Important and/or distinctive aspects of rights on termination in Hungary.
The general rule for the termination of an employment relationship is that notice has to be given by the terminating party. However, it is also possible to terminate an employment relationship without notice if the other party wilfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship, or otherwise engages in conduct that would render the employment relationship impossible. The right of termination without notice may be exercised within a period of fifteen days of gaining knowledge of the grounds thereof, but in any case within less than one year of the occurrence of such grounds (in the event of a criminal offense up to the statute of limitation). It is also possible to terminate the employment relationship without notice in a probation period, or by the employer in fixed-term employment relationships.
Under Hungarian law, the parties are allowed to agree that the employment relationship may not be terminated by notice for a period of up to one year from the date of commencement of the employment relationship.
The employer may not terminate the employment relationship by notice during pregnancy, maternity leave, a leave of absence taken without pay for caring for a child, during any period of actual reserve military service, or in the case of women, while receiving treatment related to a human reproduction procedure, for up to six months from the beginning of such treatment.
Obligation to give reason
Employers are required to justify their dismissals, and employees may only be dismissed for reasons in connection with his / her behaviour in relation to the employment relationship, or with his / her ability or in connection with the employer’s operations.
Compensation for post-termination restrictions must be paid to the employee at the end of the employment relationship in lump sum, or during the restriction period in instalments, as courts do not deem the monthly payment of a certain amount during the employment relationship on this basis acceptable. Based on the practice of the courts, the implementation of a post-termination restriction cannot serve as a requirement for maintaining an employment relationship. Post-termination restrictions also have to be proportional to the business interests of the employee.
Parties are almost completely free to deviate from the provisions of the Labour Code, should the employee qualify as an executive. Therefore, especially in such cases, it is advisable to design the employment contract in a way that to the utmost extent serves the interests of the employer.