Background information on applicants

Background checks

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

As a general rule, background checks are prohibited (except social media checks, which are acceptable under certain conditions). Employers may only ask the applicant to share his or her personal data if they are absolutely necessary for the position.

Medical examinations

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

The medical examination is a mandatory condition of employment. The employer must refuse to hire the applicant who does not submit to an examination.

In each case, the examination must be relevant to the applicant’s physical ability to perform the work and the doctor may not share any medical information with the employer (except for the information on the employee’s fitness for the particular position).

Drug and alcohol testing

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

Generally, drug tests are not permissible in Hungarian hiring practice.

The employer may filter out employees coming to work under the influence of alcohol by using an alcohol test. The employee may refuse such a test only if it is abusive (eg, if the employer carries out the test out of personal revenge, or on an ad-hoc basis without any pre-determined and justified process). Otherwise, the employer may impose the appropriate legal sanctions on the employee (including suspension from work and salary deduction) if the employee does not submit to a test.

Hiring of employees

Preference and discrimination

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

Under the Equal Treatment Act, the principle of equal treatment must be strictly observed already in the hiring process, before creating the employment relationship (in a job advertisement, during a job interview, etc).

Laws or collective bargaining agreements may require positive action for eliminating the inequality in opportunities of a specific group of employees. However, such positive action must not violate any fundamental right, grant any unconditional advantage, or exclude the assessment of individual aspects. This means that a person with protected characteristics cannot be automatically given priority over the others if another applicant not having a protected characteristic proves to be more suitable for the job based on objective eligibility criteria.

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

To engage in an employment relationship an employment agreement must be concluded between the employer and the employee. The employment agreement must be in writing, which is the employer’s obligation to take care of. However, failure to comply with this obligation will only render the employment agreement at the employee’s initiative taken within 30 days from starting work.

The written employment agreement needs to indicate at least the name of the employer and the employee as well as their data relevant from the perspective of the performance of the agreement (eg, the bank account number of the employee), the personal base wage and the position of the employee.

To what extent are fixed-term employment contracts permissible?

If the parties do not provide for the term of the employment agreement, it is deemed to have been concluded for an indefinite period. Accordingly, if the parties wish to establish an employment relationship for a definite period, this must be expressly set out in the employment agreement. The duration of a fixed-term employment relationship (including any extension thereto and any new fixed-term employment relationship established within six months from the termination of a previous fixed-term employment agreement) may not exceed five years.

Probationary period

What is the maximum probationary period permitted by law?

The parties may outline in the employment agreement a probationary period of a maximum of three months starting from the beginning of the employment. If the parties agreed on a shorter probationary period, they may once agree on extending it up to the three-month maximum. Collective bargaining agreements may provide for the possibility of a probationary period of a maximum of six months.

Classification as contractor or employee

What are the primary factors that distinguish an independent contractor from an employee?

An employment relationship is established by entering into an employment agreement based on which the employee is required to work as instructed by the employer, while the employer is required to provide work for the employee and to pay wages. Although there is no clear-cut rule on how to differentiate an independent contractor from an employee, Hungarian case law developed some primary and secondary criteria.

The primary criteria are:

  • the continuous nature of the activity and the definition of the task as a job;
  • the requirement to perform work personally, the employer’s obligation to provide the employee with work and the employee’s obligation to be available; and
  • the subordinate nature of the relationship.

 

The secondary criteria include, among others;

  • the payment of a recurring and typically fixed remuneration; and
  • the use of the employer’s equipment, resources and raw materials.

 

While the primary criteria may alone be sufficient to categorise the legal relationship, the secondary criteria only support primary criteria.

Temporary agency staffing

Is there any legislation governing temporary staffing through recruitment agencies?

Yes, temporary staffing through temporary staff agencies is governed by a separate chapter of the Labour Code. In this special form of employment, the employment relationship is created between the employee and the temporary staff agency, while the client concludes a separate civil law contract with the temporary staff agency to hire the temporary staff. The employment agreement needs to specifically include that it was concluded for the purpose of temporary staffing. The contract between the temporary staffing agency and the client must specify the key conditions of leasing and the allocation of the employer’s rights.