The following table summarizes the general Hungarian rules of terminations initiated by the employer. Please note that special circumstances (e.g. pregnancy, age nearing retirement, duration of trial period) may invoke the application of further and special rules to the termination. We advise to consult an employment law expert before taking any steps toward the termination of an employment relationship, as the employees have the right to challenge the lawfulness of such termination which would entail a lengthy and costly litigious procedure.
| TERMINATION AGREEMENT | DISMISSAL | EXTRAORDINARY NOTICE | |
|---|---|---|---|
| Is the consent of the employee required? | YES, the employee and the employer need to sign a termination agreement together | NO, the employer gives notice unilaterally | NO, the employer gives notice unilaterally |
| Are reasons to be provided? | NO, the termination agreement should not contain the reasons for termination | YES, the notice needs to contain the true and valid reasons for dismissal which also need to have a causal link to the termination of the employment. The reasons need to be connected to:
| YES, the notice needs to contain the true and valid reasons for dismissal which also need to have a causal link to the termination of the employment. The reasons need to be connected to:
|
| What is the termination date? | FREELY AGREED by the parties in the termination agreement | A statutory NOTICE PERIOD applies, the minimum of which is 30 calendar days and it increases upon the time spent in employment with the employer (e.g. after 3 year, the notice period is 35 days, after 20 years, the duration is 90 days). Any differing provisions of the employment agreement should be taken into account. The employment terminates on the last day of the notice period. | The termination has IMMEDIATE EFFECT due to the severity of the causes. |
| How long is the employee obliged to work? | The parties may FREELY AGREE on the potential exemption of the employee from work. | The employee shall be exempted for at least HALF OF THE NOTICE PERIOD. Longer exemption period may be granted unilaterally by the employer. | NOT APPLICABLE, as the effect of the termination is immediate. |
| What exit allowances are due to the employee? | The employee is entitled to his/her SALARY until the agreed termination date (or his/her average salary in case he/she is exempted from work), as well as the PECUNIARY EQUIVALENT OF THE proportionally available but UNTAKEN VACATION DAYS. No severance payment is due, however, as an incentive, employers often pay an exit allowance in the same amount as the severance payment applicable in case of a dismissal. | The employee is entitled to his/her SALARY until the termination date (or his/her average salary in case he/she is exempted from work), as well as the PECUNIARY EQUIVALENT OF THE proportionally available but UNTAKEN VACATION DAYS. Additionally, the employee is entitled to SEVERANCE PAYMENT after 3 years of employment with the employer. The amount of the severance payment increases upon the time spent in the employment (1 month salary after 3 years of employment up to 6 months’ salary after 25 years of employment). | The employee is entitled to his/her SALARY until the termination date, as well as the PECUNIARY EQUIVALENT OF THE proportionally available but UNTAKEN VACATION DAYS. No severance payment is due to the employee. |
