18 September 2019

The loss of confidence was a frequently used reason of termination by employers, which was not defined by the Labour Code, therefore it is for the judicial practice to give substance to it. We summarize in our article, in which case was well-founded the termination based on loss of confidence in the practice of Labour Courts.

1. Loss of trust or confidence as termination reason

Trust is the base of every relationship thus no employment can be imagined without it, and the loss of it implies the termination of the labour contract.

However, the Hungarian Labour Code does not give a guideline about the loss of trust or confidence, , just generally mentions the behaviour and the infringement relating to the employment relationship of the employee. Indeed, as employer, you bite off more than you can chew, if you want to write down in detail the behaviour of employers appropriates to the expected confidence.

Nevertheless, as employer, you can allege to the loss of confidence as a reason of termination, either immediate either “normal” reason of termination.

As the court will evaluate the legality of your termination, in order to know, when you can do that, it is worth looking into the practice of the labour courts relating to loss of confidence.

2. Fifty shades of loss of trust

Very wide range of employee’s behaviour can be ground for a dismissal for the loss of trust.

It is important to note, that the loss of trust largely depends on the nature of the work.  For instance, in case of a colleague, responsible for money management, or entitled to dispose of funds of higher amount, the question of loss of confidence arises more increasingly, than in a case of an administrative colleague.

The same goes for the place in the corporate hierarchy: the same employee behaviour can lead to a different judgment in case of a managing director, than in case of a secretary.

In the following we examine, when was the termination of the employer legal based on loss of confidence.

3. Attitude in workplace

The termination based on loss of confidence was legal in cases of an employee having love affair with a member of his staff, or in case another one, who struggled at the workplace, or in generally, disturbed the working environment.

In one case, the employment relationship of an editor-in-chief was terminated, who wrote insulting articles about the employer, and the termination notice, having regard to the position of the employee was found valid by the labour court.

In another case, the inconsistent answers to newspapers allegations of an employee, who was in leading position and responsible for public procurement procedures, served as valid ground of termination for loss of confidence.

According to a fresh judgment of the Curia, when a chief financial officer makes a professional mistake by not requiring the necessary documentation, the loss of confidence can be valid ground for dismissal, as he should fulfil his work obligations by complying with the general professional rules, showing due diligence.

4. Cases outside the workplace

Your employee shall take into account the interests of your company in his private life too.

Therefore, according to a court decision, an employee who deals with travelling administration, cannot accept preferential travelling services from a company who has a contractual relationship with his employer because it causes the loss of confidence.

In another case, a bank employee disposed of the school class money as his own, so her employment was terminated without notice on the basis of the loss of confidence.

According to another court decision, the employer manifestly loses his confidence in case of a police notification about the arrest of his employee. Furthermore, as employer, you do not even have to wait the end of criminal procedure against your employee, the reasonable suspicion is sufficient to the termination without notice due to loss of confidence.

5. Summary

Based on the above case law, it can be established that there are, requirements, which can be difficult to determine, yet the employee shall maintain in the absence of written rule, and the non-compliance with them can lead to the loss of trust with the employee

The loss of confidence is “blanket rule” in the case law of the Hungarian labour courts, as an employer you can refer to it in wide variety of cases, but you have to be careful, because the devil is always in the details!