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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

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

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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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

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

Changes in simplified employment

News, Employment, labour law / / , ,

Simplified employment is an atypical employment relationship that offers the possibility to work in a more flexible framework than the general rules. The specific provisions can be found in Act LXXV of 2010 on Simplified Employment (“Simplified Employment Act“), whereas the provisions of Act I of 2012 on the Labour Code (“Labour Code“) serve as a background rule. This year, there are several significant changes to the rules on simplified employment, which will be or have been introduced gradually in two stages. This article summarizes these changes.

Amendments effective from 2 February 2025

  • Changes concerning taxes

Employers are required by law to pay a specific contribution for their employees working under the Simplified Employment Act. The amount of this tax is based on a percentage of the minimum wage applicable on the first day of the month in question, thus the increase in the minimum wage also affected the amount of the tax payable. It is also important to note that the percentage of the minimum wage per employee and per calendar day has also increased, i.e., the following percentage of the minimum wage applicable on the first day of the month shall be paid:

  • 0,75% (compared to 0.5% previously), i.e. HUF 2 200 per day for seasonal agricultural and touristic work;
  • 1,5% (compared to 1% previously), i.e. HUF 4 400 per day for occasional work.

There was no increase for film industry extras, thus, the tax rate remained unchanged at 3%, i.e. HUF 8,700 per day.

It is important to note that these new provisions will only apply to employment relationships concluded after 1 February 2025. Accordingly, if an employment relationship was established on or before 1 February 2025, the rate of tax will be based on the previous rules.

  • Employee benefit entitlement

An employee employed in a simplified employment relationship is not considered to be insured, but is entitled to pension, accident health care and job-seeker’s allowance.

The amount of the pension benefit is adjusted to the minimum wage applicable on the first day of the month in question, therefore the amount has already been increased from 1 January 2025. Under the amendment to the Simplified Employment Act, the percentage rate has also increased from 2 February 2025. On this basis, the pension is calculated on the basis of the following percentages of minimum wage on the first day of the month:

  • 2,1% (compared to 1.4% previously), i.e. HUF 6 100 per day for seasonal agricultural and touristic work;
  • 4,2% (compared with 2.8% previously), i.e. HUF 12 200 per day for occasional work.

There was no change for film industry extras, which remained at 2.8%, i.e. HUF 8 100 per day.

Amendment to take effect from 1 July 2025

  • Annual limit, introduction of electronic enquiry system

In the future, employees will be allowed to work up to 120 days per year under a simplified employment relationship. This change is of particular importance, as the duration limit previously applied only to the specific employer-employee relationship, but now it will have to be taken into account for all the simplified employment relationships of the employee established in a given year. Hence, the number of working days worked by the employee in the context of simplified employment must be aggregated, irrespective of the employer. In order to enable employers to verify that the employee concerned has not exhausted his/her annual “limit” of 120 days, the National Tax and Customs Administration (“NAV”) will provide them an electronic enquiry system.

Given that this limit will be introduced during the year, the 120-calendar day limit will be taken into account from 1 July 2025 when calculating the duration of employment in 2025.

Summary

It can therefore be concluded that the cost of simplified employment has increased this year, and the rules on the annual limit have made this type of work more restrictive than before.

However, we would like to point out that on 11 March 2025, the Government submitted an act proposing to ease the rules on simplified employment, such as the general limit of 120 days and the possibility of extending the limit with an additional 90 days for occasional agricultural work, with effect – as planned – from 1 January 2026. The provisions of the proposal will be detailed in a separate article, once it is adopted and officially published.

For more information on simplified employment, please have a look at the information brochure (unfortunately, the information brochure only available in Hungarian language) on the following link issued by the NAV.  If you have any further questions on this topic, please do not hesitate to contact us.

Image source: Maria Turkmani, Pexels.com

Changes in simplified employment Read More »

Expected changes in the area of labour law

News, Employment, labour law / / ,

On 29th October 2024, the Government submitted its bill proposal number T/9718 (“Proposal“), which contains provisions amending certain labour legislation for the year 2025.  The Proposal concerns, inter alia, Act I of 2012 on the Labour Code (“Labour Code“) and Act XCIII of 1993 on Labour Safety (“Labour Safety Act“). The main changes of the Proposal are summarised below.

Under one of the provisions of the Proposal concerning the Labour Code, workers who would be required to work for more than eight hours on the day of an election or a referendum would be exempted from their work obligation for a period of 2 hours to ensure their participation in these events. Although the Labour Code has already provided that the employees right to vote must be guaranteed, the amendment clarifies the permitted period of absence.

Furthermore, the proposal would also extend the period for using paternity leave from 2 months to 4 months. This would mean that fathers would have more time after the birth of their child to use this type of leave.

The current measures protecting executive employees would also be extended, because the concerned employees’ employment could not be terminated by the employer during paternity leave.

With the amendment of the Labour Safety Act, the government’s declared aim is to ensure that employers manage safety and health documentation in a more up-to-date and transparent manner. In addition, the proposal would create the possibility for companies to pay their OSH fines in instalments, thus protecting smaller businesses or businesses who have financial difficulties.

If the Parliament votes in favour, the amendments will enter into force on 1 of January 2025.

Expected changes in the area of labour law Read More »

New rules of aptitude tests

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

Partial abolition of the employer’s obligation to provide an aptitude test

The subject of much debate and uncertainty in recent months has been the abolition of the compulsory assessment of employees’ fitness for work by employers. The officially communicated legislative aim of the phase-out is (also) to reduce the administrative burden on companies. The purpose of this newsletter is to provide guidance to our clients on the changes and their associated responsibilities.

1.  The previous rules

Previously, the Labour Code and the Occupational Safety and Health Act generally stipulated that employers must provide an occupational fitness assessment free of charge for the employee before the start of the employment and at regular intervals during the employment. Unless the firm’s activity or the requirements of the job were subject to an exception rule, the general rule for the assessment of fitness for work was the NM Decree No. 33/1998 (VI.24.) (the “Decree“).

2. Legislative changes already in force and expected

In order to reduce the aforementioned corporate obligations, both the Labour Code and the Occupational Health and Safety Act were amended with effect from 1 September 2024.

However, the new wording did not fully clarify the obligations of companies. According to the regulation, in general cases, i.e. not covered by a specific occupational requirement (e.g. military service), the test must be carried out if the employer decides to continue the practice in the absence of an obligation or if the law continues to require it.

In the latter case, the draft of the proposals for public consultation have been published in recent weeks, several of which will enter into force in the coming days which aim to clarify when testing is mandatory. Our understanding is that those firms will continue to be obliged to carry out aptitude tests who are operating in the sectors covered by the drafts (e.g. construction, commerce). However, even for firms falling under the sectoral classification, only those workers who, by virtue of their job, fall into the categories listed in the same drafts (e.g. workers exposed to increased risk of accidents, of noise, of manual handling of loads over 10 kg; or workers who also work night shifts). There is one case in which the determining factor will not be the sectoral classification and the job, because if the employee works at night on a regular basis or for at least a quarter of his or her annual working time, he or she falls within the mandatory scope of the test, irrespective of the employer’s sectoral classification.

3. Proposal

Based on the above, it would make sense to recommend that companies should first check whether they fall within a sector covered by the drafts, and then, as a second step, assess the jobs covered by the obligation and organize the aptitude test for these employees.

However, the Occupational Health and Safety Act continues to provide as a general rule that the company is responsible for ensuring that the health of the worker is not adversely affected by his or her employment. This obligation can only be fulfilled with a high degree of certainty if the company assesses the potential risks to the employee on a case-by-case basis, taking into account the specific nature of the job. In the light of this, we recommend that companies should, as far as possible, maintain the aptitude test for all employees in accordance with the Decree until the detailed rules (including regulations related to the implementation of the Occupational Health and Safety Act) are known in their final form.

It is worth noting that the change has not only an employment law but also a data protection dimension, as the test regime is now in many cases based on the company’s decision, which requires additional data processing documentation.

New rules of aptitude tests Read More »

Our law firm retains Top-Tier Firm Rankings in The Legal 500 EMEA 2024 Edition

News, Ranking / / , ,

We are delighted to announce that we have again been ranked as a top-tier firm in The Legal 500 EMEA 2024 edition. Our services have been ranked in Employment and Commercial, Corporate and M&A practice areas. The reviewers appreciated among others our multinational clientele in various sectors, a key area of strengths in assisting our clients with digital transformations, and our extensive expertise in cross-border transactions.

The Legal 500 EMEA guide provides researched coverage of over 80 countries and over 2,700 ranked law firms. Researchers are free to make ranking decisions on merit alone. Ranking is conducted annually, providing a detailed qualitative assessment of various factors including work conducted by law firms over the past 12 months and historically; experience and depth of teams; specialisms and ancillary services; and, importantly, opinions of law firms” clients,

It is a special honour to be part of this publication and we are thankful to our clients who provided these excellent feedback on our performance.

We are happy to share some of the Testimonial given by our Clients to Legal 500 EMEA team:

“The team is proactive, quick to respond and eager to find a business-satisfactory solution to all problems.”

„I have received the answer to our queries quickly and professionally, the problems were reviewed from a wide perspective and always a bigger picture was taken into account to find a satisfactory solution to the query or challenge.”

„Our direct contacts are Anna Katalin Papp and Barbara Seregély. They are always available for us, we can always count on their cooperative work, they are professionally well prepared. If there are some changes in the legislation, they always draw our attention to them.”

„Working for many years with CLV, we met young and experienced colleagues, and all gave their full expertise in their fast replies. CLV is capable of working on an international level in relation to multinational tasks, which is important for us.”

„They all speak a high level of English and are well prepared. In terms of timing of meetings, we always received flexibility according to our needs. In case of very specific questions, they have experts to provide the adequate explanation.”

„The relationship is really good, and open minded. The advisor is ready to think out of the box, and not tied strictly to the question, if they can help with their advice.”

Our law firm retains Top-Tier Firm Rankings in The Legal 500 EMEA 2024 Edition Read More »

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