Significant Changes to the Labor Code From January 1, 2023

Analysis

Dr. Emese JĆŗlia Simon, Senior Associate, Noerr and Partners Law Firm

The most comprehensive amendment to the current Hungarian Labor Code (Act I of 2012 on the Labor Code) is expected to enter into force on January 1, 2023. Most of the amendment is based on the implementation of European Union directives (2019/1152 and 2019/1158). These aim to create more transparent and predictable working conditions and a better work-life balance, especially for parents and employees caring for their relatives.

The changes will require considerable preparation on the part of the employers, for example, by updating labor law documentation and examining more carefully the circumstances that give rise to unilateral measures, such as terminations, before taking action.

A substantial change is expected in the general rule on abuse of rights. From January 1, if an employee claims that the employer committed an abuse, the burden of proof in any legal dispute will be on the employer with respect to the fact that there is no causal link between the circumstances referred to by the employee (for example, that he or she had a private dispute with his or her manager) and the harmful action caused (such as termination of employment).

This change in the burden of proof obviously puts employers in a more difficult position. One practical consequence may be that employees are more likely to bring legal actions to challenge dismissals.

A significant change in the context of terminations is that, at the request of the employee, the employer will be obliged to give reasons for the termination even in cases where the Labor Code does not otherwise oblige the employer to do so (under a probationary period, termination of an executive employee’s employment, or an employee who is retired). Such a request will only be possible in some instances, for example, if the employee claims the termination is due to their asking for flexible working conditions.

One of the most significant changes will be that employees with young children (up to the age of eight) and employees taking care of relatives will be able to ask their employer to change their place of work or working schedule or to request part-time or teleworking. Employees may only make such a request if they have been employed for at least six months and must give written reasons.

The employer must provide a written answer, including proper reasoning, within 15 days. If the employee believes the refusal is unlawful or the employer does not offer a response within the time limit, the employee can go to court. The court can provide the necessary approval to change the working conditions instead of the employer. 

The mandatory content of the information to be provided at the start of the employment relationship will be extended, requiring employers to update their templates. Furthermore, the deadline for providing such information will be shorter (it will have to be presented within seven days of the start of the employment).

The duration of paternity leave will be increased from five to 10 working days. For the first five working days, the employee will be entitled to his full absence pay; from the sixth day onwards, 40% of it must be granted. A new legal instrument called parental leave will be introduced, under which an employee with a child under three will be entitled to 44 working days of leave (both the mother and the father can take parental leave). For this leave, 10% of the absence pay is payable, but this must be reduced by the amount of the child’s social security benefit paid to the employee.

A working time benefit for caregivers is also introduced, under which an employee is exempted from the obligation to work for up to five working days a year to provide personal care to a relative who needs care for serious health reasons or to a person living in the same household as the employee.

Although this is not a change in connection to the directives, it is worth mentioning that in the future, an employee who is unfit for work for health reasons will be exempted from their obligation to work and will not be entitled to salary during the period of exemption. With this amendment, the legislator has sought to eliminate inconsistent case law by introducing a uniform rule in the Labor Code.

This article was first published in the Budapest Business Journal print issue of December 16, 2022.

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