TERMINATION OF EMPLOYMENT BY EMPLOYER IN HUNGARY -PART2/2

11 January 2024

In our two-part article we summarize what should the employer look out for, to execute a dismissal lawfully. In the first part we explained the basic principles of the justification of the dismissal. In the present article, we summarize what cases may serve as grounds for dismissal by the employer.

1. Reasons for dismissal

The Labour Code stipulates that the reason for dismissal may be in connection with the employee’s behaviour, abilities, or the employer’s operation. However, the Labour Code does not provide a more detailed guideline about what cases can be considered within the above categories. Fortunately, this does not mean that the employer would be in the dark when evaluating a specific violation, because there is an extensive case law in this regard.

2. Reasons related to the employee’s behaviour

Based on Hungarian court practice, the following problems, which are connected to the employee’s behaviour, may justify dismissal:

2.1. Violation of general rules of behaviour

This category includes, among others, intolerable behaviour, the breach of obligation to cooperate, misbehaviour towards third parties, and inappropriate behaviour outside working hours, just to name a few. The employer may create an exemplificatory list of intolerable behaviours in its code of conduct, which can be relied upon in the justification.

2.2. Breach of work duties and responsibilities, company policies

This category includes, among others, the breach of the obligation to be available at the place and date as required, and perform work according to the respective rules, including the rules in internal policies. Refusal to take instructions from superiors is a common violation which usually justifies dismissal. Finally, the employee must not jeopardize the employer’s economic interests.

2.3. Inadequate performance

In a legal sense, inappropriate work is often due to the employee not paying enough attention, ignoring deadlines, which is more of a behavioral problem than a medical or occupational unfitness. Such workers often breach work duties too, which falls within point 2.2. Serious and/or repeating problems can lead to the termination of employment.

2.4. Loss of trust:

Some problems can lead to the loss of the employer's trust in the employee, especially in case of managerial positions and other positions that require a higher level of trust. Usually, loss of trust is invoked as an additional reason in addition to one or more factual violations, in order to strengthen the seriousness of the justification.

3. Reasons related to the employee’s abilities

The reason for termination may be in connection with the employee’s abilities. Permanent medical unfitness determined by occupational medical specialist falls within this category. However, if the lack of abilities is not connected to medical reasons, this dismissal related to the lack of abilities carries a risk, as the lack of abilities (e.g. attentiveness, precision) is an inner characteristic of the employee which is hard to be objectively proven in a lawsuit.

However, the lack of abilities often manifests in errors or delays, in connection with which, the reasons explained in point 2), including loss of trust can be invoked.

4. Reasons related to the employer’s operations

Similarly to the above categories, the Labour Code does not include the specific cases within this category, therefore we need to turn to court practice again to see the most common cases:

4.1. Reorganization by elimination of a position

It is a lawful ground for dismissal in case the employer eliminates a position, which means that there will be no employee at the company with the same or similar set of duties. This can be done by outsourcing the tasks or redistributing them among other positions, as additional duties. It is important that the employer may not hire a new employee to fulfil the same tasks, even if it creates a position with a different name.

4.2. Reorganization by redundancy

In case of redundancy, the employee’s position is not eliminated, but in the future, it will be fulfilled by less employees. In case the dismissed employee starts a labour lawsuit, the court does not examine the aspects of selecting the employees to be laid off, only the fact that the downsizing actually happened and the employer did not hire new employees to the affected position either before or after the redundancy.

4.3. Qualification-based exchange

It may be a lawful reason for termination if the employer requires higher or additional qualification for a certain position, which the employee does not possess. A typical example is when, after an ownership change, the staff will need to know a foreign language to communicate with the new management.

The change may be justified if the new employee with higher qualification can work more efficiently. However, termination based on qualification-based exchange may be unlawful if the requested higher qualification or skill is not needed for the position and does not positively affect the performance of the job.

In this part, we examined the most common categories of reasons for dismissal, which are recognised by Hungarian case law. The cases shall be considered on a case-by-case basis, and the dismissal may only be lawful if the basic principles of justification we summarized in our pervious article are met.

As you can see, the employer shall meet many legal criteria in connection with a dismissal, therefore, we always recommend the involvement of a legal expert with experience in labour law to avoid wrongful termination.