Sometimes it happens in business life that the other party does not pay. In case the creditor takes legal action to recover the debt, it is very important to prove his claim against the debtor, which is usually based on written evidence. In this article, we examine how can the creditor use electronic texts or other communication to prove its claim during debt collection in Hungary.
Trade secrets are protected on more levels in Hungary. While the Business Secret Act provides general protection, the Labour Code protects the business secrets of employers in the employment context. Yet this abundance can cause problems when it comes to the question which court is competent to protect employer’s rights in case of theft of trade secrets by an ex-employee. Can an employer file a damage claim against an ex-employee and a competing company as co-defendants in front of the commercial court? Or is it the labour court which is competent to hear the case? A fresh decision of the Hungarian Supreme Court, analysed in this short article, deals with these questions.
As we pointed out in our last article, the rules on writing set out in the Civil Code are a guideline for all areas of law. Therefore, in our series of articles, we will start the examination of the areas of law with civil law. If we take a look at the judicial practice in Hungary we will see that in civil law, compared to other areas of law, there is a stricter approach and that text-based communication often does not meet the legal criteria of written form in civil law .
In addition to facilitating the provability of facts and statements, recording the declarations in writing is also a condition of validity in many cases, so its significance is undeniable. When we think of a writing format the first thing to come to mind is hand-signed documents. However, since the development of technology, various digital solutions, such as electronic signatures, e-mail or SMS, have become more and more widespread. However, the question is whether these modern solutions really meet the criteria for writing. Given that this is a relatively recent and constantly evolving issue, to which we can find different answers in each area of law, we will explore this topic in a series of articles, what may be interesting to all market player. In this article we will present the legal basis of writing and find out in which cases it is mandatory. We will then go around what are the challengers of the "traditional" written form due to modernization. And finally, we present which areas of law we will examine in detail in our series.
At the beginning of the year, several important provisions of the Labour Code were amended, and the changes affect all employers in Hungary. It is recommended for the employers to review whether the labour templates, policies and HR processes of company comply with the amended rules. In our article, we describe the main changes by providing a non-exhaustive summary.
Can a valid, but inapplicable choice-of-court clause, be regarded as a "tacit" jurisdiction agreement? Is it sufficient to establish the jurisdiction of the courts of a member state under the Brussels I Regulation? This article addresses these questions based on a judgment that the Hungarian Supreme Court delivered in a cross-border dispute between a Hungarian claimant and a Romanian defendant.
In the first part of our article, we explained that in case of outsourcing of tasks to an external company, in addition to its benefits, a special labour law rule, the so called “transfer of employment” must also be taken into account. We highlighted that the employer must be cautious if it is possible that material or human resources will be taken over by the external company, as it is possible that special labour law rules will come into effect due to the takeover of resources. In this article, we examine the aspects of takeover based on the relevant Hungarian and EU case law.
In connection with the outsourcing of tasks to an external company, which is popular these days, everyone thinks of the savings, smaller company size, and less responsibility. However, a special labour law rule must also be taken into account in connection with outsourcing, because the legal consequences of an unlawfully executed process can be more costly than the savings expected from it. In order to avoid this scenario, in this article we examine the legal background of the mentioned special labour law rule, and in the second part of the article, its practical operation, based on Hungarian and EU judicial practice.
In business, it often happens that the parties enter into a contract with a choice of court agreement for eventual legal disputes and then, years or even decades later, the legal dispute occurs. What is the effect of changes that have occurred in legislation on the choice of court agreement? Will the applicability of the choice of court agreement be decided according to the rules in force at the time of the conclusion of the contract or those applicable when the lawsuit was initiated? A recent decision of the Hungarian Supreme Court allows for an analysis of these questions.(1)
At the end of our series of articles on working time, we come to the issue that generates the most dispute between the employer and the employee about working time, the overtime. While in the case of a factory worker, it is most often evident to compensate for the extra work, in managerial or career-promising positions, it is often considered an inherent part of the employment and the employee is expected to handle the issue of working hours "flexibly". In our article, we will find out whether an employer can legally avoid paying wage supplement related to overtime in Hungary.
In the previous article of our series, we presented the regular work schedule by the employer, which most often means an 8-hour working time per day. However, in many cases the effective functioning of the employer cannot be achieved in this system, and it becomes necessary to schedule working time more freely. In this article we will discuss the irregular work schedule which serves the above purpose, and which is implemented by the working time banking and the payroll period under Hungarian labour law, which, despite their practical advantages, are not so well known.
Based on the basic principle of international civil litigation, a person can usually be sued only in the courts of their own country. However, this makes it very difficult for a claimant who wants to enforce their rights against several defendants living in different countries. Can the jurisdiction of the Hungarian courts that exists in respect of a domestic defendant (the so-called "anchor defendant") be extended to foreign defendants as well? This article analyses the practical application of the new rules enforced in 2018 based on a recent decision of the Hungarian Supreme Court.
In our previous article, we examined the basic concepts of working time and clarified when we are talking about it, to make the complex system of working time understandable. This time we will examine the amount of working time that can be allocated and rules governing working time scheduling. First, we will clarify the exact lengths of time we can allocate, and then we will go around the types of work schedules and the conditions related to them.
A common reason for the failure of debt recovery is that the debtor company's managing director, during years of legal proceedings, takes the company's assets and then bankrupts the company. How does the Hungarian Bankruptcy Act and the provisions of the Civil Code of Procedure support creditors who are usually "in the dark"? This article answers this question by examining a recent Hungarian appellate court judgment.
It is not the first time on the Smartlegal blog that we publish a series of articles about a complex labour law topic. After our series on dismissal, we are now examining the details of another cornerstone of labour law, the working time. In connection with this topic there are also many misconceptions in the public awareness, which may cause serious financial consequences on the side of the employer. Since working time is a variable and complex topic, we will analyse it in a series of articles to give you a comprehensive picture.
After several condemnations from the European Parliament, the Hungarian legislature has introduced a new legal remedy to get financial compensation from the state in the case of excessively long civil litigations, so that the injured parties will not need to apply to the European Court of Human Rights (ECHR) for redress. This article summarises the main features of this new remedy and its potential effects on litigations in Hungary.
Under what conditions can a minority shareholder sue the managing director on behalf of the company if the majority of shareholders do not support the motion? Should these conditions be interpreted restrictively or broadly? This article analyses the above questions in the context of a recent Supreme Court judgment.
Refusal of employer 's instructions, unjustified absence, intentional damage: some cases where the justification for dismissing an employee is relatively easy to determine. What happens, however, if the employee does not commit a severe breach of duty similar to the one above, but his or her colleagues consider him incompatible, with whom it is impossible to cooperate, or even afraid of him or her. Can dismissal be justified by behaviour that is incompatible with others and creates disharmony in the working environment? In our article, we seek the answer to this question in the light of Hungarian judicial practice.
This article analyses a recent Supreme Court decision(1) and seeks to answer the following questions: - Can a defendant which is domiciled abroad be sued in Hungary under the EU Brussels Recast Regulation (1215/2012/EU) in the event of defective performance of an international sales contract if the place of performance is abroad? - Can the jurisdiction of a Hungarian court be established based on the fact that a lower court expressly established its jurisdiction at the beginning of the litigation? - How is the Ex Works (EXW) clause to be interpreted within the meaning of the EU Brussels I Regulation?
In the event of a longer leave of a worker, it is common for employers to hire a replacement worker with fixed term contract to make up for the missing workforce. When the replaced worker returns, a labour dispute may arise. In the legal case presented in our article, the Supreme Court examined how the employment relationship of the replacement employee terminates at the end of the replacement. From our article you can learn about the decision of the Supreme Court and what to look for as an employer to make the closing of the replacement smooth. (In our article, we examine the court decision published under No. BH 2021.2.51)
Termination of employment is a sensitive area and the process is not always smooth. It can happen in an escalated situation that both parties give notice of termination or a party later changes its previous declaration. The employer must also be prepared for such situations, as it is not uncommon for an employee to take legal action after a poorly coordinated dismissal, in which case the final farewell takes place in a courtroom.
Black Friday is once again around us: the time when online shops and the consumer protection authority cash in some extra income every year. We guess you’ve already read about the extreme discounts and the record-breaking fines by the authorities, so in our article, we will explain, that without your knowledge, your own business can easily step into the field of consumer protection, in which case, your contracts are subject to special rules. In our article, we show you how you can recognize these situations and, of course, summarize the obligations.
It is often the case that the employer does not clearly regulate the employment relationship of the employees, which later leads to an employment lawsuit. This happened in the case before the Hungarian Supreme Court, where a legal dispute arose in connection with the employee's work schedule, the stake is the payment of several million forints of overtime work compensation to the employee. In our short article, we analyze the Supreme Court’s decision and draw conclusions on how the employer can avoid similar situations.
Although the UK has already left the EU 9 months ago, EU legislation is still applicable to the country during the transitional period until the end of the year, so in practice we have not yet faced the post-Brexit legal environment. Due to the protracted process, businesses in the EU may easily overlook the fact that, as of January 2021, they will no longer be able to transfer personal data to the UK as they used to. However, until the end of the year, there is still time to settle the legality of data transfer to UK, the possibilities of which are analysed in our short article.
Cross-border online sale of medicinal products is a recurring issue before the Court of Justice of the European Union. This is no coincidence, as trade in medicines is a strictly regulated area in all Member States, which can easily conflict with the EU principle of freedom to provide services, and in the end, the "price" of excessive national restrictions is borne by the consumers. In our article, we summarize the recent ruling of the Court of Justice of the European Union on the limitation of the principle.
Messi hit the legal news again, this time not because of his tax issues. In September, the match between the EUIPO and the world-famous football player, which was ongoing since 2011, finally ended. Messi won the match, as the European Court of Justice ruled that because of his significant reputation, his name can be registered as a trademark despite the fact that it is similar to several earlier trademarks, which is otherwise a ground for exclusion. In our short article, we summarise the details of the case and the legal significance of the decision.
The legal debate surrounding the “infamous” legislative amendment in 2015 introducing the right to unilaterally increase land rents has taken another turn. In its decision this spring, the Hungarian Supreme Court disregarded the previous decision of the Constitutional Court on this matter and omitted the application of the disputed provision when deciding a legal issue. Our article will discuss the significance of the decision, as well as the contradiction between the two highest organs of the judiciary.
The „start-up capital” of the limited liability company is the initial capital which is the totality of the capital contributions provided by the shareholders. Since the shareholders may declare that the capital contribution shall only be provided after the establishment of the company in a later date, the painful situation might occur that the shareholder does not provide or only partly provides the capital contribution. Given that this may create unwanted consequences, the settlement of the capital-related problem is the common interest of the shareholders. In this article we summarize the possible methods to solve this issue.
On 11 March 2020, the Hungarian Government declared a state of emergency in Hungary , which is still in force until revocation. In the last two months, nearly 100 government decrees have been adopted in connection with the pandemic, nearly a third of which are economic measures. In our article, without going into the very details, we summarize the most important measures affecting businesses to give economic operators a comprehensive picture of the benefits and reliefs available in different areas.
Although efforts are being made around the world to curb the spread of the epidemic, it can already be seen that entire sectors of the economy have to face a difficult situation, which is also affecting companies ’contracts. For example, many businesses request the reduction of the rent for the premises they lease for business, due to the coronavirus situation. The question arises as to whether there is another option for amendment if the parties fail to reach a mutual agreement.
The worldwide coronavirus epidemic is causing serious problems in the economy as well, businesses in sensitive sectors fear a total loss of income for months. For this reason, the Hungarian Government introduced a ban on termination and rent increase for commercial lease contract in case the lessee operates in specific, sensitive sectors. However, there are several legal uncertainties surrounding the measure, which will be discussed in our brief article.
You are reading the final part of our series on “lawful dismissal”. This article examines with a case study approach, that in practice, what violations may justify immediate termination, i.e. what shall be meant under the Labour Code definition “grave violation of a substantive obligation”.
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 the previous articles on the lawful dismissal, we discussed that, ranging from the employee’s behaviour to the employer’s reorganization, there can be many legitimate reasons for dismissal by the employer. However, irrespective of the legitimate reason, the employment relationship cannot be terminated if the employee is protected against dismissal by law (i.e. the Labour Code). From our article, you can learn about these protections.
You can hear a lot of stories where the debtor “escaped with the money”, the construction contractor “disappeared” or the debtor company’s assets have been hidden. Essentially, failure to pay is a breach of contract, which is subject to civil action, eg. litigation. However, if a transaction is suspected to be a scam, criminal proceedings may be brought against the defaulting debtor, for example, for fraud, which we examine in this article.
In the previous articles on the lawful dismissal, we explained dismissal for employee-related reasons. However, that is only half of the whole picture, because in many cases the employer dismisses employees for reasons of reorganization or redundancy. Justification must meet strict rules to be lawful in this case as well, the details of which we explore in this article based on case law of Hungarian labour courts.
In our previous article we have examined the cases in which an employer may terminate the employment due to an employee's inappropriate behaviour or attitude. But what if inadequate work or the lack of expected results is not because of the misbehaviour or bad attitude of the employee, but because of not having the knowledge or skills needed to perform the job properly. What can an employer do in this case? What can be the basis for a legal termination? From our article, you can get the answer to these questions.
Although, considering the current labour market in Hungary, employers are trying to keep the employees at the company, there may be situations where the employment relation cannot be maintained due to behaviour or attitude. In our previous article we explained that a dismissal by the employer is far from a simple move, as the legitimate justification must meet a number of criteria. In the present article, we examine the grounds for termination based on the behaviour of the employee.
From salary to vacation leave, an employment relationship can have many sensitive parts. However, labour disputes mostly arise around the termination of the employment by the employer and specifically in connection with the justification of dismissal. Since the fault of the justification will result in unlawful termination, leading to important pecuniary consequences, in our forthcoming article series, we summarise the rules governing employment terminations and the related case-law of the Hungarian courts. In the first part we present the general rules for justifying employee termination.
Whether weekly or once a year, to another continent or just across the city, work related travel concerns every single employment relationship. Despite its importance, Hungarian regulations are unclear about work related travel, which can easily be the source of an unpleasant labour dispute. To avoid this, from our article you can learn if your business is properly accounting for business travel.
For companies operating internationally or with foreign background, it is common to work with documents in a foreign language and to sign corporate documents and contracts abroad. Although it is insignificant in the daily life of a company, the situation is different if you want to use a document signed abroad or in foreign language in a litigation or in other legal proceedings, as the foreign document has to comply with special rules. In our short article we will summarize what should you consider if you want to use foreign documents before the Hungarian authorities.
Even winning a lawsuit and having the positive judgment in your hands are of no use if the debtor company is terminated in the meantime. In this case, the "winning" judgment will only be a worthless piece of paper, despite that you have spent a fortune on debt recovery. In this short article, we summarize the most important rules and deadlines so that you can avoid staying empty-handed at the end of the debt collection in Hungary despite winning the lawsuit.
It has been one of the most annoying things for Hungarian companies that they had to pay Value Added Tax (VAT) in case of unpaid claims as well, so even if the invoice has never been paid by the business partner. Fortunately, from 2020, the above rules will change, and it will be possible to refund the VAT already paid on uncollectible claims. In our article we summarize the details.
One of the annoying things in business is when your invoices are not paid by your business partners. After getting bored of their excuses, there comes a time when you have to put pressure on your debtor. At that point, you either entrust a law firm or turn to one of the many debt collection agencies offering “simple and cheap, yet efficient” solutions. Are the latter solutions really that effective? Is it worth entrusting a debt collection agency in Hungary? In our article, we bring up three reasons why hire rather a law firm in Hungary instead collection agencies.
The initiation of a liquidation procedure is an effective debt collection method, since the debtor may only avoid being liquidated by paying the claim if the conditions specified in the Act on Bankruptcy Proceedings and Liquidation (Bankruptcy Act) are met. For this reason, in the case of liquidation, one of the most common defences of the debtor is the reference to offsetting. But can the debtor refer to offsetting without limitation during liquidation? In our short article we answer this question.
In business, signing a contract or making a declaration on behalf of a company is daily task. During this “routine” process, the parties often do not check whether the signatory of the other party can represent the company. Is the contract valid in Hungary if the signatory has no signing authority, or it is limited? Who, what and from whom can claim in such a case? In our article, you will find the answers to these questions.
Remuneration is one of the cornerstones of an employment relationship for both parties. It is not a new practice that employers seek other ways to increase the consideration of workers without modifying the base wage. The so-called “semi-official” solutions can be dangerous for the employer, because an employment ending badly can easily be the beginning of a labour dispute. In our article, we will show you smart salary solutions compliant with the Hungarian labour law.
If you believe that the highest judicial forum of the EU only deals with matters that are far from everyday life, you have missed the recent decisions of the Court of Justice of the EU. Last year, the Court has drawn significant conclusions on copyright in a case concerning the taste of a cheese product, and now, in a legal dispute surrounding a returned mattress, the Court gave important guidance on online purchases. The decision concerns both consumers and sellers, so our short article is worth reading for everyone.
In case of leasing an office, warehouse or other industrial property, lessees often make significant investments to the premises, which can easily result in a dispute when the contract is terminated. From our article, you can learn what should you to take into account as a lessor in relation to investments made by lessees.
Changing your supplier is a common situation in business. Can you switch between suppliers without restrictions, if there is no fixed term or exclusive contract? Do you have to purchase from the supplier during the notice period? What are the risks of failing to give purchase orders? In our article, we answer the above questions by analysing the Hungarian judicial practice.
It has not been a good start for McDonald’s this year, as in January, the news that the major company has lost its EU trademark protecting BIG MAC spread like wildfire. Since the decision can be subject to an appeal, it would be premature to consider the loss of the trademark as a fact, however, the lesson can already be drawn, which we present in our article along with the details of the case.
Which artworks are protected in the European Union by copyright? Due to the constant development of technology and art the answer shall be reconsidered from time-to time. In our article we address this question on the basis of the landmark judgments of the European Court of Justice delivered in the field of copyright.
The Court of Justice of the European Union has ruled in a case, where the main question was whether the taste of a cheese product may be eligible for copyright protection under EU law. We summarize the case and answer the question what constitutes a “work of art” under EU copyright law.
On 1st January 2019 the Act on the Control of Investments Detrimental to the Interests of Hungarian National Security entered into force. On the basis of the new law investors who are considered as “foreign” have to report their newly acquired interest in Hungarian companies. Pursuant to the Act, the Minister of the Interior may prohibit the acquisition or may withdraw the right of the company to pursue a certain activity. In our article, we summarize the most important information regarding the new law.
The Christmas shopping fever began with Black Friday in late November, and not only the buyers are trying to exploit this period of discounts, but also the sellers. During this season the Competition Authority is also curious about the incredible sales and should they find any breach, their “surprise” to the seller will be a fine of ten millions of HUF. During the inspections of recent years, big companies have been caught in the authority's net such as Extreme Digital, Media Markt, Alzo or Lidl. If you are a seller or operate an e-shop, it is as easy to slip into a legal pitfall as slipping on ice. That's why we've collected the most important rules for discounts attracting customers and how to operate a compliant e-shop. Thus, you can avoid paying your end-of-year earnings to the Competition Authority.
Has your debtor just gone bankrupt? Has he alienated his assets to a foreign company before that? When can you sue the latter in your home country for concealment of assets to avoid an expensive foreign litigation? In its judgment in the Feniks case the Court of Justice of the European Union, answers the above question, which we summarise in our article.
When we talk about work, employment relationship comes to everyone’s mind first, although you can work for someone’s interest in other ways outside the “9-5”, monthly paid job system, for example by an engagement contract. Whether you are an employer or an employee, you need to know what the differences are between the two most common forms of working, especially because in some cases the employment authority or the court may re-classify the engagement as employment and may impose a significant fine on the principal.
If business secrets are mentioned, most people think of big companies and tenders worth millions. Nevertheless, not only big companies are affected by leaks of confidential information, causing serious disturbance and financial loss. If you think this problem cannot affect your business, this article is for you. In our article, we will show you what can be considered as a a business secret, how you can protect this information, and what are your options when the breach has already occurred.
There are many requirements for international road transportation. These usually concern the carrier, but in some cases you also have obligations as a recipient and failure to comply with them may result in a fine. In this article, we tell you how you can avoid the “fine trap” set by the authority, in case your company is waiting for a shipment from outside the EU.
We are no longer keeping it secret: in August, the new law on the protection of business secrets entered into force, which, unlike the fragmented rules that have been applied so far, will protect business secrets and know-how in Hungary more uniformly and effectively. We summarize the most important aspects of the new law in our article.