In early January 2024, many managing directors in Hungary of companies with any agriculture-related activity could be surprised to receive a letter of the Hungarian Chamber of Agriculture stating that the company has become a member of the Chamber by law from 1st January. What does this chamber do, and what are the main consequences of the membership? Why it is worth to consider an opt-out from the Chamber? In this article, we address these issues.
As many of you may know, it is possible to set a probationary period at the beginning of the employment relationship, in order to allow the employer to get to know the employee and his/her professional qualities and personality better. In this article we will go through the rules on probationary periods in order to make this very useful legal instrument for employers more transparent.
When you enter a contract with a Hungarian business partner, it is more common that a Hungarian arbitration clause is included in the contract. This provision is crucial because it determines how you can enforce your claim against the other party in case of a legal dispute. In the following we outline the basic Hungarian legal provisions on arbitration agreements.
On 30 November 2023 our managing partner dr.Richard Schmidt LL.M gave a lecture on contemporary issues of the arbitration agreement to lawyers of the Budapest Bar Association in the framework of the training course „Arbitration and other Alternative Dispute Resolution Methods” jointly organised by the Budapest Bar and the Hungarian Arbitration Association.
In order to boost corporate lending and thus increase economic competitiveness, the legislator recently implemented changes to the Hungarian Companies Act. From 1 January 2024, companies will have to provide additional information about the finances of the company in the registration or modification procedures. In this article, we summarize the new rules and the related deadlines.
Our managing partner, dr.Richard Schmidt LL.M was invited by the Legal Division of the Hungarian Chamber of Commerce and Industry and the Hungarian Commercial Arbitration Court to make a presentation on the sometimes stormy relation of international commercial arbitration with EU law and the European Convention of Human Rights.
The company name is an important asset of the company and also helps the customers when choosing between products or services. Therefore, a new company can only be founded with a name that is sufficiently different from existing companies. What are the legal options for a company if, despite the above, a new company with a very similar name has been registered? In our article, we analyse this question based on the recent decision of the Hungarian Supreme Court.
Nowadays, thanks mainly to technology, administration has become much faster, and this is also true for company formation. Once you have the necessary documents, you can start your company quickly. In this article we show you the timelines and deadlines regarding company formation procedure.
In the field of labour law, we meet with strict rules which protecting the workers. The failure of compliance may result in not only consequences, but it can cause serious harm to the company’s reputation. Therefore, in this short summary we sum up the most important things that an employer needs to know before hiring an employee in Hungary.
Similar to creating a company, closing a company is also a legal procedure at the Company Court. You will need professional help in this issue: a lawyer and an accountant. In this short article we summarise the legal aspects of the winding up procedure.
The position and tasks of the employee are one of the key elements of the employment contract and are typically recorded in the job description. It is often a matter of dispute between the parties whether the employer can unilaterally modify the job description at all, and if so, to what extent. In a recent court decision, a Hungarian appellate court addressed the above question in a situation where the employer supplemented the employee's tasks with new tasks similar to his existing tasks. In this article, we analyse the recent decision on this matter.
There are times when you reach a point when you decide it is better to finish your business in Hungary e.g. if you have a non-prospering company without perspectives. However, the situation is not so simple, and leaving the company behind may be risky. In this short article we summarise the legal aspects of company shutdown which is worth to read if you considering closing the company.
In some cases, setting up a supervisory board is mandatory. Its main function is to control the management and the managing directors of the company. In this article, we will summarise the most important rules concerning the supervisory board and its importance for deciding whether we need one in a Hungarian LLC.
In most cases the shareholders of a limited-liability company (LLC) will not be liable for the debts of the company with their own assets. However, there are situations, when the rule of limited liability shall not prevail and under special conditions, the shareholder of a terminated LLC will be directly and unlimitedly liable for the company’s debts. In this short article we summarize the most important cases when the limited liability becomes unlimited.
Signing a contract or making a statement on behalf of a company is a common task in business. During this "routine" process, parties often do not check whether the signatory of the other party can represent the company. Is a contract valid in Hungary if the signatory has no or limited signing authority? Who, what and from whom can claim in such a case? In this article you will find the answers to these questions.
As many people know, enforcement can be requested on a final judgment. Furthermore, in case if the debtor did not raise any objection against the order for payment in 15 days the order for payment has the same force as a judgement from the court, and the creditor can enforce it. But how exactly can enforcement be requested and what are the costs? These and other questions will be examined in this article, which summarises how to enforce a domestic judgment in Hungary.
Doing business also means a lot of paperwork. When signing company document in Hungary, it is important that the signature should not have any fault, because it may result in an invalid document, and can cause a loss of time and money. To avoid wasting time and money for administrative mistakes, read the 4 must-knows we gathered in this article.
In our last article we summarised the rules on e-writing in employment law. In this article we will look at judicial practice in regard with the above to examine how lenient the courts are with regard to certain documents.
The new Hungarian Whistleblower Act was finally adopted in May and will enter into force on 24 July 2023. It is particularly important, since businesses with more than 250 employees have to be compliant with the law before the above-mentioned date, while small businesses have deadline until 17 December 2023. In this article, we summarise the key tasks for employers under the new legislation.
Limited liability companies are a popular form of business in Hungary, often because of the limited liability of the members, the founders and owners of the company. In the course of their business activities, their private assets and the assets of the company are separated, so that they are not, as a rule, liable for the debts of the company. The liability of the members is therefore limited, but how and why is the managing director (CEO) of the limited liability company liable? In this article we will look at this question.
In our previous article, we introduced the costs of the litigation in Hungary. In this article, we will examine which party is liable to pay these costs and whether the debtor be liable to pay court costs in Hungary.
The use of electronic documents is very popular in the field of labour law among both employers and employees. Although e-signatures may seem like a good and simple solution for many labour law documents, it is worth first examining the regulations applicable to the documents. In this article we will introduce the general regulations on the labour law documents and in our next article we will examine the judicial practice in relation to different kind of documents.
Celebrating their partnership agreement signed last year, the Permanent Arbitration Court attached to the Hungarian Chamber of Commerce and Industry (HCAC) and Jus Mundi organized a half-day conference together with the Hungarian Arbitration Association in Budapest, on 4 May 2023, with the title ‘Confidentiality and Transparency in International Arbitration’. This blog post sheds light on the background and summarises the main topics of the conference.
In this article we summarise the key points of forming a limited liability company (LLC) in Hungary. We present the steps and costs of the formation procedure. If the necessary documents are available, the company formation will not take more than a few days.
In company law, we often encounter the requirement of written documents. From the first moment, i.e. the establishment of the company, through the operation of the company, until its termination, as we presented in our last article. In this article, we will examine the provisions related to the companies established online, and we will explore how we can make electronic legal declarations on behalf of the company.
In this article we summarize the key-points of the limited liability company (LLC) formation in Hungary. By presenting the main features of the Hungarian LLC, we show why it is the favourite company form among foreign investors.
Finding the most appropriate company form is essential for every business. Hungarian company law offers a wide range of company forms available for foreign entrepreneurs and investors. We prepared this summary to help you to find the form that mostly fits your business goals.
Hungary is a popular target for investing in the Central Eastern European region thanks to the 9% tax on capital gains for SMEs and 15% personal income tax for individuals, which tax rates are among the lowest for both businesses and private individuals across Europe. However, there are extra requirements for foreigners that are important to pay attention to. In order to avoid unpleasant surprises, we would like to draw your attention to the following when you are setting up your company in Hungary as a foreigner.
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.
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.
The Hungarian Arbitration Association held its general annual meeting on 16 December 2022. After the general meeting, the managing partner of our firm, dr.Richard Schmidt made an online presentation with the title „Double of quits – competing arbitration and choice-of-court agreements”.
The Civil Law Committee of the Hungarian Academy of Sciences and the Faculty of Law and Political Sciences of the Károli Gáspár University of the Reformed Church organized an online conference with the title “Review of arbitral awards under European Law” on 15 November 2022. Among more outstanding Hungarian lawyers, our managing partner, Richárd Schmidt made a presentation on the conference.
In October 2022, our managing partner, dr.Richard Schmidt participated in the annual conference of International Law Firms in Dubai, and made a presentation on recent issues of enforcing asymmetrical arbitration and jurisdiction clauses in international dispute resolution.
The Court of Justice of the European Union (CJEU) has recently addressed the issue of the possibility of retaining traffic and location data in two of its decisions. As many people know, personal data is highly protected and can only be retained in specific cases and in a specific way. The question is whether the protection of this data is also a priority in cases where it is needed for the prevention of crime. In this article, we will present the recent CJEU judgments dealing with the above issues, which are also relevant for the Hungarian legislation.
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 latest part of our series, we discussed the rules of irregular work scheduling, i.e. working time banking and payroll period in Hungary. In this article, we discuss the cases when employer transfers the right to schedule working time to the employee in whole or in part. In view of the COVID-19 pandemic situation and the widespread Home Office working arrangement, this type of working time schedule is becoming more and more popular, so we consider important to examine this institution.
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.
Our managing partner Richard Schmidt gave a lecture on asymmetric arbitration and jurisdiction agreements at a conference organized by his Alma mater, the Pázmány Péter Catholic University Faculty of Law and Political Sciences.
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.
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.
In case the employer terminates the employment relationship unlawfully, he shall reimburse the damage caused by the termination, including the loss of salary of the employee. However, the employee shall mitigate damages by registering as job-seeker, and actively searching for other job opportunities. In its latest decision, the Hungarian Supreme Court addressed how extensive is the duty of the employee to mitigate damages.
In its most recent decision , the Curia (the Supreme Court of Hungary) examined whether the requirement of equal treatment related to age can be considered in cases where the employer terminates the employment of a retired employee solely because of his age, without giving reason. In this article we examine the answer given by the Curia in connection with this question.
As a result of the COVID-19, the working from home is the “new normal” for many employees, therefore statutory regulation of distance work has become essential. After the "temporary" rules so far, the Parliament regulated the issues of working from home in December 2021. Based on the new law, the current regulations live on in the Labour Code after the end of the state of emergency, with effect from 1st June 2022. In this article we summarize the most important rules in effect.
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.
In part IV of our series of articles on the reasons for termination of the employer, we have already mentioned the qualification-based change as reason for termination in connection with the operation of the employer. Since qualification-based change is perhaps the least known reason dismissal, we summarise the Hungarian judicial practice in this article.
In its recent judgment, the Hungarian Supreme Court addressed the question whether the immediate termination is lawful if it refers to several minor infringements of the employee already sanctioned by the employer prior to the termination. In our short article we analyse the decision of the Supreme Court and the relevant judicial practice.
The non-compete agreement may provide protection of the legitimate economic interests of the employer even after the termination of employment relationship. However, the Hungarian Labour Code lays down strict requirements for the agreement. In our article we analyse a recent decision of the Supreme Court about the importance of the precise determination of the compensation, so you as an employer can conclude a valid non-compete agreement.