Navigating changes: key changes in labour and immigration law in 2023 in Hungary

Employment

As of 1 January 2023, a significant modification to the Hungarian Labour Code came into force. The amendments, outlined in Act LXXIV of 2022, focused on areas such as information obligations of the employer, abuse of rights, new types of holidays and rules to make it easier for parents to work. In March 2023, the European Court of Justice (ECJ) adopted a decision that had a major impact on the calculation and allocation of daily and weekly rest times.

Significant modification to Hungarian Labour Code

Information obligations of the employer

The 2023 amendments have refined the information notice requirements under sections 46 and 47 of the Labour Code. Employers are now obliged to provide detailed information within seven (instead of 15) calendar days of the commencement of employment. Notable additions to the information notice include:

• working time (ie, daily working time, its beginning and end and length of any overtime work);
• benefits;
• termination rules;
• employer's training policy; and
• the name of the authority to whom the employer pays employment taxes.

Employees working abroad for over 15 days must receive additional information concerning remuneration and reimbursement rules, along with essential details on the rights and obligations of cross-border service providers and their employees.

Abuse of rights

Section 7 of the Labour Code establishes the prohibition of abuse of rights as a fundamental provision guiding behaviour in employment relationships. As of the 2023 amendment, changes to the rules of evidence have shifted the burden of proof in cases involving wrongful termination due to abuse of rights in favour of the employee. The claimant (typically the employee) is now responsible for proving the facts and detriments, while the party exercising the right (usually the employer) must demonstrate the absence of a causal link. Additionally, starting in 2023, employees can request the court to reinstate the employment relationship if the employer have abused its rights to terminate it.

Paternity and parental leave

Aligned with Directive (EU) 2019/1158, Hungary has extended the paternity leave from five to 10 days. With the 2023 Labour Code amendments, Hungary introduced parental leave, granting both parents 44 working days, provided the employment has existed for at least one year. The employee is entitled to 10% of the absentee fee during parental leave, with deductions for social security benefits. It is noteworthy, however, that the length of parental leave in Hungary does not fully align with Directive (EU) 2019/1158, which stipulates a four-month duration for parental leave.

Employment contract amendment for parents

The amendment allows employees to request a change of place of work, a change of scheduled working hours, remote working or part-time work until their children reach the age of eight, except for the first six months of the employment. The employee must give reasons for this request in writing and indicate the date of the change. The employer must give written notice of the employee's request within 15 days. If the request is refused, the reasons must be provided. In the event of an unlawful refusal of the request or failure to make a declaration, the court can replace the employer's statement of consent.

Amendments to fixed term employment

Renewal or re-establishment of fixed-term contracts within six months of termination now requires a legitimate interest on the part of the employer. Probationary periods are prohibited in these instances. For contracts lasting up to one year, the maximum duration of the probationary period (three months) is prorated.

ECJ decision on weekly and daily rest time

On 2 March 2023, the ECJ adopted a decision that had a major impact on calculating and allocating daily and weekly rest periods. The ECJ's decision (C-477/21), originating from Hungary, was an employment dispute involving a train driver contesting MÁV-START, the Hungarian state railway company, not providing him daily rest before weekly rest. The ECJ ruled that while member states can give weekly rest periods exceeding the EU Directive's minimum of 24 hours, they cannot compromise other rights, notably the mandatory 11-hour daily rest. ECJ also clarified that the weekly rest period can begin to run once the employee has benefited from the daily rest period.

The decision requires Hungarian employers to adjust work schedules to ensure compliance, a task made challenging by the existing 48-hour weekly rest provision with an 11-hour daily rest period. Since the ECJ decision, the Hungarian legislator has yet to propose a solution, leaving legal uncertainty. Hundreds of cases on this specific legal matter are pending in Hungary, many were initiated within a month following the ECJ's judgment.

Immigration

In 2023, the Hungarian government initiated the modification of immigration laws, starting with the introduction of an unsuccessful new residence status, accompanied by presenting a comprehensive legislative modification.

Short-lived legislation on guest workers

On 13 June 2023, the Hungarian Parliament adopted a new law regulating the employment of foreign workers. The law introduced the concept of guest workers (third-country nationals from countries outside the EEA and non-neighbouring countries) and established guidelines for their employment in Hungary.

This new law was due to come into force on 1 November 2023. However, the Ministry of Economic Development announced in October 2023 that this law was withdrawn, and a new law would be drafted instead. According to the government's explanation, they aim to implement a stricter legal framework for the reception of guest workers from third countries.

Comprehensive legislative modification

On 11 November 2023, the Hungarian government officially presented an all-encompassing legislative proposal on immigration law to Parliament. According to the official reasoning of this legislation, rationale behind this proposed legislation is that the increasing migration calls for a tightening of the aliens' policing system. The proposed law will fundamentally change the rules on the Hungarian immigration system, going beyond regulating the entry of guest workers and introducing new types of residence permits (eg, the Company Card, National Card and residence permit for guest workers). Furthermore, it seeks to tighten the obligation to depart the country and act against exploitative employers.  The recently enacted legislation came into force on 1 January 2024. It is applicable from 1 March 2024; until then immigration proceedings are suspended.

Comment

In summary, while the year 2023 marked significant revisions to the Hungarian Labour Code, 2024 promises extensive legislative changes in the domain of immigration. The evolving legal landscape not only reflects the dynamic nature of societal needs but also underscores the ongoing commitment to adapt and refine regulations to address emerging challenges.

This article was originally published on Lexology.

authors: Dániel Gera, Dóra Halmosi