LAWFUL DISMISSAL IN HUNGARY - PART VI: TERMINATION WITHOUT NOTICE

12 February 2020

In the last two articles of our series on “lawful dismissal” we present the most severe sanction that can be applied to an employee, the immediate (formerly: extraordinary) termination. This measure is applied in serious incidents only, so many employers believe that they will not need to use the sanction. But, as we know, the devil does not sleep and it is in the details, so the employer needs to be prepared for this scenario as well to avoid further inconvenience.

In this article, we explain the basic rules of immediate termination, and in the following article we will go deeper by applying a case-study approach, what specific violations may justify the sanction according to Hungarian judicial practice.

 

1. What is termination without notice?

Immediate termination (or termination without notice, as in the Labour Code) by the employer is based on the concept of “regular” termination, however there are significant differences between the two sanctions. The most important difference is shown by the name of the termination itself: in case of immediate termination, the employee usually immediately leaves work for good, after a short saying goodbye.

Further differences between the two types of termination:

The comparison shows that in the event of an immediate termination, the employment relationship (and hence the employee's source of income) is terminated overnight. Therefore, the LC. allows its application only in the case of serious violations, under strict rules of procedure.

2. Justification

The employer must state reasons for the immediate termination. The requirements for justification were analyzed in detail in our article on ordinary dismissal. Those rules are also binding in case of immediate termination. (https://smartlegal.hu/publication/lawful-termination-of-employment-in-hungary-part-one-how-to-justify-a-dismissal)

It is important that in a labour dispute, the employer has to prove the reality and reasonableness of the justification, in the absence of proper evidence, the employer has little chance of winning.

3. Grounds for termination

The LC. allows immediate termination in the following two cases:

1. the employee wilfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship;
2. otherwise engages in conduct that would render the employment relationship impossible

a) Serious misconduct 

It is important that the first reason can only be invoked if all three conditions set out in the provision are met:

aa) Violation of substantive obligation:  the law does not provide which obligations are considered substantive, in practice, the following are considered as such:

• unexcused absence
• not working in working hours
• causing damage
• refusal of orders
• alcohol use at work
• breach of duties[1]
• non-cooperation[2]

ab) Wilfulness or gross negligence:   Except in clear cases, the determination of liability requires legal knowledge. Wilfulness is a clear when, for example, a worker goes to work completely drunk or refuses an order defiantly. The situation is more nuanced, for example, in case of a damage or unauthorized absence, as such events can occur despite the employee's due care or due to external circumstances.

ac) Grave violation:  A further condition is that the violation must be serious. Determining this aspect is often a neuralgic point, as it is not carved in stone how long delay or how many occasions of surfing Facebook during working time are considered as “serious”.

Luckily, there are some general rules in connection with the above: When assessing the violation, the usual circumstances and practices of the workplace shall be taken into account. For example, a conduct that the employer has previously tolerated cannot be invoked against the employee.[3] The position and responsibilities of the employee within the company shall also be considered.[4] (increased responsibility of managers).

b) conduct rendering the employment relationship impossible

This reason is rarely invoked in itself, rather serves as an auxiliary category. In most cases, the conduct giving rise to the termination can be associated with the breach of an employment related obligation, which circumstance can be more objectively demonstrated. An example where the reason was invoked: The employee was also a member (co-owner) of the company where he worked. As a co-owner, he sold his own shares in company, endangering the company's operation and thus his own employment. According to the court, his conduct rendered his employment relationship impossible, thus termination without notice was lawful.[5]

4. Deadline for exercising the right

It is important that the employer should respond to an incident giving rise to an immediate termination within a short period. There are multiple reasons for this: first, as time passes, demonstration becomes more and more difficult, second, the time limit can prevent the employer from blackmailing the employees by their possible dismissal.

With respect to the exercise of the right of immediate termination, the below deadlines should both be met:

1. Subjective deadline: the employer may exercise the right of immediate termination within 15 (fifteen) days of gaining knowledge of the grounds for termination. Gaining knowledge means when a person entitled to exercise the employer's right gets the information that allows him/her to recognize that an event giving rise to immediate termination has occurred. If it is necessary to investigate the case, the deadline starts after the investigation is finished.[6]
2. Objective deadline: the right of termination can be exercised within 1 (one) year from the occurrence of the event giving rise to it. Thus, immediate termination may not be based on an event which happened more than a year earlier.

But how do we calculate the deadlines if the termination is collectively based on multiple breaches (eg. short but systematic delays)? In such cases, the 15-day time limit shall be counted from the "most recent" breach. However, the objective deadline still has to be respected, so only events occurred within 1 year can be considered.

 

5. Conclusion

As you can see, there are significant differences between “regular’” and immediate termination, which the Labor Code only allows in case of serious misconducts. It must be ascertained whether the violation is serious enough for immediate termination, and the employer must not exceed the 15-day time limit for making the decision. As immediate termination is subject to strict conditions, we strongly recommend that you entrust a legal expert with the task in order to maintain legality and avoid a costly labor dispute.