Unlawful Termination of Employment in Hungary: Rights and Remedies

Introduction

The termination of an employment relationship is one of the most significant events in both an employer’s and an employee’s professional life. Hungarian labour law, governed primarily by Act I of 2012 on the Labour Code (Munka Törvénykönyve, “Mt.”), provides detailed rules on the lawful grounds and procedures for terminating employment. When an employer deviates from these rules, the termination may be declared unlawful (jogellenes megszüntetés), entitling the employee to substantial remedies including compensation, back pay, and — in certain cases — reinstatement.

This article examines the grounds on which a termination may be deemed unlawful, the categories of employees who enjoy heightened protection, and the remedies available to wrongfully dismissed employees under Hungarian law.

Lawful Grounds for Employer-Initiated Termination

Ordinary Dismissal (Felmondás)

Under Mt. § 66, an employer may terminate an employment relationship by ordinary dismissal (felmondás), but only on one of the following grounds:

1. Reasons relating to the employee’s conduct (magatartás): The employee has violated their duties under the employment contract or the Labour Code
2. Reasons relating to the employee’s ability (képesség): The employee is no longer able to perform the work required — for example, due to health reasons or lack of qualifications
3. Reasons relating to the employer’s operations (működés): The employer’s operational requirements have changed — for example, due to reorganisation, redundancy, or cessation of a business activity

The employer must state the reason for dismissal in the written notice, and the reason must be clear, real, and substantiated (világos, valós és okszerű). A dismissal based on a vague, false, or unsubstantiated reason is unlawful.

Extraordinary Dismissal (Azonnali Hatályú Felmondás)

Under Mt. § 78, an employer may terminate employment with immediate effect (azonnali hatályú felmondás) if the employee has:

• Wilfully or through gross negligence committed a serious breach of a substantial obligation arising from the employment relationship, or
• Otherwise engaged in conduct that makes the continuation of the employment relationship impossible

Extraordinary dismissal must be exercised within 15 days of the employer learning of the grounds and no later than one year after the underlying conduct occurred. Failure to observe these time limits renders the dismissal unlawful.

Procedural Requirements

Written Form

All employer-initiated terminations must be in writing (Mt. § 24). An oral dismissal is void and has no legal effect.

Statement of Reasons

The employer must include a clear and specific statement of the reason for termination in the written notice (Mt. § 66(2) for ordinary dismissal). The statement need not be exhaustive, but it must enable judicial review of the termination’s lawfulness. In litigation, the employer bears the burden of proof to demonstrate that the stated reason is true and justified.

Notice Period

For ordinary dismissal, the employer must observe a notice period (felmondási idő). Under Mt. § 69, the minimum notice period is 30 days, increasing with the employee’s length of service:

• After 3 years: 35 days
• After 5 years: 45 days
• After 8 years: 50 days
• After 10 years: 55 days
• After 15 years: 60 days
• After 18 years: 70 days
• After 20 years: 90 days

During the notice period, the employer must grant the employee paid time off for job searching, amounting to at least half of the notice period.

Consultation with Works Council or Trade Union

Where a works council (üzemi tanács) is established, the employer must seek the works council’s opinion before effecting a collective redundancy (Mt. § 72). Where the employee is a trade union official, the employer must obtain the prior consent of the higher-level trade union body (Mt. § 273).

Protection Periods (Felmondási Védelem)

Categories of Protected Employees

Hungarian law identifies specific situations during which an employee enjoys protection from ordinary dismissal. Under Mt. § 65(3), the employer may not give ordinary notice of dismissal during the following periods:

1. Pregnancy and maternity leave (szülési szabadság)
2. Parental leave (gyermekgondozás céljából igénybe vett fizetés nélküli szabadság)
3. Incapacity for work due to illness or accident, for a specified duration
4. Absence caring for a sick child (gyermek ápolása, gondozása)
5. Voluntary reserve military service
6. Any period of women’s protection during fertility treatment (emberi reprodukciós eljárás)

A dismissal issued during any of these protection periods is automatically unlawful, regardless of whether the employer was aware of the protected status.

Extended Protection for Mothers and Parents

Employees on maternity leave, childcare leave (GYES), or childcare allowance leave (GYED) enjoy particularly strong protection. The employer may not terminate these employees by ordinary dismissal, and any notice of dismissal issued during the protection period is void.

Pre-Retirement Protection

Employees who are within five years of reaching the general retirement age enjoy protection from ordinary dismissal on operational grounds (Mt. § 66(4)). This protection does not apply to dismissals based on the employee’s conduct or ability.

What Makes a Termination Unlawful?

Substantive Unlawfulness

A termination is substantively unlawful if:

• The stated reason is false: The factual basis for the dismissal does not exist
• The stated reason is unsubstantiated: The facts, even if true, do not justify the dismissal
• The dismissal is based on a discriminatory motive: The true reason is related to the employee’s gender, age, ethnicity, religion, sexual orientation, disability, trade union membership, or other protected characteristic
• The dismissal is retaliatory: The employee was dismissed for exercising a lawful right, such as filing a complaint or refusing an unlawful instruction

Procedural Unlawfulness

A termination is procedurally unlawful if:

• It was not made in writing
• It fails to include a statement of reasons (for ordinary dismissal)
• The required notice period was not observed
• The dismissal occurred during a protection period
• Required consultations with the works council or trade union were not conducted
• The time limits for extraordinary dismissal were not observed

Remedies for Unlawful Termination

Compensation (Átalány-kártérítés)

Under Mt. § 82, the primary remedy for unlawful termination is compensation. The employee is entitled to:

• Lost wages for the period between the unlawful termination and the court’s decision, up to a maximum of twelve months’ absence pay (távolléti díj)
• Payment in lieu of the notice period if the notice period was not observed
• Payment of any outstanding severance pay (végkielégítés) to which the employee was entitled

Reinstatement (Visszahelyezés)

Under Mt. § 83, the court may order the reinstatement of the employee in the following cases:

1. The termination violated the equal treatment (anti-discrimination) requirements
2. The termination violated the protection period rules
3. The employee was the elected representative of a trade union or works council
4. The employee filed a claim for reinstatement and the employer cannot demonstrate that reinstatement would be unreasonable

If the court orders reinstatement but the employer refuses to comply, the employer must pay additional compensation in lieu of reinstatement.

Additional Damages

Beyond the statutory compensation, the employee may claim additional damages (kártérítés) under the general rules of labour law liability if the unlawful termination caused further losses — for example, lost benefits, costs of retraining, or non-pecuniary damage. The burden of proving additional damages lies with the employee.

Special Categories and Enhanced Protection

Pregnant Employees

If an employer dismisses a pregnant employee, the dismissal is unlawful regardless of whether the employer knew of the pregnancy. The employee need only prove that the pregnancy existed at the time of dismissal. This protection applies from the commencement of pregnancy, even before the employee has informed the employer.

Employees with Disabilities

Dismissal of an employee based on their disability violates the equal treatment requirements and is unlawful. Employers are additionally obliged to make reasonable accommodations (ésszerű alkalmazkodás) for employees with disabilities and may not dismiss an employee for requesting such accommodations.

Trade Union Officials

Trade union officials (szakszervezeti tisztségviselők) enjoy enhanced protection. Their dismissal requires the prior consent of the superior trade union body. A dismissal effected without this consent is unlawful.

Whistleblowers

Employees who report or disclose unlawful conduct by the employer in good faith enjoy protection from retaliatory dismissal under Act XXV of 2023 on Complaints and Public Interest Disclosures (panaszokról és közérdekű bejelentésekről szóló törvény). A dismissal that is motivated by the employee’s whistleblowing activity is unlawful.

Procedural Aspects of Challenging a Dismissal

Time Limits

An employee who wishes to challenge a dismissal must file a claim with the competent labour court (munkaügyi bíróság) within 30 days of receiving the written notice of dismissal (Mt. § 287(1)). This is a preclusive (jogvesztő) time limit — if the employee fails to file within 30 days, they lose the right to challenge the dismissal, subject to very limited exceptions for excusable delay.

Burden of Proof

In proceedings challenging a dismissal:

• The employer bears the burden of proving that the stated reason for dismissal is true and justified
• Where the employee alleges discrimination, the burden shifts: the employee must first establish a prima facie case of discrimination, after which the employer must prove that the termination was not discriminatory

Interim Measures

The employee may apply for interim measures (ideiglenes intézkedés), such as the continuation of wage payments during the proceedings, if the employee can demonstrate that they would suffer irreparable harm without such measures.

Practical Guidance

For Employers

1. Document the reasons for termination thoroughly before issuing the dismissal
2. Verify protection periods: Check whether the employee is in a protected status before proceeding
3. Follow procedural requirements meticulously — procedural defects alone can render a dismissal unlawful
4. Seek legal advice before dismissing employees in protected categories
5. Consider settlement: A negotiated termination by mutual agreement (közös megegyezéses megszüntetés) avoids the risks of litigation

For Employees

1. Act quickly: The 30-day filing deadline is strict and non-extendable except in narrow circumstances
2. Preserve evidence: Keep copies of the dismissal letter, performance reviews, communications, and any evidence of the true reasons for termination
3. Seek legal representation: Employment litigation requires professional legal knowledge, and legal aid may be available in certain cases
4. Consider all remedies: In addition to compensation, reinstatement may be appropriate in discrimination or protection-period cases

Conclusion

Hungarian labour law provides robust protection against unlawful termination, with detailed rules governing the grounds, procedure, and timing of employer-initiated dismissals. Employees who are dismissed in violation of these rules have access to meaningful remedies, including compensation and, in appropriate cases, reinstatement. Employers, in turn, must exercise care in documenting reasons, observing procedural requirements, and respecting protection periods.

Given the significant legal and financial consequences of an unlawful termination — for both parties — professional legal advice is essential whenever termination of employment is contemplated or has occurred.

This article is for informational purposes only and does not constitute legal advice. For guidance on your specific situation, please contact our office.