The reasons for regular termination as set out in the Labour Act are as follows:
- if the need for work ceases to exist for economic, technical or organisational reasons (‘notice due to business reasons’); or
- the employee is incapable of fulfilling his employment-related duties due to certain personal characteristics or qualifications (‘notice due to personal reasons’); or
- the employee intentionally breaches a contractual obligation (‘notice due to misconduct’); or
- if the employee did not satisfy the employer’s requirements during the probationary period.
Generally, employees in Hungary are not required to justify ordinary dismissals (“felmondás”) in case of an open-ended employment relationship. Nevertheless, they must observe prescribed notice periods.
If the employer terminates an open-ended employment relationship, as general rule, it must provide a reason for it, which has to be in connection with (i) the behaviour; (ii) skill; (iii) health status of the employee; or (iv) the operation of the employer. However, the employer is not required to give reasons for terminating a permanent employment relationship if the employee in question qualifies as a pensioner.
Certain “vulnerable” employees enjoy additional protection against dismissal (e.g. a more serious infringement to justify a dismissal, an obligation to seek another job profile for the employee in specific cases, etc.). These include women or single parents until their child reaches three years of age as well employees within the five-year period prior to the statutory age limit for a retirement pension.
The employer shall be permitted to terminate a fixed-term employment relationship by notice (i) if undergoing liquidation or bankruptcy proceedings; (ii) for reasons related to the employee’s ability; or (iii) if maintaining the employment relationship is no longer possible due to unavoidable external reasons.
Employees are required to give reasons for terminating their fixed-term employment relationship. The reason given for termination may only be of a nature that would render maintaining the employment relationship impossible or would cause unreasonable difficulties in light of his/her circumstances.
Discriminatory dismissals or dismissals due to “illegal reasons” can be challenged by employees before the relevant court.
The Employment Relationship Act (‘Zakon o delovnih razmerjih’ or ‘ZDR-1’) distinguishes between ordinary and extraordinary termination of the employment contract. Ordinary termination is termination with notice period, which is only possible due to a business reason, reason of fault, incapacity to work, inability to work due to disability, or the unsuccessful completion of a probationary period, any of which render continuation of the employment under the conditions of the existing employment contract impossible.
A business reason occurs when the performance of certain work is no longer required under the conditions of the current employment contract due to economic, organizational, technological, structural or similar reasons on the employer’s side.
Reasons of incapacity are: non-achievement of expected work results because the worker has failed to carry out the work in due time, professionally and with due quality, or non-fulfilment of the conditions for carrying out work as stipulated under the law and executive regulations issued on the basis of law due to which the worker fails to fulfil or cannot fulfil the contractual or other obligations arising out of the employment relationship.
Extraordinary termination is termination without notice period and is only possible if:
- it is based on one of the exhaustively provided reasons in ZDR-1; and
- taking into account all the circumstances and interests of employer and employee, continuation of the employment until the end of the notice period or until the expiry of the employment contract is considered impossible; and
- it is given within 30 days of establishing the reason for extraordinary termination, and within six months of the occurrence of that reason.