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What’s next for pay transparency? By dr. Anna Katalin Papp

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

Reading time: 8 perc

If we open any HR portal, we will find a news article about pay transparency on nearly every homepage, which is hardly surprising. In my opinion, the 2023 directive requires a level of transparency from companies that is unprecedented in labour law and fundamentally reshapes the way companies and their employees communicate with one another— in my view, for the better.

The topic itself is not new. In fact, the principle that men and women should receive equal pay for equal work was already set out in the 1957 Treaty of Rome establishing the European Economic Community. In Hungary, the Labour Code also contains numerous provisions aimed at preventing discrimination based on gender.

The real change in recent years is brought by Directive (EU) 2023/970 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (“EUPTD”), which recognises that pay systems are not transparent and therefore employees are unable to enforce their claims. Accordingly, it imposes specific disclosure, information, and reporting obligations on employers.

The EUPTD is therefore a kind of enforcement directive, and to our knowledge, the Hungarian draft law already prepared by the ministry does not significantly expand or tighten these rules, as they are already quite detailed in themselves.

We are aware that some of our clients have been dealing with this topic at group level for quite some time, while others have started processing it independently due to a lack of background support or while waiting for Hungarian legislation. In many cases, we provide assistance in this area, but we also consider it important to summarise—briefly and in newsletter form—how this project should be approached.

Naturally, we have reviewed numerous service providers’ approaches and implementation models that may be viable, but our position is primarily based on the specific provisions of the EUPTD, guidance and working documents of EU expert bodies, as well as relevant case law of the Court of Justice of the European Union, which is binding on Member States. We do this because we believe this approach provides the highest level of legal certainty for companies aiming for compliance.

Key steps in the EUPTD compliance process for all companies from 7 June 2026:

Identification of individuals classified as employees and wage components

Although the concept of “employee” may seem straightforward at first, the EU definition is significantly broader than the Hungarian legal concept. Accordingly, any legal relationship falls under labour-law assessment in which a person: (i) for a certain period; (ii) under the direction of another person; (iii) performs work / provides services; and (iv) receives remuneration (wage) in return.

Accordingly, employers must proceed carefully, as among their contractual arrangements, freelancers, interns, cooperative workers, or agency workers may all fall within the scope of the EUPTD project, as well as board members.

It is also of key importance which remuneration elements the company includes in the assessment. Based on EU terminology and case law, not only base salary and bonuses, but also benefits in kind (e.g. company-provided additional leave, travel passes, personal use of company equipment, internal mobility opportunities), as well as group-level benefits (ESOP, MRP, VSOP systems) fall under the scope of the EUPTD.

Defining compensation components can provide a competitive advantage—for example during a recruitment process—but at the same time, it will be necessary to take a more holistic approach to the issue, as there have historically been significant differences between individual employees, and trade secrets and personal rights may also be compromised in the process.

Establishing or reviewing job and pay structures

Although the existence of a job structure is not a formally required obligation, in my view the compliance process cannot be completed without it. All reporting and disclosure obligations are based on the employer’s accountability regarding which employee performs what work (as defined in task-definition section of the job description). At the same time, companies are expected to assess what skills, effort, responsibility, and working conditions are associated with each role.

Once the baseline data (employees, remuneration, and job roles) is available, it becomes possible to assess how objectively the pay structure has been established. The remuneration assigned to each role must therefore be evaluated: to what extent it is based on objective criteria, and whether any differences between identical roles can be justified. This base data will also form the foundation of the salary increase strategy, as employees will need to be informed about career advancement opportunities in the future.

For many companies, carrying out the above task is a challenge because it forces mid-level managers to confront the fact that the compensation of certain employees cannot be justified rationally, while other employees with long-term stable performance have not received appropriate salary increases or adjustments. While it will be easier to build such systems going forward, correcting existing discrepancies or identifying the reasons behind them is a process that requires more time and significant HR resources. The good news is that this task can be managed as a project, and EU guidance materials support companies in accelerating the process.

Companies that already have a pay structure in place should review their job roles and employee categories based on the EUPTD framework to prepare for their reporting obligations

Administration, administration, administration

A key objective of the EUPTD is that employers must be accountable. Therefore, companies must establish information procedures in four directions:

towards job applicants

towards employees

in consultations with employee representatives

towards supervisory and regulatory authorities

Most of the detailed Hungarian regulations are expected in this regard, as defining specific deadlines, appointing the responsible authority, and specifying the sanctions applicable in the event of non-compliance typically fall within the competence of the national legislator.

Employers are required to present pay data derived from the aforementioned structure on a very broad scale, in each case including a percentage-based comparison of the gender pay gap.

As several misunderstandings and pieces of misinformation often arise in this regard, it is important to emphasize that the vast majority of the above tasks are mandatory only for companies of a certain size starting this June. The SME sector is granted relief in that the reporting to authorities and employee representatives will be introduced in stages, as follows:

250+ employees from 7 June 2027, annually thereafter
150–249 employees from 7 June 2027, every three years thereafter
100–149 employees from 7 June 2031, every three years thereafter
1–99 employees voluntary

General approach of the EUPTD

Based on our experience to date, it is equally important that—without claiming to be exhaustive—the following aspects be discussed and considered prior to implementation and to note that the EUPTD implementation should not be viewed as a standalone, isolated project:

employee curiosity

new market players and services (new benchmarking opportunities, competency mapping, process management)

role of publicity

impact on market competition

transformation of internal procedures

opportunities offered by AI

specifics of executive compensation systems

I believe that for colleagues working in internal HR or legal departments, this will be an extremely exciting and professionally challenging period. Although implementing the EUPTD within a Hungarian organisation will certainly require significant time investment, its long-term effects (e.g. more efficient recruitment, standardisation and accountability of selection and evaluation criteria, transparent corporate HR culture) will ultimately be positive and supportive of everyday cooperation. We of course continue to support our clients throughout the process, as interpreting the detailed rules together and assessing related labour law (and broader legal) implications raises many practical questions for which it is worth preparing the correct answers in advance.

Photo source: pixabay, pexels.com

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CLVPartners has achieved outstanding results in the 2026 guides of Chambers and Partners Europe© and Legal 500©

Corporate law, Data protection, Employment, labour law, News, team / / , , , , , ,

We are pleased to announce that Chambers and Partners© and Legal 500© have ranked our firm for the 15th consecutive year in 2026, and in multiple categories: we are one of the few firms in Hungary to have been recognized in the areas of labor law, commercial law, corporate law, and M&A, as well as data protection.

This year marks a particularly significant milestone for us, as we have moved up one category and achieved a higher band rating.

As a boutique law firm competing against the largest international firms with nearly 100 employees, this achievement is a significant recognition for us, one that reaffirms our professional commitment and our dedication to providing our clients with the highest level of service.

We are particularly pleased that our managing partner, Anna Papp, has also received individual recognition and was listed in the guide among Hungary’s notable practitioners in the field of labour law.

We would like to share some feedback that is particularly valuable to us, which our clients provided to the certification body:

„The law firm’s technical strength, practical mindset and outstanding client care make it genuinely distinctive within the employment law market.”

„The team is approachable, easy to reach and provides timely advice, even on short notice. Its ability to balance quick turnarounds with well-considered, practical guidance is a key strength.”

“The firm has particularly extensive experience in designing whistleblowing systems and managing data protection requirements for internal workplace investigations. This includes ensuring that the principle of ‘privacy by design’ is upheld even when investigating sensitive corporate matters or reports of harassment.”

“CLVPartners is always flexible, proactive, and solution-oriented. Their approach is holistic: beyond solving the immediate problem, they highlight areas we may not have considered but which are essential.”

“Anna Papp demonstrates flexibility, preparedness, extensive experience, precision and client focus. In addition to her comprehensive expertise, she also understands the practical side of things.”

“We can count on Anna Papp for all our questions. We don’t have a problem that she doesn’t have a suggestion for. Her professional knowledge and dedication are outstanding”.

“Barbara Seregély has extensive experience in cross-border mergers and acquisitions and corporate law.”

“Anikó Hrebenku delivers an excellent client experience, ensuring that each matter is handled by experts who provide consistent support.”

We would like to thank our clients for their trust and valuable feedback throughout the year. We remain committed to continuing to effectively support our clients’ day-to-day operations.

Photo source: pexels.com, Fotó: Pixabay

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Termination based on employer-related reasons and their legal framework in practice

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

Reading time: 5 minutes

The termination of an employment relationship is one of the most complex areas of labour law, requiring particular care. To ensure compliance with the law, it is essential that the employer has a thorough understanding of the relevant legislation, as well as the rights and obligations of both parties. Therefore, to ensure compliance, this article reviews the possible grounds for termination by the employer and, within that context, provides a detailed overview of the practical considerations regarding terminations based on reasons related to the employer’s operations.

Key rules governing termination of employment by the employer

The purpose of labour law regulations is primarily determined by the social function and the hierarchical relationship of the parties. Consequently, Act I of 2012 on the Labour Code (“Labour Code”) sets forth in detail the substantive and procedural conditions under which an employer is entitled to terminate an employee’s employment relationship.

One way to terminate an employment relationship is through a termination notice given by the employer. When the employer decides to terminate the employment relationship by giving a termination notice, it must be determined whether there is a valid basis for doing so as required by law.

In the case of an indefinite-term employment relationship, the grounds for termination may be based solely on

the employee’s ability,

the employee’s behaviour or

reasons related to the employer’s operations.

It is thus clear that the groups of reasons can be divided into two main categories, depending on whether they relate to the employee or the employer.

In practice, it is often difficult to draw a clear line between whether the disputed circumstance is related to the employee’s ability or behaviour (e.g., in cases of performance issues, it is often not entirely clear whether they are caused by the employee’s attitude or a lack of ability). In other cases, however, these circumstances are clearly distinct (e.g., an employee’s regular tardiness is typically a behavioural issue, while medical unfitness or a lack of required language skills indicate deficiencies in ability).

Of course, any of these circumstances may justify the employer’s right to terminate the employment contract.

Another important category involves reasons related to the employer’s operations, which, as the name implies, are independent of the employee’s conduct or abilities. It happens that the number of orders at the employer decreases, the economic environment deteriorates, or that organizational restructuring, reorganization, or outsourcing is necessary to maintain competitiveness. Of course, in such cases, the need to terminate certain employment relationships may arise, which can indeed serve as a lawful basis for termination by the employer. Since this article focuses specifically on terminations based on reasons related to the employer’s operations, we will now describe this category of reasons in detail.

Reasons for and rules governing termination of employment related to the employer’s operations

First, it is worth emphasizing that grounds for termination based on the employer’s operations constitute a broad category, as they may encompass numerous specialized, economically motivated decisions for which an exhaustive statutory list would not be practical. Below, we describe a few typical scenarios, noting that these may occur even in combination.

We can speak of the elimination of a position when an employer completely eliminates a specific position within the organization, and as a result, the employment relationship of all employees working in that position is terminated.

In contrast to the above, the situation involves a reduction in headcount rather than the elimination of a position when the employer does not eliminate the position itself but reduces the number of employees in that role (e.g., due to a decrease in tasks or digitization). Although the court does not examine the economic rationality of the decision or the criteria for selection, the fundamental principles must, of course, be observed in such cases as well—with particular regard, for example, to the requirement of equal treatment and the prohibition of abuse of rights.

Replacement for better qualifications is also one of the grounds for termination that fall within the employer’s sphere of interest and decision-making. The rationale behind such a replacement is that the employer decides to fill the position in question with an employee who possesses additional qualifications in the future; for example, the employer may require to have proficiency in a specific language or additional training.

Another common scenario is when an employer decides to reorganize the performance of tasks in the future, for example, by establishing temporary agency work, simplified employment, or contractor/service relationships instead of employing workers under a traditional employment relationship.

A common feature of these grounds is that the practicality of the employer’s organizational or business decisions cannot be questioned on its own merits. Accordingly, the court cannot deem terminations related to reorganization to be unlawful merely because the practicality or economic rationality of the decision is debatable. Similarly, an employee cannot successfully argue that the measure serving as the basis for the termination was not economically rational. It is important, however, that the reason for terminating the employee’s employment must be reasonable, meaning that the selected employee’s dismissal must be related to the economic reason.

Application of the rules governing collective redundancies

If an employer terminates the employment of a specific number of employees within a relatively short period of time, citing operational reasons, the decision may be classified as a collective redundancy procedure. In such cases, the employer is subject to specific procedural, consultation, and notification obligations.

Since a large number of employees may suddenly enter the labor market, the law requires compliance with a set of procedures that include specific safeguards to counterbalance this. These rules are intended to ensure that both the affected employees and the labour market, as well as the Government Employment Service —which assists employees in finding new employment as quickly as possible—can prepare for the change. We will discuss the detailed rules of this in the next part of our series of articles.

Summary

Overall, it can be said that the termination of employment is one of the most complicated areas of employment law, the primary purpose of which is to balance the power between the employee and the employer. One possible ground for termination by the employer is a reason related to the employer’s operations, which may serve as a means of restructuring the organization or maintaining economic stability. In cases of termination based on such grounds, a thorough understanding of the regulations is particularly important, since if the employer terminates the employment of a specified number of employees within a short period of time citing this reason, the decision may qualify as a collective redundancy, which entails specific procedural obligations.

Photo source: pexels.com, Jahoo Clouseau

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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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