Hungary: Use of electronic documents in employment relationships

This trend has inevitably affected the employment sector, as both employers and employees have an increasing need to reduce the volume of paper-based documents used in employment relationships. At the same time, the use of electronic documents has raised several practical questions. This update discusses the key legal aspects of using electronic documents in employment relationships in light of the relevant court practice.

General formal requirement of employment-related documents

The Labour Code provides that legal statements in the context of an employment relationship can be made without formal requirements, unless otherwise stipulated by law or the parties' agreement. The law requires that the key documents concerning employment relationships be in writing, such as:

• documents establishing, modifying or terminating an employment contract;
• information notices setting out working conditions; and
• notices on collective redundancy.

Generally, if an agreement must be made in writing, so must its amendment and termination. In addition, on an employees' request, an employer must make its statement in written form.

The Labour Code does not precisely define 'written form'. As such, most practitioners agree that the Civil Code applies in this regard.

The code states that if a legal statement must be made in writing, this applies, at a minimum, to its key points. The code also states that "a legal statement shall be construed to have been made in writing if the person making the statement has signed the legal statement". This requirement is used and accepted in practice. However, commentators have disputed whether the handwritten signature of the party making a statement (primarily employers) is required (see court practice below).

Formal requirements of electronic documents

Although the Labour Code may not be explicit with regard to written form, it defines the requirements that electronic documents must fulfil in order to qualify as written statements. An electronic document can qualify as a written statement if it can:

• appropriately record the information contained therein unaltered (to enable retrieving its contents later);
• identify the person making the legal statement; and
• record the date on which the legal statement was made.

Apart from the above, the law prescribes no stringent requirements regarding electronic documents. In particular, it does not require parties to use electronic or so-called 'qualified electronic' signatures.

Court practice seems to confirm that emails, text messages and even entries on social media sites can be considered electronic documents and be accepted in an employment context.

In a recent case, a court ruled that a preliminary information notice of a collective redundancy sent to an employee by email could be considered written notice, as it would fulfil the Labour Code's requirements. In other words, the obligation to provide written information can be discharged by sending an email and statements made by email cannot generally be considered as invalid for formal grounds.

Most commentators agree that the development of court practice allows employers to issue even termination notices by means of electronic communication (eg, by email). Given that the concept of electronic documents is interpreted broadly, employers may lawfully apply such practice. However, in the case of a dispute, the employer must be able to prove, among other things, that:

• the statement was made on time;
• the employee had the chance to access its contents; and
• it was made by an authorised person.

For these reasons, in the case of unfriendly terminations, employers and their legal advisers show some reluctance towards the use of electronic communication (sometimes rightfully so) and stick to the old-fashioned paper-based method. However, due to changing court practice and emerging communication methods, electronic communication in this regard will likely increase further.

Signature requirements

As noted above, the Labour Code does not explicitly:

• require a handwritten signature on written documents; or
• refer to the Civil Code's requirement that a legal statement must be signed by the person making it.

In addition, neither the law nor court practice require the parties making statements to sign them electronically.

The question as to whether a handwritten signature is required for the validity of written employment-related documents has particular relevance if an employer intends to introduce electronic signatures within its organisation. This is because the EU Regulation on Electronic Identification (910/2014) applies to electronic signatures. Although this regulation states that an electronic signature should not be denied legal effect because it is in electronic form or does not meet the requirements of the qualified electronic signature, it also states that only a qualified electronic signature will have the equivalent legal effect of a handwritten signature.

Introducing a system in which only a qualified electronic signature is used on a daily basis is fairly burdensome. However, court practice seems to favour flexibility, as it requires neither handwritten signatures nor qualified electronic signatures.

In a recent case, an employee challenged the validity of a mutual termination agreement as the paper-based document had not been signed by the employer's representative; rather, the business stamp of the employer and the signature stamp of the managing director had been used. The court accepted that the document was valid as the employer's managing director had signed it with a 'signature stamp' (ie, no handwritten signature was required).

Comment

The use of electronic documents in an employment context is becoming increasingly common. That said, employers must be cautious when using electronic documents for documents of significant importance (eg, documents establishing or terminating an employment relationship) as there are some associated risks, especially concerning the delivery of electronic documents.

As shown by the above examples, the courts tend to accept some flexibility in relation to the use of electronic documents. Due to this and the increasing importance and significance of electronic communication methods, the risks associated with the use of electronic documentation are likely to be further reduced in future.

This article was first published on www.internationallawoffice.com 

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Further reading

Employee consent to data processing