Hungary: 7 Tips Before Firing An Employee In Hungary

Last Updated: 4 November 2019
Article by Anita Vereb
Most Read Contributor in Hungary, October 2019

Wrongful termination of an employment contract is the most common trigger for lawsuits arising out of labour relationships. The following guide summarizes the most important rules of firing an employee in Hungary in order to help you to reduce your company's exposure for unlawful firings and lower the risks of a costly labour litigation.

  1. Ordinary termination

As an employer you can terminate the employment relationship with an ordinary termination. It is important to know that the ordinary termination is only valid in writing.

The employer's termination letter shall justify the dismissal with a valid reason except for executive employees or pensioners. The ground of the termination can be the employee's skills (abilities) or his employment related behaviour, or the employer's operational reasons (e.g. reorganization, etc.) except the business transfer. In case of litigation the employer has to prove the grounds and the reasonableness of the justification of the dismissal.

Practical advice: The takeover of the termination letter shall be acknowledged by the employee. If the employee refuses to take over the termination letter, you shall draw up a record.

  1. Protection against ordinary termination

In some cases the labour Code protects the employee against ordinary termination. The ordinary termination is excluded among others, if your employee is pregnant, she is on maternity leave or she is treated in connection with human reproduction process.

Practical advice: Before you communicate the ordinary termination to the employee you should ask him/her if the ordinary termination has any obstacles. You should declare the employee's answer in the minutes of meeting.

  1. Costs of termination

The employer shall pay salary for the notice period, and in case that the employment exceeds 3 years a severance pay shall be paid to the employee as shown in the table below:

Length of employment (years)

Notice period

Severance pay

0-3

30 days

-

3-5

35 days

1 month

5-8

45 days

2 months

8-10

50 days

2 months

10-15

55 days

3 months

15-18

60 days

4 months

18-20

70 days

4 months

20-25

90 days

5 months

25-

90 days

6 months

In addition, if the employee has unspent vacation time the employer should either schedule the vacation or financially compensate the employee.

Practical advice: Consider the possibility of mutual agreement to avoid the above costs of ordinary termination.

  1. Extraordinary termination

The employee can be dismissed by a written extraordinary notice if he wilfully breaches or commits a grossly negligent breach of key employment obligations, or otherwise demonstrates behaviour rendering their employment impossible.

The right of extraordinary termination shall be exercised within 15 days from the day on which the employer becomes aware of the reason for the termination, or in any event, no later than 1 years as of the occurrence of such a reason.

  1. Mutual agreement – if possible

In Hungary you can fire your employee by signing a mutual agreement. This is the most peaceful way of ending the employment relationship as the employee is a party of the agreement and not only the addressee of your termination letter.

It also gives you and your employee the possibility to differ from the strict regulations of termination (eg. justification, notice period)

Practical advice: The mutual agreement is beneficial for the employer since the length of notice period and the sum of severance pay is negotiable with the employee, plus, the risk of litigation can be reduced in this way.

  1. Technical issues

At the end of the employment relationship the employer shall hand over the employee the statements and certifications prescribed by law. If your employee requests you shall provide a written assessment of the employee's work if the employment relationship lasted for at least one year.

Practical advice: Do not forget to report the termination of the employment relationship to the tax authority.

  1. Lawsuit

The employee can file a lawsuit against the dismissal within 30 days, and shall be informed about this possibility in the termination letter or mutual agreement. Without such information he will have 6 months deadline to turn to court.

In case of wrongful termination the employer shall pay compensation for the loss of income, which cannot exceed 12 months' salary. In certain cases such as discrimination or breach of protection against dismissal, the court will reinstate the employment relationship upon request of the employee.

Practical advice: Always pay attention to the written form and the justification of the termination letter to avoid the consequences of wrongful termination.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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