TEMPORARY EMPLOYMENT AT DIFFERENT EMPLOYER IN HUNGARY – NEW LEGAL RELATIONSHIP?

16 September 2020

What are the main risks if you employ your staff at different employer, within or outside the company group? Is that a new legal relationship, is remuneration payable for that, or the “good old” labour contract can cover this situation? In a recent judgement the Hungarian Supreme Court Curia addressed these questions. In our short article we analyse the judgement and summarize what you as an employer should consider if you would like to temporary reassign your employee.

1. Facts

The claimant of the case was the general manager of company “A” who performed his tasks in employment relationship. Company “A” concluded an agreement with its mother company, Company “B”, based on which Company “A” reassigned the claimant to Company “B” in order to work abroad.

Claimant’s task was the coordination of the disassembly and the transport of a dredger which task he performed for Company “B” in Germany between June and December of 2014 for 27 days. Claimant has not received a remuneration from Company “B”, his salary was paid by Company “A”.

Based on the above facts the claimant sued Company “B” for the payment of HUF 4,7 Million as salary. Claimant argued that although he has not concluded a labour contract with Company “B”, an employment relationship between him and Company “B” excited based on which he is entitled to salary.

2. The decision of the labour court

The labour court established that based on the instruction of his employer Company “A” Claimant was obligated to temporary work in the interests of Company “B”.

Based on the labour law provisions, Company “A” was allowed to give such instruction to his employee since, based on the Labour Code, as a main rule, the employer is entitled to reassign the employee to tasks and a place of work other than what is contained in the employment contracts, or to another employer.

No employment relationship was established between the Claimant and Company “B”, the Claimant performed work for the Company “B” based on reassignment thus he is not entitled to claim salary from him. Therefore, the labour court rejected the Claimant’s claim.

3. The second instance court’s decision

The second instance court delivered a completely different decision based on the above facts.

The second instance court did not agree with the labour court that the Claimant performed work for the Company “B” based on reassignment as Company “B” could not prove the fact of the reassignment.

As regards the employment relationship between the Claimant and Company “B”, the second instance court also was on the opinion that no employment relationship existed between Claimant ad the Company “B”. Indeed, the parties failed to agree in the position and salary of the employee which was the obligatory element of a labour contract.

Based on the second instance court’s view the parties contracted for a specific and concrete task without a time limit which means that a service contract-like civil law relationship was established between the parties and the labour court does not have a jurisdiction to rule in the case.

4. The decision of the Curia

The respondent Company “B” filed a request for judicial review against the second instance court’s decision thus the case was decided by the Curia.

Contrary to the second instance court’s conclusion the Curia established that a civil law contract was not concluded between the parties, even the Claimant did not make any related statement.

The Curia found that that the general manager of the mother company (Company “b”) of his employer (Company “A”) was entitled to exercise the employer’s rights towards the Claimant. In fact, this very person orally informed the Claimant that temporary he shall work in the interest of Company “B” abroad.

Given that the Labour Code does not set forth that the information about the reassignment shall be in writing, the acts of the employer of the Claimant (Company “A”) that he orally communicated the fact of the reassignment to the Claimant did not infringe the legal provisions.

Based on the above the Curia established that the Claimant performed work for Company “B” in the framework of his employment relationship with Company “A”, based on reassignment. No employment relationship existed between the Claimant and Company “B”, thus the Claimant cannot claim salary from Company “B”.

5. Lesson learnt

So, the Curia confirmed in the analysed decision that the employer is not obligated to inform the employee in writing that he would like to temporary reassign him to another employer, oral communication shall be sufficient.

At the same time we can also see that that Company “A” could have saved his mother company (the Company “B”) form a litigation, has he informed the Claimant in writing that in the framework of the project he shall perform work for Company “B”. If such written information was available, the chances that the Claimant would argue that an employment relationship between him and the Company “B” existed and that he would claim salary from Company “B” were very slim, or the written information could have significantly facilitate the evaluation of the case.

Based on the above we encourage employer to inform the concerned employee in writing in case they wish to temporary reassign him to another employer, even in case of intra-group transfers.