Expert Guide on Human Rights and Forced Labour in Hungary

• Constitution of Hungary
  The Constitution of Hungary is the country’s fundamental legal document, setting out the basic principles and values that govern Hungarian society and its legal system. Several articles within the Constitution specifically address labour rights and protections:
• Act I of 2012 on the Labour Code
  This act is the primary legislation governing employment relationships in Hungary. It sets out the rights and obligations of employers and employees, covering all aspects of employment such as contracts, working hours, wages, and termination. The act is based on the principle of freedom to work and fair employment practices.
• Act CXXV of 2003 on Equal Treatment and Promotion of Equal Opportunities
  This law enforces the principle of equal treatment and prohibits discrimination in employment and other areas of public life. It covers a wide range of protected characteristics, such as gender, age, ethnicity, disability, and more. The act requires employers and public bodies to actively promote equal opportunities and take steps to prevent discrimination.
• Act LIX of 2000 on the Proclamation of Convention No 105
  This act brings into Hungarian law the International Labour Organization’s Convention No. 105, which calls for the abolition of forced labour. By enacting this law, Hungary commits to eliminating all forms of forced or compulsory labour within its jurisdiction.
• Act C of 2012 on the Criminal Code
  The Criminal Code defines criminal offenses and their penalties in Hungary. It includes specific provisions to combat serious crimes related to labour and human rights.
• Act XVIII of 2013 on the Proclamation of the Council of Europe Convention
  This act incorporates the Council of Europe Convention on Action against Trafficking in Human Beings into Hungarian law. The convention aims to prevent and combat human trafficking, protect victims, and promote gender equality in anti-trafficking measures.
• Act XCIII of 1993 on Occupational Safety and Health
  This law regulates workplace safety and health standards in Hungary. It sets out the obligations of employers to provide safe working conditions and protect employees’ health.
• Act No CVIII of 2023 on Corporate Social Responsibility (ESG Act)
  This recent act regulates corporate responsibility in environmental, social, and governance (ESG) matters. It requires companies to adopt sustainable business practices and report on their ESG performance. The act introduces a new reporting obligation that goes beyond the requirements of the EU Corporate Social Responsibility Directive, aiming to enhance transparency and accountability in corporate operations.

No, there no sector specific rules.

Based on the ESG Act the company is required to 

1. establish a risk management system, 
2. develop an internal responsibility strategy and system, 
3. conduct regular risk analysis, 
4. establish preventive and corrective action within the company's own business scope and with its direct suppliers, 
5. comply with ESG reporting obligations, and 
6. require direct suppliers to declare ESG risks that arise.

The company fulfils its reporting obligations by preparing an annual ESG report on the fulfilment of its sustainability due diligence obligations for the previous financial year, which it is obliged to have audited by an ESG certifier.

In assessing a company’s compliance with its due diligence obligations for sustainability purposes, it will take into account

1. the type of business and size of the company, 
2. the company’s ability to influence the source of the Corporate Social Responsibility (CSR) risk or environmental risk or the breach of the CSR or environmental obligation, 
3. the typical expected seriousness of the breach, the reversibility of the breach and the likelihood of the breach of the social responsibility or environmental obligation; and 
4. the nature of the undertaking's causal contribution to the breach of the social responsibility or environmental risk or obligation.

A CSR risk is a risk that arises as a result of a lack of respect for fundamental rights, a lack of support for families, a failure to ensure fair working conditions or social inequalities, or unfair, opaque or malicious business practices.

The Regulated Activities Supervisory Authority monitors the compliance of companies with their sustainability due diligence obligations and the transparency of ESG reporting processes.

If the Regulated Activities Supervisory Authority finds a breach of an obligation during its inspection, it shall issue a warning or, after considering all the circumstances of the case, impose an administrative fine as provided for in a government decree, and in its decision shall oblige the company to remedy the breach and take the necessary preventive or corrective measures, with the possibility of repeating the imposition of the fine in the event of failure to comply with the obligation.

If fundamental rights are not respected, the employee can also bring an action before the labour court or they can turn to the Office of the Commissioner for Fundamental Rights of Hungary.

Section 192 of the Criminal Code criminalizes various acts related to human trafficking and forced labour. Key provisions include:

• Basic offenses (1-5 years imprisonment): Selling, buying, exchanging, transporting, accommodating, or harboring a person for trafficking purposes.
• Forced labour (2-8 years imprisonment): Using deception, abuse of power, or coercion to force someone into work, services, or unlawful acts.
• Facilitating forced labour (2-8 years imprisonment): Recruiting, selling, or transporting individuals for forced labour.
• Sexual exploitation or illegal body use (5-10 years imprisonment): If trafficking involves sexual acts or illegal body use.
• Aggravated cases (5-15 years imprisonment): If the victim is under 18, tortured, targeted by a public official, or multiple victims are involved.
• Severe cases (5-20 years or life imprisonment): If the victim is under 12 or suffers life-threatening harm.
• Preparation (in case of felony it shall be punished by up to 5 years imprisonment): Planning or preparing trafficking activities.
• Benefiting from trafficking (in case of felony it shall be punished by 1-5 years imprisonment): Using forced labour or services, especially for sexual or body-related exploitation.

For further information please see previous question.

In the Hungarian criminal law, the prevailing principle is individual liability meaning that a person may only be held criminally liable if he/she performs actions that per se qualify as a criminal offence provided that the actions are culpable. Accordingly, directors or executives may only be exposed to criminal liablity if they personally commited any criminalized form of human trafficking or fored labour or if they interntionally abetted and aided another person to perfom criminal actions.

The managing directors of a company must perform their management duties on the basis of the company's best interests. In their capacity as managing directors, they are subject to the law, the articles of association and the decisions of the company's supreme body. If, in the course of their management activities, the company's directors breach the provisions of the law to which they are subject, the company's articles of association or any resolution of the sole member of the company, and thereby cause damage to the company, they are liable to pay compensation in accordance with the rules on breach of contract.

If the managing director has caused damage not to the company but to a third person acting in that capacity, the company itself, and not the managing director, shall be liable. The manager shall be jointly and severally liable with the company vis-à-vis third parties only if the damage was caused intentionally by the manager.

No.