionate burden on the employer. Therefore, with appropriate justification, the termination of the employment relationship would be considered lawful.

Summary

The employer is required to adjust working conditions to the employee’s (changed) state of health where this is necessary to ensure safe and healthy working conditions. However, this obligation is not unlimited: under the principle of reasonableness set out in the Labour Code, the employer is only required to take measures to the extent that they do not impose a disproportionate burden. Accordingly, the extent of adaptation expected from the employer must always be assessed on a case-by-case basis, considering the specific circumstances and available resources, in order to determine what level of adjustment is reasonable to enable the continued employment of the affected worker. For a lawful and fair procedure, it is advisable to involve the employee, the occupational health physician, and—where necessary—the occupational safety specialist in the decision-making process, and to maintain transparent documentation of the measures taken. This approach ensures not only the protection of the employee’s interests but also the employer’s lawful and compliant operation.

Image source: pexels.com, Karolina Grabowska

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The scope of employer control in assessing liability for damages

Employment, labour law, News / / ,

Reading time: 5 minutes

The concept of employer control is one of the most important aspects of labor law, determining the employer’s liability for damages caused to the employee. Strict rules apply to employer liability under Act I of 2012 on the Labor Code (hereinafter: “ Labour Code“), as the employer is objectively liable for any damage caused to the employee in connection with the employment relationship. The employer may be exempt from liability in two cases. The first is if it can prove that the damage was caused by circumstances beyond its control, which it could not have foreseen and could not have been expected to prevent or mitigate. Another possibility for exemption for the employer is if it can prove that the damage was caused solely by the unavoidable behaviour of the aggrieved party.

This article examines the scope of control relevant to the first exemption option, the definition of which is key to determining liability.

The definition of the scope of control

Liability for damages means that the employer is liable for damage caused to the employee in connection with the employment relationship. Several factors must be taken into account when assessing liability, such as:

  • the employee’s conduct,
  • the working environment provided by the employer, or
  • the working methods used.

In order for the employer to be exempt from liability for damages, it is necessary to examine the circumstances of the damage in order to determine whether they fall within the employer’s scope of control.

The difficulty lies in the fact that the concept of control is not defined in the Labor Code. According to the developed judicial practices, the scope of control refers to the extent to which the company  is able to control and direct the activities of its workers.. This includes all circumstances over which the company has actual influence, and which it must create in order to ensure that the employees have the necessary working conditions and a safe working environment. The scope of control therefore includes all objective circumstances that the employer had any possibility of influencing, including working methods that could lead to an accident.

The scope of control generally includes the following:

  • the place of work,
  • working hours,
  • work equipment
  • working methods,
  • performance of tasks, and
  • related personal conduct,
  • work organization.

The scope of control is not necessarily limited to the company’s registered office or premises, as depending on the circumstances of the specific case, the employer may also be entitled and obliged to create safe working conditions at other locations (e.g. at a construction site managed by the employer or in the case of international transport). so, in certain cases, transport conditions may also fall within the scope of the control.

The importance of the scope of control in relation to accidents

If an employee suffers an accident, it must be classified from both an occupational safety and social security perspective.

  • An accident is considered a work accident if it occurs during or in connection with organized work. For example, if the incident occurs while the employee is traveling, transporting materials, moving materials, cleaning, using organized workplace catering, occupational health services, or other services provided by the employer in connection with their work.
  • Accident at work is a social security category that classifies accidents in terms of entitlement to benefits. An accident at work is an accident that occurs to an employee during or in connection with work performed in the course of their employment, so work accidents generally fall into this category. However, an ccidents that happen to employees while traveling to or from work or their place of residence (accommodation) are also classified as accident at work, but these are not work accidents, but so-called accidents on the journey.

In the event of a work accident, the employer may be liable for damages, in which case the employer is obliged to compensate either the employee for the entire damage or, if the employee contributed to the accident, for part of the damage. The employer is obliged to investigate the work accident; in doing so, it must uncover the circumstances of the accident, such as the condition of the machines and equipment, the availability of protective equipment, and knowledge of and compliance with the rules of work, which are generally considered to fall within the employer’s scope of control. Thus, all circumstances that the employer has control over and that lead to a work accident constitute grounds for employer liability.

Judicial practice

The developed judicial practice is fundamentally very strict and considers all facts and circumstances that the employer had the opportunity to influence to be within the employer’s scope of control.

An extreme individual decision also evaluates the employer’s expectations and instructions in this context:

According to the findings, the truck driver was transporting raw leather and, following his employer’s instructions, spent the night in his truck at a rest stop, where he fell seriously ill after being bitten by an insect. The accident occurred during the employee’s rest period, over which the employer has no control. The court nevertheless ruled that the circumstance causing the damage, i.e., the insect bite, fell within the employer’s scope of control, since the employer had expressly required the vehicle and cargo to be guarded, thereby also giving instructions on how to spend the rest period. The employee thus acted in the employer’s interest even during his rest period. The Supreme Court found that the employer had influence over the conditions, but failed to avoid the circumstances within its control, as a result of which the employee suffered damage, and therefore ruled that the employer was liable for damages.

Summary

The employers’ liability rules established by the Labor Code set strict conditions for exemption in the event of damage, which is why it is extremely important for employers to ensure safe working conditions, take appropriate health and safety measures, periodically reviewing these measures, and, in the event of a work accident, applying corrective mechanisms to prevent further similar accidents. When an accident occurs, it is advisable to carefully document the circumstances, as these will form the basis for the court’s assessment.

Image source: pexels.com, Mikael Blomkvist

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The employer’s opportunities to enforce financial claims against the employee

Employment, labour law, News / / , , ,

During the employment relationship, the payment of remuneration is one of the fundamental obligations of the employer, which also constitutes the basis of the employee’s livelihood. Given its important role, Act I of 2012 on the Labour Code (“Labour Code“) contains detailed rules on the types, amounts, methods of payment, and protection of wages. We often encounter the question of how an employer can enforce its claim against an employee, for example in the event of damages or other claims arising from the employment relationship. In this article, we summarize the simpler options for enforcing the financial claims of employers outside of litigation.

Deduction from wages

In view of the rules on the protection of wages, the employer may only apply deductions from the employee’s wages within the legal framework and under certain conditions. While the provisions governing the categories and conditions of deductions are contained in the Labor Code, the limits on the amount of deductions are set out in Act LIII of 1994 on Judicial Enforcement („Vht.”).

Conditions for deduction:

    • As a general rule, employers are only entitled to deduct wages from employees on the basis of law or an enforceable order. In other words, the employer is obliged to deduct any taxes imposed on wages or claims deemed enforceable by a court. However, it is important to emphasize that in such cases, the employer is typically not pursuing its own interests.
    • With the employee’s consent, the employer is also entitled to deduct the employee’s wages. However, the consent must be explicit, and the deduction may only be applied to wages exceeding to the deduction-free part of the wages.
    • The employer shall also be entitled to deduct its claim from the wages if it arises from advance payment.

Limits on deductions in terms of their amount:

The Vht. stipulates that only the employee’s net salary may be used for enforcement. As a general rule, 33 percent of the debtor employee’s net salary may be subject to enforcement, but in exceptional cases, the deduction may reach up to 50 percent of the net salary.

We refer to the fact that with the entry into force of the relevant provisions of Act LXXIV of 2024 on the establishment of Hungary’s central budget for 2025 (“Amendment“), the exemption rules on income deduction were amended as of 1 July 2025:

    • Pursuant to the Amendment, the family tax allowance under Act CXVII of 1995 on personal income tax (“Szjatv.”) is exempt from the deduction. This means that when determining the basis for deduction, the amount arising from the debtor’s net salary due to the applicable family tax and contribution allowances must be disregarded. However, the exemption shall only apply to enforcement proceedings initiated on or after 1 July 2025.
    • A further change relating to deductions is that the portion of net income exempt from deduction has been increased from HUF 60,000 to 60% of the net minimum wage. This sum is currently HUF 116,029 which must be paid to the debtor employee in all cases.
    • The rule remains unchanged that if the amount payable to the employee after the deduction exceeds HUF 200,000, the amount exceeding HUF 200,000 may be enforced without restriction.

The payment notice as an alternative method of enforcing the employer’s claim:

As a general rule, the employer can only enforce its own claims arising from the employment relationship against the employee through court proceedings or payment orders. However, the Labour Code also provides for a special option for enforcing claims, namely payment notice. The biggest advantage of a payment notice is that it is much faster and simpler than litigation or payment order proceedings.

The employer may enforce claims against the employee and related to the employment relationship that do not exceed three times the minimum wage (currently HUF 872,400) by means of a written payment notice. However, it is important to note that in the case of claims arising from the same legal basis, the employer may only issue one payment notice. Thus, the employer has no opportunity to enforce its claim exceeding HUF 872,400 by issuing several different payment notices. In such cases, the employer may enforce its claim in accordance with the general rules, i.e. in court or through a payment order procedure.

The employer must always justify the payment notice. Therefore, a payment notice complies with the law if it is clear to the employee why it was issued. In addition to written form and the obligation to provide justification, notification on legal remedies is an essential element of payment notices.

This is because if the employee does not appeal against the payment notice within 30 days, the court will issue an enforcement order and it will become directly enforceable. It also means that, in the absence of notification on legal remedies, the payment notice cannot be accompanied with an enforcement clause.

Summary

Overall, we can conclude that the employer may only enforce its own claims arising from the employment relationship directly against the employee’s wages if the conditions specified in the law are fulfilled.

Given that the employee’s salary is the basis of his livelihood, in the event of deductions, the criteria set out in the Labor Code and the restrictions on the amount of deductions set out in the Vht. must always be taken into account.

A payment notice can be a quick and effective alternative to enforcing a claim, but it can only be issued up to a certain amount and under certain conditions.

If you have any questions regarding the above, please do not hesitate to contact us.

Image source: cottonbro studio, pexels.com

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Practical issues relating to the written employment contract and the commencement of employment

News, Employment, labour law / / , ,

According to Act I of 2012 on the Labour Code (“Labour Code“) an employment relationship is established by an employment contract, which shall be made in writing by the parties. Thus, the establishment and existence of an employment relationship can be clearly established if there is a written employment contract. But what happens if the agreement is not concluded in writing or is concluded later? What happens if one party wants to withdraw after the written offer but before the signing of the employment contract? It is worth being aware of the detailed rules to ensure that your employer’s practices comply with the provisions of the law. Since a new ruling by the Curia on the subject was published in March 2025, we summarise the most significant information regarding the written form and the establishment and duration of employment relationship.

The importance of concluding in written form

As a general rule, an employment relationship is established by an employment contract. According to the Labour Code, the employment contract must always be concluded in writing, and it is enough for the parties to agree on the employee’s base wage and job. However, it is worth noting that in practice there are many examples where an employment relationship is established in the absence of a specific employment contract. For example, if an employer makes an offer containing the essential terms and conditions (job and base wage) and the employee accepts it, the employment relationship is deemed to have been established by the employee’s acceptance, without the parties signing the employment contract.

Failure to put it in writing does not result in the non-existence of an employment relationship. The Labour Code stipulates that the legal consequence of not having a written contract is invalidity, which can only be invoked by the employee, and only within 30 days of commencing employment relationship.

This interpretation was also confirmed by the Curia in its recent decision. In the case in question, the employee was employed for a fixed term but continued to work after the expiry of the fixed term, to which the employer did not object, and continued to fulfil its obligations to provide work for the employee and to pay wages. In the meantime, the parties wanted to settle their employment relationship, and the employer sent the employee an offer for an employment contract of indefinite duration, which the employee accepted, but the parties did not sign. In the meantime, the employer gave termination of notice to the employee, who claimed that it was unlawful on the grounds that, in the absence of a written employment contract, they were not in an employment relationship and therefore termination was not conceptually possible. The employee claimed that the employment contract was only signed after the termination of notice was given, so in in its view its employment relationship was established from that time.

In the case, the Curia ruled that the employee’s employment relationship had existed since the beginning of the fixed-term contract, which, after its expiry, had become an employment relationship of indefinite duration due to the parties’ implied conduct and which the employer was therefore entitled to terminate. This ruling also shows that the existence of an employment relationship is not solely determined by the written employment contract of the parties, in the absence of which the existence of an employment relationship can be established on the basis of the circumstances of the case.

The question legitimately arises: why then is there a need for a written employment contract? As an employment law counsellor, the answer is simple: to prevent disputes. In our experience, neither party wants to argue in court what kind of cafeteria allowance an employee is entitled to, what limits apply to the home office and how the annual leave can be granted. In addition, failure to conclude a written contract may result in sanctions applied by the Hungarian Labour Authority as a result of the inspection.

Important stages of the establishment of employment and a possibility of withdrawing

In addition to the written form of the employment contract, the dates – periods – at which the employment relationship is established are of paramount importance, as the parties have different rights and obligations at different stages.

At the time the employment relationship is established, we differentiate between the time when the employment relationship is established and the time when the employment relationship commences.

  • Establishment of the employment relationship

The employment relationship is established on the date of conclusion of the employment contract or on another date specified in the contract (offer). From that time onwards, the parties may not engage in any conduct that would prevent the employment relationship from being established. The question may arise as to what conduct can prevent the employment relationship from being established. On the employee’s side, for example, failure to attend compulsory medical examinations by the private induvial can be such case.

  • Commencement of the employment relationship

The commencement of the employment relationship is the date on which the employee starts to work. In the absence of a specific provision in the employment agreement, that is the day following the conclusion of the employment contract. From this point on, the “active” phase of the employment relationship begins, during which the parties can exercise their rights and must fulfil all the obligations arising from the employment relationship. If the parties have agreed on a probation period, the duration of the probation period also starts at the commencement of the employment relationship. Last but not least, this day is also significant from a social security point of view, as the start of the insurance relationship aligns with the commencement of the employment relationship.

The parties have the possibility to set an alternative start date in the employment contract, thus allowing the actual employment and availability obligation to be delayed by up to several months (e.g. in view of the employee’s previous notice period).

  • Right of withdrawal

Between the establishment and the commencement of the employment relationship, either party has the right to unilaterally withdraw from the employment contract, which will terminate the legal relationship between them with retroactive effect. This right can be exercised if, after the employment contract was concluded, there has been a material change in the circumstances of the party whereby carrying out the employment relationship is no longer possible, or it would result in unreasonable hardship.

It should be emphasised that only circumstances arising after the conclusion of the employment contract may entitle the parties to withdraw and that the parties must settle their claims against each other retroactively to the date of the conclusion of the employment contract.

Summary

It can be seen that, as an employer, there are a number of important aspects to consider and communicate when making an offer to ensure that the procedure complies with the law and to avoid disputes later on, such as:

  • When does the employee start work?
  • Are there any other conditions to starting work?
  • How long is the employer’s offer valid?
  • Are there any conditions to the offer that, if not accepted, will invalidate the whole employment relationship?
  • In what cases can either party withdraw from the offer?

Image source: Pavel Danilyuk, Pexels.com

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New forms of employment in the 21st century

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The digital revolution of the 21st century has led to the emergence of new forms of employment at global level. The common character of these employment relationships is that they provide more flexible working conditions than traditional employment relationships. These new forms of employment are characterised by different contractual relations, different rules on where, how and when work is performed, and increased use of information and communication technologies. In our article, we would like to present the three most typical types of new forms of employment.

Digital nomads

Digital nomads are people who can perform their work from anywhere – even a continent away – with the help of digital tools. Although the new trend is becoming more widespread, many people are not aware of its legal implications. Becoming a digital nomad has important employment, tax, social security and immigration consequences.

If the employment relationship has a cross-border element, questions arise as to which country’s employment rules apply, in which country the insurance obligation arises, how the tax liability is determined – especially on income from wages -, and whether there is a need to make a declaration or obtain a permit to stay legally in a country after a certain period of time

As an example, let’s take an employee who wants to establish an employment relationship with a company based in the UK by residing in Hungary on a permanent basis. In this case, in the absence of a choice of law, the parties must apply Hungarian labour law to the legal relationship, given that, as a general rule, the labour law of the country from which the employee usually works is applicable. Under current Hungarian labour law, employees may also work remotely, provided that the employee and the employer agree on this separately. In the case of teleworkers, the employee works part or all of the time at a place separate from the employer’s premises, even in a different country. In the example case, the parties determine the place of work in accordance with the residence in Hungary and may agree that the employee performs his/her obligations arising from the employment relationship through telework.

A different approach will apply to a temporary agreement where the worker is only temporarily (up to 1-2 years) going to a country other than the country of origin – the Posting of Workers Directive 96/71/EC will apply.. In this case, the labour law of the Member State where the work is carried out will apply on certain issues (e.g. minimum wage, paid leave, occupational safety and health), regardless of which Member State’s law applies to the employment relationship.

If the digital nomad is a third-country national, there is also an immigration aspect to his/her legal relationship, as he/she needs a residence permit to work and enter the country. In general, it can be stated that Hungary explicitly supports the entry and residence of third-country nationals as digital nomads. The Act XC of 2023 on the General Rules on the Entry and Stay of Third Country Nationals specifically provides for the so-called White Card, a residence permit that can be obtained through a preferential procedure, for digital nomads.

The correct assessment of the tax liability can only be determined by assessing the relevant legislation (e.g. the relevant double taxation convention) and the individual circumstances of the case. However, as a general rule, it can be stated that employees are liable to pay their taxes in the country where their centre of economic interest can be established. From a social security point of view, the place where the employee works is relevant.

Overall, these questions can be answered on a case-by-case basis, as different rules apply to the persons concerned depending on their nationality, the country in which they would work, the length of time they would work and the type of job they would perform.

Platform workers

Platform-work is a relatively new form of employment, which is based on matching the supply and demand of paid work through an online platform. So, the person who does the paid work is connected by the platform offering the service to the party who uses the service, i.e. the party who buys it. This type of work has grown in popularity in recent years, for example in the case of food delivery services or taxi services. It is estimated that the number of platform workers has now reached 43 million in the European Union. There are also a number of issues of relevance to labour law in relation to platform work.

The most significant is the issue of the qualification of the legal relationship. The vast majority of platform workers are self-employed, even though platforms have extensive powers of instruction, control and discipline. As a result, they are not guaranteed the broader protection of employment rights.

In Hungary there is no unified regulatory system for platform work yet. This means that courts examine the nature of the legal relationship individually in the event of litigation. In December 2023 uncertainty over the classification was increased by the judgment of the Curia on the qualification of a contract of a food delivery service provider, in which the body ruled that platform work does not constitute an employment relationship.

The European Union, recognising the vulnerability of platform workers, adopted Directive 2024/2831 on improving working conditions in platform work (“Directive“) in 2024 to improve the platform worker’s employment conditions.

In order to classify the relationship correctly, the Directive requires Member States to introduce measures to facilitate the definition of an employment relationship. To achieve this, Member States should provide rules to determine whether a relationship is an employment relationship or another contractual relationship for self-employment, regardless of how the parties have previously classified the contract between them. The Directive introduces a rebuttable legal presumption that the relationship between the platform and the person performing the work is an employment relationship if facts indicating control and direction are founded in accordance with the law, collective agreements or practice in force in the Member State concerned. Member States, including Hungary, must implement the Directive provisions by 2 December 2026; in the meantime, the general rules are applicable.

Guidance on the classification of employment relationships in labour law disputes – although now repealed – continues to be based on the FMM-PM Directive 7001/2005 (“FFM-PM Directive“). The FFM-PM Directive distinguish between primary (e.g., subordination) and secondary (e.g., determining the place and time of work) qualifying attributes. While primary qualifying attributes can be decisive on their own, secondary qualifying attributes can typically only lead to a reclassification of a legal relationship in combination with other attributes indicating the existence of an employment relationship. It is expected that the regulation to be developed under the Directive will contain similar criteria, which may replace the criteria under the FFM-PM Directive, which is no longer in force but is taken into account in practice.

In practice, the question of classification often arises in the activities of marketing agencies. Agencies typically employ freelancers, who are assigned to clients to carry out specific tasks. However, clients should be aware that if freelancers are fully “integrated” into their organisational system when carrying out their activities, they will be considered by the court as employees of the client in a possible classification litigation.

Platform work also has tax and social security implications. The reason for this is that platforms are not obliged to pay taxes or contributions after their employees in the absence of an employment relationship.

Employer of record („EoR”)

A new type of employment is the so-called Employer of Record (“EoR“). This form of employment allows companies to enter markets in countries other than their home country without establishing a business premises (from corporate viewpoint) and recruiting employees there. The essence of the model is that the company wishing to enter a new market, as a client, enters into a contract with the company providing the EoR service. The EoR service provider concludes employment contract with the employees, so the EoR service provider becomes the employer of the employees (it bears all the responsibilities of employment), while these employees perform their activities on behalf of the client.

In Hungary the challenge with the EoR model is that the Hungarian labour law provides special provisions on temporary agency work which is a much more strictly regulated activity that requires a licence. It is similar in substance, since the purpose of temporary agency work is to allow the temporary-work agency to temporarily assign the temporary-agency worker, who is employed by the temporary-work agency for the purpose of a loan to the user enterprise for work supervised by the user enterprise. If the Hungarian labour authority finds that the service provider has engaged in temporary agency work without being registered with the authority, it may reclassify the legal relationship in question as temporary agency work and impose a fine of up to HUF 25 million on the service provider. For this reason, EoR service providers typically wish to avoid being classified as temporary work agencies.

Another problem with the model, as explained earlier, is the integration of the employee into the client’s work organisation. The reason is that the tighter the relationship between the parties, the greater the risk that the contract will be considered temporary agency work.

Tax issues may also arise in connection with the EoR model. If the client establishes a premise by using the EoR service, it may be subject to tax liabilities.

Summary

In summary we can conclude that the traditional employment model is still dominant, but labour market trends and new work-related demands suggest that atypical forms of employment will become increasingly popular in the future. However, before applying them, it is necessary to carefully examine the underlying conditions in the specific case to ascertain their lawfulness.

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International publication on Global Law Experts

News, Employment, labour law /

Global Law Experts recently published Anna Katalin Papp’s article on Doing Business in Hungary from an Employment Law Viewpoint

Introduction

Employment relationships under Hungarian law are primarily, but not exclusively, governed by the provisions of Act I of 2012 on the Labour Code (“Labour Code“). In addition, the content of employment relationships is further governed by the provisions of other legislation (e.g. Act XCIII of 1993 on Occupational Safety and Health), collective agreements, internal rules of the employer and individual employment contracts. As an EU member state, Hungary is also subject to EU legislation – either directly or by implementation – in the area of labour law. Below is a summary overview of the most important Hungarian labour law rules. Please note that the below does not constitute full legal advice.

  1. Establishment of employment

The employment relationship is established by the conclusion of a written employment contract. The employment contract must contain the mandatory elements prescribed by law (e.g. basic salary, job title) and any other conditions that the parties consider necessary. In that context, the parties may derogate from the provisions of the Labour Code mostly in the favor of the employee, unless derogation is prohibited by law.

It is important to note that the employment relationship is an agreement between the parties, thus it can only be modified by the mutual consent thereof.

At the same time as the employment relationship is established, the employee must be provided with an information letter containing the most important information about the employment relationship (e.g. the person exercising the employer’s rights, the duration of the daily working hours, possible starting and ending dates of work, benefits beyond the basic salary, etc.). This is a unilateral information letter issued by the employer, therefore, as a general rule, it can be unilaterally amended (updated) by the same.

The employee should also be informed of their job duties at the time of the establishment of the employment relationship, as the job description summarizes the tasks expected by the employee to perform. That is typically included in a separate job description – the content thereof can indeed be unilaterally amended by the employer without changing the job title.

When the employment relationship is established, the employer must also register the employee with the tax authorities.

  1. Working hours and work schedules

The standard daily working hours in Hungary are 8 hours, and the standard working week is from Monday to Friday (i.e. 40 hours a week in principle).

Deviations from the daily working hours and working days are possible for certain activities (e.g., multi-shift activity) and working schedules (e.g., working time frame) within the limits provided by the law.

The right to schedule working hours is assigned to the employer, but it can also be delegated to the employee, known as a flexible work schedule.

  1. Teleworking

As a result of COVID, teleworking, or a hybrid version thereof, has also become widespread in Hungary. According to Hungarian law, teleworking is when the employee works partly or at all time at a location separate from the employer’s premises.

Teleworking must be agreed in the employment agreement, i.e. the consent of the employee is always required, if the employer wishes to introduce or eliminate it. Still, the detailed terms (e.g., the number of office and teleworking days) may be determined unilaterally by the employer.

The rules on teleworking are fundamentally different for jobs involving IT devices (e.g. office workers) and non-computing jobs (e.g. seamstresses, chefs).

  1. Executive employees

An employee is considered to be an executive employee in two major scenarios:

  • by virtue of their position:
    •  the executive(s) of the employer and other employees under their direct authority and authorized to replace them, in whole or in part (e.g. MD, CFO);
  • by agreement of the parties, if
    • the employee holds a position of major importance or a position of a highly confidential nature for the operation of the employer;
    • their basic salary is at least seven times the statutory minimum wage, i.e. HUF 2,035,600 (approx. EUR 5,100) in 2025.

Regarding  executives, the parties may derogate from most of the provisions of the Labour Code, for example, the termination of an executive does not need to be justified in principle (taking into account the fiduciary nature of the position).

  1. Non-compete agreements

Upon agreement of the parties, the employee may not engage in any conduct that would harm or jeopardize the legitimate economic interests of the employer (e.g. working for a competitor, starting a business in a competing activity) for a maximum of 2 years after the termination of employment.

Importantly, a valid and enforceable agreement is conditional on (i) the written agreement of the parties; and (ii) appropriate consideration for the employee in exchange for the restriction.

Proportionate consideration must be assessed on a case-by-case basis. When determining the amount of compensation, the degree of impediment the agreement has on the employee’s ability to find employment elsewhere shall be taken into consideration and tailor-made to the certain employment. However, in general the consideration shall not be less than one third of the basic salary due for the same period as the agreement.

  1. Termination of employment

The employment relationship may terminate automatically (e.g. death of the employee, termination of the employer without successor, expiry of the fixed term), or initiated by the parties, namely by (i) mutual agreement; (ii) termination (with notice period); or (iii) termination with immediate effect.

Upon mutual agreement the parties are free to determine the terms of termination of their employment relationship, notwithstanding the provisions of the Labour Code.

In the case of termination by notice (termination in lieu of notice), the employment relationship is terminated at the end of the notice period. The basic notice period prescribed by law is 30 days, which increases based on the length of service in the case of termination by the employer.

An employment relationship of indefinite term may be terminated by the employee without giving reasons, whereas the employer is obliged to give reasons. The employer may give notice of termination only for reasons related to the employee’s conduct or ability or the employer’s operations.

The employer or the employee may terminate the employment relationship with immediate effect if the other party (i) willfully or by gross negligence, seriously breaches a fundamental obligation arising from the employment relationship, or (ii) otherwise engages in conduct which makes it impossible to continue the employment relationship.

The termination with immediate effect shall be communicated within 15 days of gaining knowledge of the grounds therefor.

  1. Consequences of unlawful termination

The Labour Code provides for sanctions for unlawful termination of employment.

In the case of an unlawful termination by the employee, the employee

  • in the case of an employment contract of indefinite term, shall pay an amount equal to the absentee pay due for the period of the employee’s normal notice period (typically 30 days),
  • in the case of a fixed-term contract, shall pay an amount equal to the absentee pay for the remaining period of the fixed-term contract (but maximum of 3 months).

In the event of unlawful termination of employment by the employer, it must compensate the employee for any damage caused by the unlawful termination (the amount claimed for loss of earnings must not exceed the employee’s 12 months’ absentee pay).

In certain cases (e.g. violation of equal treatment, abuse of rights), the employee may also request the reinstatement of his/her employment relationship, in which case, if the court grants the request, the time spent in the interim period (the period between the unlawful termination and the final court decision) is considered as employment and for that the employee is entitled for renumeration.

  1. Employment of foreigners

Employment of EU nationals is permit-free but may be subject to registration.

Employment of third-country nationals is, as a general rule, subject to permit. There are several types of permits that can be applied, depending on the circumstances of the case to decide which permit is appropriate for the particular third-country national.

  1. Foreign employers

If a foreign company decides to carry out activities/provide services in Hungary, it is advisable to consider the nature of the Hungarian activity (especially with regard to the persons to be employed) at the time of the establishment of the Hungarian company. The conditions of employment – for example: form of employment (e.g., employment / assignment), persons to be employed (e.g., on the basis of nationality), mode of employment (e.g., Home office / office presence) – have a fundamental impact on the employment structure.

  1. Taxation of salaries

Payments received with respect to the employment relationship (typically salary) are generally subject to three main taxes and contributions in Hungary: (1) personal income tax (15%), (2) social contribution tax (13%) and (3) social security contribution (18,5%).

These taxes and contributions are typically deducted (or paid) in advance by the employer, thus the employee receives his/her tax-deducted, i.e., net salary from the employer.

However, there are certain benefits (e.g. some cafeteria benefits or the newly introduced housing allowance) that are taxed more favourably, and there are also employees who may qualify for tax relief under certain conditions (e.g. based on age, family status).

https://globallawexperts.com/doing-business-in-hungary-from-employment-law-viewpoint-2/

 

 

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Employers’ tasks related to the implementation of EU Directive 2023/970 on equal pay and pay transparency

News, Employment, labour law / / , , ,

The deadline for the implementation of Directive 2023/970/EU (hereinafter: “the Directive“), published on 17 May 2023, which aims to reinforce the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms, into Hungarian law is approaching, and must be met by 7 June 2026. Although the specific Hungarian legislation will be known after the Directive has been implemented, it is already necessary to refrain from any action that would jeopardise the aims of the Directive, so employers should also keep the rules in mind in their internal processes and include compliance with the Directive on their 2026 to-do list.

Purpose of the Directive

The Directive sets minimum requirements to ensure that men and women receive equal pay for work of equal value. It applies to employers in both the private and public sectors and to employees who have an employment contract. Entry into force will be phased in, but from June 2026 large companies with 250 or more employees will have to comply.

Basic principles of the Directive

To achieve the aims of the Directive, we need to see what we mean by equal work or work of equal value and what we need to look at when we talk about pay. Work of equal value is work that is considered to be of equal value in a non-discriminatory and objective, gender-neutral way, in accordance with gender-neutral criteria.

Accordingly, there may of course be differences in pay, but these need to be justified by objective criteria, independent of the sex of the employee. In terms of remuneration, all elements of pay must be taken into account in the comparison, be they basic wage, bonuses, transport allowances, so the Directive looks at all benefits received directly or indirectly, in cash or in kind, by the employee under the employment relationship.

In order to assess and ensure equal value for work and equal pay, the Directive requires the application of a pay structure that allows for the assessment of whether employees are in a comparable situation, based on objective, neutral, gender-neutral criteria. These criteria may, in particular, be relevant to the skills, responsibilities, working conditions and conditions of the job in question and their assessment must not lead to direct or indirect discrimination on grounds of sex.

Member State and employer obligations

The Directive sets out a number of obligations for both Member States and employers.

The Member States are responsible for collecting and regularly communicating data on pay gap and for setting up the necessary monitoring mechanisms and appointing a monitoring body to protect workers’ rights.

There are also a number of obligations for employers. It is important to ensure that, at the application and selection stage, the applicant is informed of the initial pay or its range, based on the criteria for the position concerned, and, where applicable, of the provisions of the employer’s collective agreement in relation to the position. It has to be ensured that the candidate can conduct an informed and transparent negotiation of the position.

In order to provide the relevant information, it is advisable to bear in mind that this data is sensitive for the employer and may therefore be subject to a confidentiality obligation. On the other hand, the collection and processing of the necessary data of the applicant should be in line with the GDPR rules.

During the employment relationship, employees will need to be informed of the criteria used by the employer to determine their pay, pay levels and pay increases. In addition, the Directive gives employees the right to request and receive information in writing about their individual pay levels and the average pay levels, broken down by gender, for categories of employees who perform the same work or work of equal value as them.

On the basis of these data, employers will also have additional reporting obligations on their gender pay gap survey, depending on the number of employees.

Legal remedies, enforcement

The Directive also provides for remedies for employees in order to achieve its objectives and to fulfil the employer’s obligations, and in such proceedings the employer has the burden of proving that there has been no discrimination. Interestingly, the Directive allows for legal costs to be charged to the employer even if the employee has reasonable grounds for bringing proceedings.

Concluding thoughts

The Directive sets out a number of complex obligations for employers to reduce the gender pay gap and promote the principle of equal pay.

Although the specific rules will become known when the transposing legislation is published, the framework of the rules is already visible and no less favourable conditions for employees can be expected at Member State level.

It is advisable to start preparing for these obligations now, to review internal processes in the light of the Directive and to keep them in mind when making any changes, both in recruitment, selection and employment, as the transition may take longer and affect several areas – labour law, data protection – in the event of mandatory implementation. Based on the expected employer obligations, we believe that employers who know the depth of information they need to provide to employees and the reports they need to prepare in advance will be the ones who will comply well with the Directive and Member State rules.

Image source: Freepik.com

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