Gender equality in Hungarian workplaces

This article provides a snapshot of the current situation in Hungary and a summary of the legal regulations and the available enforcement options.

Statistics

Earnings are the most debated aspect of inequality between women and men in the workplace. Every year Eurostat publishes the latest statistics on the gender pay gap. In 2020, women's gross hourly earnings were 17.2% below those of men in Hungary.

Equal pay for equal work

While in recent years significant progress has been made toward gender equality, legal protections are still necessary to ensure that employers are held accountable for their actions and to provide a framework for addressing issues relating to gender discrimination. Equal pay for equal work is one of the legal principles used to eliminate the gender pay gap. This principle holds that individuals who perform the same job, or jobs that require similar skills, experience and education should receive the same pay, regardless of their gender.

Legal background

The Constitution of Hungary¹ guarantees fundamental rights to all citizens without discrimination based on any characteristics and explicitly recognises the equal rights of women and men. However, the constitution does not expressly mention the prohibition of discrimination in earnings.

The Hungarian Labour Code², on the other hand, sets out the requirement of equal treatment in all aspects of employment, including remuneration. Specifically, the Labour Code mandates that the equal value of work for the principle of equal treatment shall be determined based on:

• the nature of the work performed;
• its quality and quantity;
• working conditions;
• the required vocational training;
• physical or intellectual efforts expended;
• experience;
• responsibilities; and
• labour market conditions.

Enforcing equal pay for equal work

By enshrining the principle of equal pay for equal work in law, Hungary has established a black letter law to reduce the gender pay gap. However, it is essential to recognise that more than written principles is needed to eliminate the disparities. Effective implementation and enforcement of these principles are equally important, and robust redress mechanisms must be established to ensure that employees do not earn less just because of their gender.

One of the ways Hungarian law³ – in line with the EU Equal Treatment Directive⁴ – helps to enforce this principle is by shifting the burden of proof in litigation. In cases of alleged breaches of equal treatment, the burden of proof is reversed compared with standard civil proceedings. This is because the person alleging discrimination is often in a disadvantaged position and may not have access to all the relevant evidence.

In Hungary, the employee must only prove the primary facts upon:

• suffering a disadvantage – in the case of gender pay gap, the disadvantage is the lower salary itself. To demonstrate the primary facts, it is enough for the employee to have hearsay knowledge for example; and
• having a protected characteristic – in the case of gender pay gap, the protected characteristic is the gender, or being a woman.

Therefore, the burden of proof is shifted to the employer, which is required to demonstrate that it did not engage in discriminatory behaviour, because there is no:

• difference between the salaries of different genders; or
• causal link between lower pay and the protected characteristic.

The employer must therefore show that the difference is due to objective reasons such as education or work experience.

When a male employee earns more than a female employee in the same job or does work of similar value, the employer has the burden of proving that there is a valid reason for the discrepancy in pay. If the employer cannot provide such evidence, the disadvantaged employee may be entitled to compensation for the loss of income suffered because of the pay gap.

That said, the above indicated rule of the Labour Code seems to provide leeway to employers, as they may justify differences in pay with different labour market conditions as an objective factor. While labour market conditions may indeed be different in certain sectors or geographical parts of the country and may therefore validly justify differences in pays, employers must validly support reference to such conditions and such conditions should not be used as grounds for justifying inequality.

Compliance rather than enforcement

While reversing the burden of proof and a stricter interpretation of objective criteria may help to hold employers accountable, it only facilitates ex-post reparation. Initiating litigation is not only a costly process, it can also take several years. This means that even if an employee is ultimately successful in their legal action, they may have already suffered significant harm due to the violation. Additionally, the time and resources required to pursue legal action can be a barrier for many employees, particularly those who may be most vulnerable to mistreatment in the workplace.

Given these challenges, a better approach is to focus on getting employers to comply with the law proactively. A proposed EU directive⁵ would prevent the gender pay gap in the workplace by increasing salary transparency. For example, the EU directive requires employers with at least 250 workers to make publicly available and accessible certain information, such as the pay gap between female and male workers in their organisation.

While some countries have already adopted similar policies and directives, Hungary currently has no such rules in place. In six countries that are part of the Organisation for Economic Co-operation and Development, there are consequences for private sector companies that fail to comply with pay auditing requirements, which may include financial penalties. These countries are:

• Finland;
• France;
• Iceland;
• Portugal;
• Spain; and
• Sweden.

Additionally, companies in these countries are obligated to share the results of their pay audits with their employees, the government, and/or the public, as part of their disclosure requirements.

Comment

The European Pillar of Social Rights action plan has set a goal to reduce the gender employment gap by at least 50% compared with 2019 by 2030.

Completely eliminating the pay gap between women and men is not statistically feasible. The pay gap is often due to the nature of specific positions rather than discriminatory practices by employers. Certain positions are typically filled by either males (eg, car mechanics) or females (eg, nurses), which skews aggregate statistics and does not accurately represent real discrimination.

However, it is important to strive for equal pay for equal work, regardless of gender. To achieve this aim, employers need to:

• review their pay practices;
• identify and address pay discrepancies; and
• ensure that pay decisions are based on objective and fair criteria.

The Hungarian legislature and judicial enforcement bodies can play an important role by creating and enforcing legislation that promotes pay transparency and fair pay practices beyond the already existing principles.

Endnotes

¹ Article XV of the Fundamental Law of Hungary (25 April 2011).

² Section 12 (1) of the Act I of 2012 on Labour Code.

³ Section 19 pf the Act CXXV of 2003 on equal treatment and the promotion of equal opportunities.

⁴ Article 19 of the Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation.

⁵ Proposal for a Directive of the European Council and of the Parliament to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

This article was originally published on LEXOLOGY. 

authors: Dániel Gera, Dóra Halmosi