Article

Chapter 44, Articles 65 (3), 82-84, 273 (1)

Description

In general, the employer shall be liable to provide compensation for damages resulting from the wrongful termination of an employment relationship. Compensation for loss of income from employment payable to the employee may not exceed 12 months absentee pay (a fixed salary for paid leave).

If an employment relationship was wrongfully terminated, the employee is entitled to severance pay. In lieu of severance payment, the employee may demand payment equal to the sum of the absentee pay which would have been due for the notice period when his/her employment was terminated by the employer. In addition, at the employee’s request, the court shall reinstate the employment relationship in cases when:

• it was terminated in violation of the principle of equal treatment;
• it was terminated in violation of the prohibition of abuse of rights (an addition to Article 83, entered into force on 1 January 2023);
• it was terminated during pregnancy, maternity leave, paternity leave, parental leave (additions to Article 65 (3), entered into force on 1 January 2023), or leave of absence taken without pay for caring for a child;
• it was terminated during any period of actual reserve military service; in case of women, if it was terminated while receiving treatment related to a human reproduction procedure, for up to six months from the beginning of such treatment;
• the requirement to obtain the consent of the trade union regarding the dismissal of a union representative (Article 273 (1)) was disregarded;
• the employee served as an employees’ representative at the time when their employment relationship was terminated; and
• the employee successfully challenged the termination of the employment relationship based on the former mutual consent between the employer and the employee concerned, or on their previous legal declaration (to accept the termination based on mutual consent).
• the employment relationship is terminated unlawfully by the employer, the employee shall be eligible to a compensation corresponding to the sum of the absentee pays that he/she would have been entitled to for the notice period.
• a fixed-term employment relationship is terminated unlawfully, the employee shall be eligible to a compensation corresponding to the sum of the absentee pays due for the time remaining until the end of the fixed period, up to maximum of three months’ absentee pay.

The employers shall be entitled to demand payment for damages if such are in excess of the amount described above. These sums in total may not exceed the employee’s absentee pay due for 12 months. This upper cap, however, does not apply to the obligation on the part of the employer to retroactively pay the absence fee for the period the employee was out of the job due to the wrongful dismissal in the case the employee requires the reinstatement of the employment relationship. The provisions on wrongful termination of employment shall apply if the employee fails to leave his/her post according to regulations.

Commentary

The amendments regarding the consequences of non-compliance with dismissal regulations can be regarded as beneficial to employees. As the law firm Bird & Bird points out, the inclusion of wrongful dismissal into cases when employees may request their reinstatement has a potential consequence on the sum payable to the employee as compensation. The duration of the period between the time of dismissal and the time of reinstatement shall be regarded retroactively as time spent in employment, and the employee shall receive the absentee pay for the said period. That means that the upper boundary of compensation (12 months absentee pay) does not apply in such cases.

Additional metadata

Cost covered by

Employer

Involved actors other than national government

Court

Involvement (others)

None

Thresholds

Affected employees: No, applicable in all circumstances
Company size: No, applicable in all circumstances
Additional information: No, applicable in all circumstances

Sources

• 2012. évi I. törvény a munka törvénykönyvéről
• New rules on the prohibition of abuse of rights in Labour Code means employers must be more careful when terminating employment