06 May 2020

In a judgement published recently, the Curia examined the question whether it may be the justified reason of the extraordinary dismissal if the employee operates a webpage closely related to one of the activities of the employer. In our short article we summarize the decision of the Curia and shortly analyse what lessons you as an employer can learn from this case.

1. Facts

The employer being the respondent has terminated the employee’s employment relationship by extraordinary dismissal.

The justification given by the employer was that the employee has neither notified the employer nor has he requested the employer’s permission to the operation of a webpage closely related to the activity of the Financial Arbitration Board (FAB) by a company owned by the employee.

The employer claimed that due to the employee’s above described conduct his confidence has been badly shaken and it is impossible for him to maintain the employment relationship.

2. The claim of the employee

After his dismissal, the employee started a litigation against the employer claiming that the latter has unlawfully terminated the employment relationship.

On the one hand the employee claimed that in the absence of a job description the establishment of a breach of employment related obligation is precluded.

On the other hand, the employee claimed that he did not have an obligation to request permission as although he was the shareholder of the company operating the webpage, he was not personally involved in the activity of the company.

3. The decision of the Curia

Contrary to the standpoint of the claimant the Curia clarified that the employee has known his tasks despite the absence of a job description, further he was aware of the conflict of interest rules applicable at the employer, in fact he made a declaration that he has acknowledged these rules.

Furthermore, the Curia pointed out that based on the law (the Act on the Hungarian National Bank) the employee had an obligation to report any other relationship the aim of which is to perform work.

Moreover, the Curia considered that the claimant has wrongly stated that he was not involved in the activity of the company operating the webpage. In fact, based on the evidence it can be concluded that the claimant was involved in the activity of the company as the domain registration of the webpage was related to the claimant and the content of the webpage was professionally well-designed whereas the company has not engaged a specialist for the operation of the webpage.

Based on the above the Curia established that the claimant’s conduct, i.e. failing to report his activity, the operation of the webpage related to the FAB activity, and as a result the loss of trust by the employer was the lawful reason of the extraordinary dismissal.

4. What should you take into account as an employer?

The consideration of the employee’s breach of obligation in the above described case was rather simple as the law clearly set forth that the employee has to report and request permission if he would like to establish another employment relationship or any other similar relationship.

Generally, the Labour Code also provides that during the employment relationship the employee cannot engage in any conduct which could jeopardize the lawful economic interest of the employer. Nevertheless, the Labour Code does not describe the “jeopardizing” activities and does not set forth an obligation to report or request permission on the employee’s side.

Thus, if you as an employer would like to avoid that your employee starts a competing activity “unpunished” during his employment it may be expedient to define in an internal policy the prohibited activities. It is also worth to set forth an obligation to report and to request permission in relation to other employment related relationship or economic interest.