Blog » CAN THE PROBATIONARY PERIOD BE STIPULATED VERBALLY IN HUNGARY? – THE CURIA RULED
CAN THE PROBATIONARY PERIOD BE STIPULATED VERBALLY IN HUNGARY? – THE CURIA RULED
28 October 2020
In its recent decision, the Curia dealt with the issue concerning what are the consequences if you fail to put in writing the employment contract which contains a probationary period clause. Is the probationary period clause valid or invalid in that case? We analyse the decision in our short article and answer the question above.
The plaintiff (“Employee”) applied for a position of a commercial leader at the defendant (“Employer”) in March 2017.
After that, the Employee consulted the managing director of the Employer three times about his employment contract. According to a witness, the parties agreed that they would stipulate a 6 months’ probationary period in the first meeting.
The last consultation concerning the employment contract, during which the parties agreed to put the employment contract in writing, happened on 30th March 2017.
After that, the Employee commenced work for the Employer without a written employment contract on 3rd April 2017. At the end of April 2017, the Employee received the draft of the employment contract, which contained a six-month probationary period, but the parties only signed the employment contract on 16th May 2017 in which they stipulated that the Employee had been working since 3rd April as well as the six months’ probationary period
A few days later, on 23th May 2017, the Employer terminated the employment relationship of the Employee without notice and justification referring to the probationary period.
2. The arguments of the Parties
The Employee claimed compensation for the unlawful termination of his employment relationship. According to the Employee, they agreed on the probationary period only one month after the establishment of the employment contract at the signature of the employment contract on 16th May 2017. Besides, the Employee argued that a six months’ probationary period could not be stipulated in the absence of a collective agreement.
In his statement of defence, the Employer argued that he agreed with the Employee on the stipulation of probationary period on 3rd April 2017, on the commencement day of the work of the Employee. The Employee did not allege the invalidity of the employment contract on the grounds of failure to put the contract in writing within a period of thirty days from the commencement date. Consequently, the stipulation of the probationary period is valid and the termination without notice by the Employer is lawful.
3. The first and second instance court decision
The first instance court (“First Instance Court”) rejected the claim of the Employee on the basis that the employment relationship was concluded between the parties on 30th March 2017 and it was proven that the parties already agreed on the stipulation of probationary period at that time.
The First Instance Court has highlighted that it could not be concluded from the Labour Code, that the employment contract shall be made in writing in each case if the parties agree on a probationary period.
However, it is true that the part of the stipulated probationary period exceeding three months is void because of the relevant provision of a collective agreement, but the stipulation is just partially invalid, therefore the parties stipulated a three months’ probationary period. As the communication of the termination without notice occurred during the three months’ probationary period, the termination is lawful.
The tribunal, which acted concerning the appeal of the Employee, upheld the judgment of the First Instance Court, explaining that the First Instance Court correctly concluded the date of the establishment of the employment relationship and that the parties verbally agreed on the probationary period.
4. The decision of the Curia
The Curia dismissed the request for judicial review of the Employee and upheld the final verdict.
The Curia referred to the circumstance that the parties may stipulate a probationary period in the employment contract. It is a fact that the Labour Code lays down a written form for the employment contract, but the invalidity on the grounds of failure to put the contract in writing may only be alleged by the employee within a period of thirty days from the first day on which he commences work. In the failure of referring to the invalidity in deadline, the employment contract, which is concluded with the infringement of the formal requirements, is valid and the employment relationship is established according to the content of the employment contract, which is concluded verbally.
Consequently, the Curia agreed with the lower courts that according to the Labour Code, the probationary period, concluded verbally, is valid if the employee does not allege the invalidity of an oral employment contract within 30 days from the first day on which he commences work.
Based on the above, the Curia established that the Employee served his probationary period, therefore the termination without notice and justification by the Employer was lawful.
5. Assessment of the decision
According to the Labour Code, the employment contract shall be made in writing and a probationary period may be stipulated from the date of commencement of the employment relationship. According to the case-law, a probationary period may be stipulated only at the establishment of the employment relationship, therefore it cannot be remedied even with a few days’ delay after the commencement of the employment relationship.
It follows from the above that the probationary period should be basically stipulated only in writing. However, the employee may only allege the invalidity of the contract or its part, the probationary period on the grounds of failure to put them , in writing within a period of thirty days from the first day on which he commences work.
Taking into account that the Employee did not allege the invalidity of the employment contract in the present case, the acting courts had to decide whether it was proven that the parties agreed on a probationary period verbally before the Employee commenced his work.
Based on the declarations of the witnesses and the drafts of the employment contracts containing the probationary period clause, all acting courts found that the parties had agreed on a probationary period before the Employee commenced his work.
Although, the above case was a success for the Employer, you as an employer act prudently if you conclude all employment contracts with the probationary clause with your future employees in writing before the commencement of work.
Hungary: Steps Towards Differentiating Between Domestic and International Procedural Public Policy
Drawing a well-defined line of demarcation between domestic and international public policy when enforcing foreign arbitral awards sends a clear pro-arbitration message from national courts in any jurisdiction. Does Hungarian case law come close to this level of sophistication? This post analyses this question in the context of procedural public policy, and it does so based on two recent appellate court decisions rendered in the context of enforcement of arbitral awards in accordance with the New York Convention.Read more »
EU ISSUED NEW GDPR STANDARD CONTRACTUAL CLAUSES – WHEN AND HOW TO USE THEM?
During summer 2021, the European Commission published two new "standard contractual clauses" on data protection regulation, which can be applied on the one hand, to the legal relationship between data controllers and data processors covered by the GDPR , and to the transfers of personal data to third countries, on the other. In this article, we answer the questions: what these SCCs regulate, how do they differ from the previous SCCs and how can your company use the new SCCs?Read more »
CAN THE NON-COMPETITION AGREEMENT BE VALID WITHOUT A PRECISE COMPENSATION IN HUNGARY?
The non-compete agreement may provide protection of the legitimate economic interests of the employer even after the termination of employment relationship. However, the Hungarian Labour Code lays down strict requirements for the agreement. In our article we analyse a recent decision of the Supreme Court about the importance of the precise determination of the compensation, so you as an employer can conclude a valid non-compete agreement.Read more »