Wrongful termination of an employment contract is the most common trigger for lawsuits arising out of labour relationships. The following guide summarizes the most important rules of firing an employee in Hungary in order to help you to reduce your company's exposure for unlawful firings and lower the risks of a costly labour litigation.
Ordinary termination As an employer you can terminate the employment relationship with an ordinary termination. It is important to know that the ordinary termination is only valid in writing.
The employer's termination letter shall justify the dismissal with a valid reason except for executive employees or pensioners. The ground of the termination can be the employee's skills (abilities) or his employment related behaviour, or the employer's operational reasons (e.g. reorganization, etc.) except the business transfer. In case of litigation the employer has to prove the grounds and the reasonableness of the justification of the dismissal.
Practical advice: The takeover of the termination letter shall be acknowledged by the employee. If the employee refuses to take over the termination letter, you shall draw up a record.
Protection against ordinary termination In some cases the labour Code protects the employee against ordinary termination. The ordinary termination is excluded among others, if your employee is pregnant, she is on maternity leave or she is treated in connection with human reproduction process.
Practical advice: Before you communicate the ordinary termination to the employee you should ask him/her if the ordinary termination has any obstacles. You should declare the employee's answer in the minutes of meeting.
Costs of termination The employer shall pay salary for the notice period, and in case that the employment exceeds 3 years a severance pay shall be paid to the employee as shown in the table below:
Length of employment (years)
In addition, if the employee has unspent vacation time the employer should either schedule the vacation or financially compensate the employee.
Practical advice: Consider the possibility of mutual agreement to avoid the above costs of ordinary termination.
Extraordinary termination The employee can be dismissed by a written extraordinary notice...