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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, control refers to the extent to which the employer is able to control and direct the activities of employees. This includes all circumstances over which the employer has actual influence, and which must be created in relation to the working conditions of employees 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 employer’s scope of control generally includes the following, as ensuring and monitoring these conditions are part of the employer’s obligations and the employer has control and influence over these factors:

  • the place of work where employees carry out their activities,
  • working hours, and
  • work equipment and
  • determination of the working methods,
  • the performance of employees’ tasks,
  • related personal conduct,
  • and the organization of work.

The scope of control is not necessarily limited to the employer’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. Accidents 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

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

Information on the changes to the Labour Code in 2023

Employment, labour law, News / / , , ,

Dear Clients,

On 21 December 2022, Act LXXIV of 2022 amending certain employment-related laws was published, which includes, among other things, the amendment of Act I of 2012 on the Hungarian Labour Code (“Labour Code“) effective as of 1 January 2023.

The comprehensive revision is mainly due to the correct transposition of two EU directives, but a number of other provisions changes as well. Among the large number of changes, we briefly highlight the most important new rules.

1.              Changes to employment documentation

1.1.         Changes to the mandatory content of employment contracts

The following will no longer be a mandatory element of the employment contract:

  •        place of work,
  •        starting date of employment, and
  •        duration of employment.

Unless otherwise provided, these are governed by the Labour Code, but if the parties wish to derogate from the main rule of law, they may do so by agreement.

According to the law,

  •        the working time starts on the day following the execution of the employment contract,
  •        the working time is indefinite,
  •        the place of work is the usual place of work for the position.

Another new novelty is that, as a main rule, wages shall be paid by bank transfer, and parties can only derogate from this main rule by mutual agreement.

In the case of fixed-term employment, if the duration is maximum 12 months, the probationary period shall be pro-rated, and after termination, no probationary period may be imposed for a second employment in the same or similar position. Employers should therefore review the standard contracts they use to ensure that they contain the right content for the future.

1.2.       The employer’s notification obligation

The notification obligation of the employer has been tightened: instead of the current 15-day deadline, the employer shall provide the necessary information in writing within 7 days from the starting date of the employment relationship, and in case of change, on the date of change.

In addition, employers will in future be obliged to provide information on their training policy and the name of the authority to which they pay employment-related taxes, currently the Hungarian Tax Authority.

1.3.       Notification before secondments abroad

The legislation states that for secondments of more than 15 days, employees shall be informed of the rules and conditions governing the remuneration applicable in the place of work, the reimbursement of travel, subsistence and accommodation expenses, and the availability of the unified national website (i.e. the OMMF) containing relevant information on the rights and obligations of the employer providing cross-border services and the employees posted.

1.4.       Certificates and declarations relating to new types of leave, exemptions

The amendment to the Labour Code contains a number of new rules regarding vacation, exemptions from work, prohibitions on dismissal, information requirements – as a result of which employers will need to assess the documentation to support entitlements – including parental leave, paternity leave, the duration of care for a relative, and the background documentation for termination without notice.

2.      Exemption from availability and work – extension of cases

The Labour Code already contains a list of cases in which the employee is exempted from his/her obligation to be available and work.

According to the amendment workers are exempted from these obligations if they are caring for a relative who needs care for serious health reasons or personal care for a person living in the same household as the worker, but for a maximum of 5 days. During the period of care, the employee is not entitled to give notice.

3.            Options for parents

3.1.       Paternity leave and parental leave

The amount of leave for fathers will be increased from next year, to a unified 10 working days. Fathers whose children are born or adopted between 2 August and 31 December 2022 will also be entitled to the amended paternity leave until the end of February 2023. For the first 5 working days of paternity leave absence fee, while the for the second 5 working days 40% of the same absence fee shall be paid .

Parental leave has been introduced, which by its very name is granted to both parents. It is granted for 44 working days up to the age of 3 of the child, provided that the employee has been employed for at least one year by the employer. The rules for taking parental leave are the same as those for paternity leave, except that it may be taken up until 30 June 2023. For the period of the parental leave 10% of the absence allowance shall be paid for the whole period.

Both leaves are granted at the employee’s request and the requested date may be postponed by the employer in exceptional cases. However, if it the leave not been granted by the date of termination, there is no cash payment, but the employee may roll over its entitlement.

It is also a common rule that during the period of leave under these entitlements, the employer shall not terminate the employment by dismissal.

3.2.      Possibility of amending employment contracts for parents with children

In addition to the current entitlement, a significant benefit is that an employee can apply until its child reaches 8 years for

  •        change of workplace,
  •        change to working hours,
  •        teleworking, or
  •        part-time employment.

The request shall be made in writing by the employee, stating the reasons, and the employer shall give written reasons for refusing the request within 15 days. The refusal of a request may be challenged in court, but the possibility of an extra-judicial hearing of these proceedings has been removed, so in practice it does not provide a real solution. However, employers are encouraged to keep transparent and accurate records of their labour needs in order to avoid disputes.

4.           Disputes

4.1.       Abuse of rights

The rules on employment law claims based on abuse of rights are amended. The new legislation sets out how the burden of proof is shared between the parties.

The burden is on the claimant (the employee) to prove the facts, circumstances and prejudice on which the claim is based, while the burden is on the decision maker (the employer) to prove that there is no causal link among the above. The significance of the change is that if the employee’s claim of abuse of rights is acknowledged by the court, the employee is entitled to request the restoration of his employment relationship by the court.

4.2.      Reasoning obligation

In exceptional cases, the employer is not obliged to give reasons for termination (e.g. in the case of termination during the probationary period). However, under the new rules, the employer is still obliged to give reasons, if the employee believes that the termination is due to one of the following reasons and requests the reasons for termination. The alleged reasons can be:

  •        working time allowance for care,
  •        paternity leave,
  •        parental leave,
  •        taking unpaid leave to care for a child, or
  •        the submission of applications under the previous point.

In the case of an employee’s request, the employer has 15 days to justify the termination. In practice, this means that the employer shall always be prepared to justify the reason for termination.

The above changes will typically come into force on 1 January 2023, applicable also to already existing employment relationships – although the legislator leaves a certain implementation period for businesses.

If you have any questions about the above, please contact us. Of course, we will also provide you with details of any further changes in the context of a personalised, partner-specific information session.

 

dr. Papp Anna Katalin –

dr. Csabai Marianna –

 

Exemption from work during adoption

Employment, labour law, Medium-sized companies, News, Start-ups / / , , , ,

Pursuant to the amendments of Act I of 2012 on the Labour Code (“Labour Code”) effective as of 1st September 2020, the employee shall be exempted from the requirement of availability and from work for a maximum of 10 working days per year during the period of preparation for adoption.

The pre-adoption phase provides an opportunity for parents intending to adopt and the child to be adopted to meet, introduce themselves and start to get to know each other before the adoption. Also during this period, the living conditions of the parents wishing to adopt will be assessed, counseling will be provided by the child protection service and, if required, a free adoption course will be conducted.
As the procedure involves a number of tasks for the employee, the legislator considered it necessary to exempt the employee from his/her requirement of availability and work during this period.

The exemption is available to both prospective parents, who are entitled to an absence fee for this period. The exemption shall also apply in the case of an executive employee, from which the employment agreement of the executive employee may not deviate.

The conditions for claiming the exemption are defined by the Labour Code as follows:
– exemption from availability and work is possible on the basis of a certificate issued by the adoption organization;
– the employee may claim the exemption within 90 days following the issuance of the certificate;
– the employee shall inform his/her employer at least 5 working days in advance of his/her intention to claim the exemption;
– the employee must be exempted on the dates specified in his/her request, therefore it is up to the employee to determine the dates;
– the Labour Code does not stipulate that the exemption of 10 working days should be granted to the employee only continuously, therefore the employee may request that the exemption be granted in several installments within 90 days from the issuance of the above-mentioned certificate.

If you have any questions regarding the above, please feel free to contact us.

Aid Provided To Employment Is Very Limited

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The Hungarian government announced that they are going to wage support the wages to those employees that who are still able to work.
The the maximum amount of Wage Subsidy shall be HUF 74,900 / employee. However, in order to request the employee and the employee jointly shall apply for the wage subsidy on cinditionsconditions that they both comply with even the company has to meet certain extensive criteria and which this further limits it’s use. The employers must also present its measures taken or is expected to take to overcome the economic difficulties and to exhaust the working time available for rescheduling work and that is operation is a national interest which is undefined category at the moment. Application for the Wage Subsidly may be submitted from the 16th of April 2020. In order to be eligible compliance with the strict requirements must be substantiated by fully comprehensive and detailed documentation. Should an application refused by the authority, no appeal or any legal way is allowed.

Government decree containing further derogations from the labour code for example:as the employers can unilaterally introduce a framework of working time up to 24 months.

Derogations in the application of Labour Code for the duration of state of emergency

Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

Effective as of today (19 March 2020) until 30 days after the end of state of emergency, the Labour Code shall be applied with derogations as a part of the economic measures announced yesterday. Please see our brief summary as follows:
1. Derogations to be applied unilaterally by the employer:

a) employer may also amend the announced work time schedule within 96 hours of the start of the daily working time; it is important to note that the rules of announcing annual paid leave/ vacation did not change and must be notified 15 days in advance;

b) employer may unilaterally order home office/ remote work for the employees;

c) the employer may implement the necessary and justified measures to check employees’ health status. The Government Decree does not specify the measures necessary and justified, therefore the employers must consider this for themselves, in compliance with the data protection legislation and the HDPA’s legal opinion, as the application of the GDPR has not been suspended for the duration of the state of emergency. It mainly relate to the mostly popular planned fever measure which may only be applied with the restrictions provided by the HDPA.

Collective agreement provisions deviating from the above may not be applied for the duration of the state of emergency, which also means that in any other question the Collective Agreement is applicable.

2. Derogations to be applied by the separate agreement of the parties:
The Government Decree fully extends the possibility of separate agreement between the employer and the employee, which may derogate from the provisions of the Labour Code. It may only be interpreted – although there is no express provision – that it allows the employers to agree with the employees on conditions that are detrimental to the employees – while earlier the Labour Code only allowed deviation in favour of the employees. In that way, thus allowing the establishment of specific and flexible rules for the duration of the state of emergency.

3. The right approach would be if before conclusion of the separate agreement with employees in matters are beyond the above cases and regulated in the Collective Bargains, the employers consult with the Trade Union and the Works’ council if the planned deviations will affect the bigger group of the employees.

The economic measures of the Government in relation to the coronavirus epidemic

On 18 March 2020 the prime minister has announced exceptional economic measures to reduce the impact of the coronavirus epidemic.

According to these measures, in the following sectors the employers shall not pay contributions after their employees, and the contributions of their employees are also significantly reduced (they shall not pay pension contribution, and health insurance contribution is reduced to the minimum set by law) until 30 June 2020:

• tourism
• hospitality ( gastronomy, hotels etc.,)
• entertainment
• sport
• cultural services
• passenger transport

In the above sectors, lease agreements may not be terminated and the amount of rent cannot be raised during this period.

Taxi drivers under ‘small enterperneurs” tax payers are exempted from tax payment.

The tourism sector is also exempted from paying the tourism development contribution.

The Government Decree foresees further legislative changes. We are monitoring for further possible government measures continuously.

The purpose of the publications announced on our website is to provide a brief, concise information on certain issues. The content of this website and the publications is not exhaustive and does not constitute a legal advice. Should you have any specific questions or inquires regarding any issues investigated by our publications, please contact us and we will be happy to be at your disposal.

Amendment of the Labour Code

Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

In case of executive employees the parties may deviate from the provisions of the Labour Code, except some provisions where the Labour Code expressly prohibits deviation. A new provision is that the employment contract of the executive employee shall not deviate from the provisions of § 128 of the Labour Code, meaning that the executive employee shall also be entitled to an unpaid leave until the child’s 3rd birthday for the purpose of childcare.

In case of pregnancy or human reproduction process, if the employee informs the employer on the above facts only after the termination notice has been handed over, the employer may unilaterally and without the employee’s consent decide to, but is not obliged to withdraw the termination notice within 15 days after the employee informed the employer on her condition.

§ 297 of the Labour Code has been replaced by new provisions. Pursuant to that, in case a foreign employee carries out work in Hungary in frame of cross-border provision of services, if the Hungarian party (receiver of the services) knows, or has reasonable grounds to know that the foreign employer has failed to comply with its obligation to pay wage and contributions after the employee, the Hungarian party will be jointly and severally liable with the foreign employer. It has also to be noted, that the parties may not vary from this provision in their contract.

As a general rule of the Labour Code a daily rest period of at least 11 hours shall be granted to the employees. The Labour Code contains several exceptions to this rule when a daily rest period of at least 8 hours is sufficient. From 2017 standby work will not be an exception any more, thus, 11 hours rest period has to be granted to these employees instead of the 8 hours presently stipulated by law.


News on the amendments of Act I of 2012 on the Labour Code

Employment, labour law, Medium-sized companies, News, Start-ups / / , , , , ,

According to the working paper available at the Government’s website, Act I of 2012 on the Labour Code (hereinafter referred to as the “Labour Code”) and other labour-related regulations – such as the Act III of 1952 on Civil Procedure, Act XCIII of 1993 on Labour Safety and Act LXXV of 1996 on Labour Inspection – are expected to be amended with effect from 1 January 2016. The planned amendments affect e.g. the regulations regarding the working place, termination and severance payments as well.

We will continuously inform you about the abovementioned amendments of the Labour Code if the single bill will become available.
 

Should you have any questions regarding the above, please feel free to contact us.
 
Dr. Marianna Csabai
H-1126 Budapest, Tartsay Vilmos u. 3.
Tel: + 36 1 488 7008
Fax: + 36 1 488 7009
E-mail:

The amendment of the Hungarian Labour Code

Company groups, Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

With the effective date of 01 January 2015 some provisions the Labour Code (Act No 1 of 2012) have been amended, as follows:
According to the previous provisions, based on the respective request of an employee, an employer was obliged to amend the working time of the employee to part time (half of the general full working time) provided that his or her child was younger than the age of three. From 01 January 2015 on, this provision has been extended so that if an employee is caring for three or more children, the obligation concerning the amendment of the working time to part time employment shall be applied until the age of five of the child. As this new rule introduced the definition of the “employee caring for three or more children”, the Labour Code now includes the definition of the employee who shall belong to the above category. Accordingly, an employee caring for three or more children shall be, any person who as a parent – within the meaning of the Act on Family Support –
i. is eligible for family allowance and receives or received childcare fee or childcare allowance, or
ii. received or receives child-rearing allowance.

The rules concerning the eligibility for annual leave have also been amended, accordingly an employee shall accrue holidays during the entire term of the sick leave, i.e. the previously applied 30 days limit have been abolished from the Labour Code.

According to the amendments, the employment contract of an executive employee cannot deviate from the provisions set out in Section 65 (3) a), b) and e) of the Labour Code. This means that employees receiving treatment related to a human reproductive procedure as specified in law (i.e. employees are protected during the treatment for a maximum of six months from the date the treatment begins) shall be considered as protected employees and therefore, the employer cannot terminate their employment during this period. (The termination protection rules set out in Section 65 (3) a) and b) of the Labour Code have already been applicable also to executive employees even before 01 January 2015.) The parties cannot deviate from this provision even with their consent in the frame of the employment contract.

Should you have any questions regarding the above, please feel free to contact us.

Dr. Marianna Csabai
Dr. Boglárka Kricskovics-Béli
Dr. Nóra Óváry-Papp

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