IS A PROBATIONARY PERIOD OF MORE THAN 3 MONTHS VALID IN HUNGARY?

15 December 2021

As it is known, the probationary period is typically 3 months long in Hungary. However, many employers feel that the employee's competence cannot be properly assessed during this time. So employers wonder whether it is possible to determine a longer probationary period or extend the 3-months’ probationary period, or if there is any other solution in the above case. In this article we address these issues of Hungarian labour law.

1. The purpose of the probationary period

The reason of the strict legal regulation of the duration of the probationary period can be found in the purpose of the probationary period.

The purpose of the probationary period is on the one hand to enable the employee to know the circumstances of the employment relationship and the conditions of work and, on the other hand, to enable the employer to assess the employee's abilities.

It is important to note that the so-called “trial work”, while the employee is working without an employment contract and remuneration, does not comply with the law.

Overall, the ability of the employee shall be assessed in the framework of the probationary period, otherwise there would be a risk of misuse at the expense of the employee.[1]

2. The exceptionality of the probationary period

The probationary period is a pending legal situation, where the termination of the employment contract depends on the success or the failure of the probationary period.[2]

In case the conditions of work, the performance or conduct of one of the parties is not proper for the other party, the other party has the possibility to terminate the employment relationship without giving reasons and with immediate effect.

This is exceptional under labour law, where the termination of employment shall be usually justified by both the employee and the employer.

3. The length of the probationary period

The strict, non-extendable legal regulation of the term of the probationary period is precisely based on the exceptional nature of this instrument.

The probationary period and its possible duration shall be taken based in the Labour Code (“LC”). [3] Article 45(5) provides that the parties may enter into probationary period of up to 3 months from the beginning of the employment relationship in the employment contract.

The law allows for the parties to specify a shorter probationary period and then to increase it to a maximum of 3 months, but not to specify a longer probationary period. Therefore, the probationary period originally set at 3 months or extended to 3 months, shall not be extended even by mutual agreement.

There is one exception to the above limits: a maximum probationary period of 6 months may be established in a collective agreement. [4]

However, it is important that the employer is only entitled to conclude a collective agreement with a trade union and a trade union association and the existence of these latter institutions imposes additional strict obligations on the employer under the LC.[5]

4. Alternative: a fixed-term employment

Given that the LC does not allow to stipulate a probationary period of more than 3 months, it could be a possible solution to stipulate a short-term fixed-term employment contract after the probationary period, or to conclude a 3-month employment contract at the beginning of the employment relationship, which may then be extended.

However, Hungarian labour courts have repeatedly held that the above practice violates the principle of the proper exercise of rights.

Thus, the conclusion of a fixed-term employment contract for reasons corresponding to the purpose of the probationary period, after the probationary period had been stipulated was found unlawful  by the Supreme Court.[6]

Furthermore, a new fixed-term employment contract concluded after a fixed-term employment contract was found invalid since it impaired the legitimate interests of the employee. In such a case, the fixed-term part of the agreement may be considered invalid and shall be deemed as it has been concluded for an indefinite period.[7]

Although the above decisions were delivered under the old LC[8] and the requirement of the proper exercise of rights has not been expressly regulated in the new LC, the only reason for this is, that the duty of good faith and fair dealing, the duty of the conduct as it might normally be expected and the prohibition of abuse of rights, which are directly regulated by the new LC, ensure the fulfilment of this principle.

5. Conclusion

The LC sets the maximum term of probationary period for 3 months, which can only be deviated from by collective agreement concluded by a trade union or trade union association.

Alternatively, a fixed-term employment contract for the same purpose as the probationary period after probationary periods may be concluded, or a fixed-term employment relationship established at the beginning of the employment relationship and then extended.

However, either a fixed-term employment contract is concluded for the same purpose after the probationary period or successive fixed-term employment contracts are concluded, there is a chance that these clauses will be considered invalid in view of the infringement of the employee's legitimate interests, which will result that the employment relationship being deemed to have been established for an indefinite period.[9]