Employment Conditions in Hungary

Terms & Conditions of Employment in Hungary

Medical examinations

Employees may be subject to a medical examination to determine eligibility for a position, set by particular legislation. Employees are subject to mandatory medical examinations, and the employer must bear the costs related to these examinations.  

Business transfer

In case of a transfer of an undertaking, the rights and obligations of the employer are transferred to the receiving employer. Before the transfer date, the transferring employer must inform the receiving employer of the rights and obligations arising from the employment relationships, non-competition agreements, and study contracts affected by the transfer. The lack of such notification does not affect the claims arising from these legal relationships.

Before the transfer, the transferring employer must inform the workers’ council or the employees’ agent (or, in their absence, employees) on (1) the date of the transfer or the planned date of the transfer; (2) the reason for the transfer; (3) the legal, economic, and social consequences for employees; and (4) the planned instructions affecting employees.

The receiving employer must comply with the 15-day rule to inform affected employees on the way the transfer will change their working conditions. Employees affected by the transfer have a special dismissal right to terminate their employment. They can give a dismissal notice within 30 days of the transfer date if the transfer would cause them disproportionate detriment or make it impossible for them to continue the employment because of a substantial and adverse change in the working conditions to which they are subject.

IP protection (copyright)

The author of an intellectual work owns its exclusive IP rights from the date of creation. Suppose the employee creating works is protected by IP rights within their work obligations. In that case, the employer is entitled to the IP rights even without a separate licence agreement as long as the creation of such work falls within the employee’s obligation. Should the creation of an IP-protected product not fall within the working obligations of the employee, the employer has only utilisation rights regarding the product.

Copyrights consist of moral rights attached to the author and cannot be transferred; namely — publication of the works, designation of the author’s name, and protection of the unity of the works. Economic rights (the exclusive right to utilise the works in whole or any identifiable part, whether financially or non-financially, and to authorise every use), however, can be transferred based on a written licence agreement. Therefore, the employee can transfer only economic rights to the employer.

When it comes to computer software, apps, and databases created within the scope of the employment relationship, the copyright belongs to the employer unless otherwise agreed in the employment contract. Without a specific agreement or a waiver, employees are entitled to claim further consideration from the company for transferring the intellectual property or know-how rights they have developed.

Non-compete clauses

A non-compete agreement must be put in writing. Employees must be compensated for the non-compete agreement, since they cannot work in the field of their expertise during the term of the non-compete agreement. The minimum such compensation is one-third of the employee’s base salary.

The statutory law does not specify the exact requirements of non-compete agreements. However, an agreement cannot be unfair and excessive, and its maximum duration can be two years, starting from the employment termination date.

A default payment can also be applied in case of non-performance or breach of the non-compete agreement. There is no defined default payment, but employers should consider it.

Employment records

The employer is required to keep an employment record for each one of the company’s employees. This means that the employer should keep in one place all documents related to the employee’s individual employment (from commencing work, through any amendments of the employment relationship, and its termination). In addition, various documents come with different time requirements:

• Data relating to the certificate must be kept until the assessment of suitability for the job but no later than the expiry of the certificate’s validity period, which is 90 days. The employer can process the data related to the outcome of the medical examination until the validity of the medical certificate.
• Employment files, such as document/files/data on employees and the payment of contributions, must be kept indefinitely.
• Documents related to the payment of taxes (e.g., declaration forms relating to the declaration of taxes and declaration of insured persons) must be kept until the statute of limitation period (five + one years) runs out.
• Accounting documents directly and indirectly supporting the accounting document (e.g., payroll, summary sheets) must be kept for at least eight years.