2013. December 21.

The so-called payroll period is coming

The new labour law legal instrument, aimed to reduce costs, the so-called payroll period indicates a longer period of time beginning with the concerned working week determined by the employer during which employees fulfil the working week. It has been introduced by the Act No. I of 2012 on the new Labour Code (hereinafter referred to as the "LC"), however, much of the companies had not even received this information. Given that this new form of work schedule is able to reduce employment costs of employers without the need on termination of employment relationships, it may be beneficial for both of the parties, accordingly we consider it important to present the essence of this legal instrument, and provide you with a brief description on practical benefits.

In the Hungarian labour law the payroll period is considered to be a new legal instrument, but not without any example on international level and is a well-established time-schedule method in the event of companies using unequal work schedule. The root of this legal instrument can be found in the U.S. ("working time bank" or "working time account"), but it has in both Germany and Austria a long tradition ("Arbeitszeitkonto") and is a flexible system that really works well in practice. Compatibility of this legal instrument with Community law – with special regard to the Directive No. 2003/88/EC of the European Parliament and the Council on concerning certain aspects of the organisation of working time – is debatable, in a profit-oriented approach; however, employers consider it as an opportunity for a technical solution in practice, which will greatly facilitate their operation.

Work schedule shall be laid down by the employer. As a general rule, employers lay down the working time of their employees according to the general working arrangement, from Monday till Friday that is to say equal for 5 working days. However, the economic conditions often require a different work schedule, as there are “busy seasons” when tight schedule shall be kept, and at other times there is less work, but eventually working time of the employees would be equalized in average.

In the event of unequal work schedules employers may decide in the future to use either (i) working time frame, or (ii) payroll period.

The legislator aimed by introducing the payroll period the facilitation of the effective operation of economic operators. According to the reasoning of the LC „in the course of determining the conditions of the duration of the length of the working time frame the same applies, however this time-schedule method is radically different from those on the time-frame. While the application of the time-frame is particularly the determination of the amount of working hours on the basis of longer period, the solution of this § is purely a schedule rule. With its application the employer has the opportunity to define for all working hours of a working week a longer period."

Rules of the duration of the time-frame, as well as the payroll of the absence, further the procedure to be followed upon the termination of employment relationship before the expiry of the payroll period shall apply regarding the payroll period accordingly.

The choice of the payroll period means the application of a time-schedule rule. The main difference compared to the working time-frame is that there is always only 1 frame, but the payroll period is multi-threaded. It may offer an optimal solution for those employers planning on introducing working-time frame, used working time-frame previously, or need even more space for scheduling their employees working time.

At the working time schedule in a payroll period it can be seen that the employer always schedules the working week, which is determined by the daily working hours and general work schedule on the basis of a longer period of time always beginning in a given week and does so every week. The amount of the working time shall always be averaged in relation to the given payroll period. Accordingly, in the event of a payroll period, these periods restart every week and are running next to each other side by side, therefore this new system requires a precise and continuous administration as precise payroll can only come true this way in connection with the fulfilled working time. In lack of a precise administration the system would get impossible to follow.

The employer has above the unequal working time schedule the opportunity to schedule the days of rest unequal as well. After 6 performed days of work, however, 1 day of rest must be issued even in the event of application of payroll period. The rule also applies for the protection of workers that 1 day of rest per month should fall on a Sunday. However, working time on Sundays as regular working time can be scheduled –if further legal conditions are met - if the employer schedules the working time in a payroll period.

Experiences from other countries show that after overcoming initial difficulties associated with the introduction of the payroll period it may facilitates a more economical operation for the companies.

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2013. October 29.

Entering, staying and working conditions in Hungary in case of Third country nationals

  1. Short term stay (not exceeding the 90 days period)

Nationals of countries listed in the 539/2001 EC council regulation Annex II. („Visa-free nationals”) may enter Hungary without a visa, however nationals of countries not listed in the council regulation/countries under visa obligation („Visa nationals”) - even if they are family members of EU/EEA citizens - will need to apply for a visa or a residence permit before entering Hungary (Visa free nationals and Visa nationals collectively: „Third country nationals”). Visa-free nationals and Visa nationals entering Hungary with a visa are entitled to stay in Hungary only for 90 days.

  1. Entry for long stay (period exceeding 90 days)

Third country nationals intending to stay in Hungary for more than 90 days shall apply for a residence permit. The type and the validity of the residence permit depends on the purpose of stay. The resident permit may be issued for the following purposes: visitation, gainful activity, education, family reunification, medical treatment, research work, voluntary activity or official purpose. In case the stay does not fall in the categories above, it may be issued for another purpose. To obtain such a residence permit the applicants shall prove not only the purpose of their stay, but also their livelihood, housing and all inclusive health insurance. Usually the residence permit may be issued for a maximum of two years, but after this period it can be renewed for two further years.

Third country nationals are entitled to become a permanent resident of Hungary, after a five-year period of uninterrupted legal residence in the territory of Hungary.

  1. Working in Hungary

Third country nationals – except family members of EU/EEA citizens - may only work in Hungary based on a permit. The work permit may be issued if the employer has a valid labor need in relation to the activity to be performed by the applicant. Once issued, the work permit is valid for a maximum of two years, but it can be renewed for an additional two-year period.

Should you have any questions regarding this post, feel free to contact us

2013. October 24.

Entering, staying and working conditions in Hungary in case of EU/EEA citizens

Entry for 90 days

Citizens of the European Union and nationals of the states of the European Economic Area („EU citizens/EEA nationals”) with the right of free movement may enter Hungary in possession of their valid passport or personal identity card. EU citizens/EEA nationals are entitled to stay in Hungary for 90 days without the obligation to report their presence and certify the legality of their stay.

  1. Stay exceeding 90 days

In case the EU citizens/EEA nationals intend to stay in Hungary for more than 90 days they shall apply to the Regional Directorate of the Office of Immigration and Nationality for a registration certificate during the 90 days-stay period. To obtain such a certificate EU citizens/EEA nationals need to prove their employment relationship, livelihood, housing and comprehensive health insurance. If all necessary documents are collected, the duration of the procedure will take only thirty minutes. The registration certificate is issued for an indefinite period and will lose its validity if the right of residence itself is terminated. It is important to note that EU citizens/EEA nationals cannot be expelled for failing to register, but they may be fined.

EU citizens/EEA nationals are entitled to become a permanent resident of Hungary, only after a five-year period of uninterrupted legal residence.

  1. Working in Hungary

EU citizens/EEA nationals are allowed to enter employment in Hungary without permission. However, the employer shall submit a notification in relation to the employment of such persons to the local employment office not later than on the first working day.

Should you have any questions related to this topic, please do not hesitate to contact us:


2013. September 11.

Community air carriers’ liability

What are the obligations of Community air carriers as regards the nature and limits of their liability in the event of accidents such as death or injury,   destroyed, lost or damaged baggage?

Death or injury

The air carrier is liable in the event of death, wounding or any other bodily injury to a passenger, if the accident took place on board an aircraft or during any of the embarking or disembarking operations.

There is no financial limit to the liability for damages in respect of death or injury. However, for damages up to 100.000 SDR[24][1], the air carrier cannot contest claims for compensation. In excess of that amount, the air carrier can defend itself against a claim only by proving that it was not negligent or otherwise at fault.

Destruction, loss or damage to baggage

The air carrier is liable for the destroyed, lost or damaged baggage in case the event caused the damage took place on board an aircraft or happened during the period of within which the baggage was in the charge of the carrier. In the case of checked baggage, the air carrier is liable even if not at fault, unless the baggage is detective or the damage resulted from an inherent defect, quality or vice of the baggage. In the case of unchecked baggage, the air carrier is only liable if at fault, however at this time the burden proof is on the passenger.

When the baggage is destroyed, lost or damaged the air carrier is liable up to 1000 SDR for each passenger. The European Court of Justice stated in its recent decision that this compensation including the total damage caused, regardless of whether that damage is material on non-material, except when a special declaration and an additional payment is made at the checking-counter by the passenger.

Passenger, baggage delay 

Additionally, when flight is canceled or significantly delayed, passengers may be entitled to compensation depending on the delay length and the flight distance.

The air carrier is liable up to 4150 SDR in case of passenger delay, and up to 1000 SDR in case of baggage delay unless it proves that took all reasonable measures to avoid the damage or it was impossible to take such measures.

Claiming compensation

If baggage is delayed, destroyed, lost or damaged the passenger must write and complain to air carrier as soon as possible. In the case of damage, the complaint must be made within 7 days and within 21 days in the case of delay, in both cases from the date on which the baggage was placed at the passenger’s disposal.

Any action in court to claim damages must be taken within 2 years from the date of arrival of the aircraft or from the date on which the aircraft ought to have arrived.

In both cases, if no complaint was made within the given deadline, no action shall lie against the airline.

 We at BWSP Gobert and Partners are constantly at your diposal! Should you have any questions, do not hesitate to contact us!

[24][1] special drawing rights, as defined by the Monetary fund

2013. March 12.

LinkedIn - LinkedOut - in other words who is entitled to your contact network?

Last week our labour team won the first Hungarian case regarding the unfair dismissal of a blogger.

Due to this we found it is time to focus on some labour law related issues regarding social media, as it is continuously growing in importance in the labour law area.

The first post relating to this issue is as follows:

Does the employer have right to ask for the employees contact list from his LinkedIn account, when terminating his employment relationship?

According to an English judgement yes, what’s more he may even oblige him to delete the entire account. Pertaining to the judgement the contact network established whilst being in employment relationship as database, is the employer’s property.

It is against the judgement that according to the LinkedIn’s terms and conditions of usage the user accounts (if the employee establishes them in his own name, not on behalf of the employer) are registered under a user name, therefore they constitute the user’s “property”. Consequently an employer may not force the employee to hand over his account, user name or password.

Nevertheless, it does answer the question, because as the judgement points it out as well, the employer does not prohibit the employee from his user account, but from using the database, which the employee gathered in the work time and on the employer’s expenses, moreover in the given lawsuit, he stored by using the employer’s IT system. Is it conceivable to draw conclusions on such score in Hungary also?

The possibility to successfully argue before the court is not excluded. The key question is in fact whether a contact list built on LinkedIn in the course of employment relationship, is regarded trade secret (confidential information), which is then the employer’s property. Obviously telephone numbers, email addresses themselves are not confidential information, however setting up contact lists pertaining to several specified areas requires investment from the company and their disclosure to competitor represents significant trade value. According to the Hungarian law, the database is under copyright protection (and as far as employer applies appropriate employment contracts), the established intellectual creation in course of the employment relationship (or with the employer’s equipments) belongs to the employer. In the case of A Hays Specialist Recruitment (Holdings) Ltd & Another –v- Ions & Another the court declared that the employer is entitled to permit and encourage the employee to build contact network on the internet, however these contact data are considered as information of an confidential character established in the employment relationship, therefore they belong to the employer. The judgment does not include clear standpoint on whose property is the contact list created on LinkedIn, however the following conclusion can be drawn from it: any database containing client contact data, built in the course of the employment relationship, is the employers property, and if an employee’s employment relationship terminates he needs to turn in this database to the employer.

During such procedure the employees may argue, that they need the database and that it is based on their personal knowledge, therefore it is not the employer’s property. Thus the aforementioned judgement (although it has not took a clear position in this matter) may let us draw the conclusion that the employee, when terminating his employment relationship, is obliged to transfer or delete the client contact database, together with his LinkedIn account created in the course of employment (regardless whether he established the account in his name, or in the employer’s).

Penwell Publishing (UK) Ltd Ltd –v- Ornstein & Others case contains even more precise conclusion, where the Court stated that direct phone numbers and email addresses pertaining to client contacts, are regarded as being confidential information and if the employee obtained these during his employment relationship, the information constitute the property of the employer. The Court has not contested that the publicly accessible information, such as the registered seat of the company and the publicly accessible phone numbers do not fall within this protected scope. Moreover in the Penwell-case the dismissed employee stored these information in the employers outlook system, continuously refreshed on the employers server and not on LinkedIn website and external servers. Taking into account these particular circumstances the Court found undoubtedly justified that the data are in the property of the employer, because they have obviously been collected in the course of employment, obviously stored on the IT systems owned by the employers, thus the contact data could not be considered the employee’s private information. 

These two judgments indicate that it is more and more suggested and needed to create a regulation governing the social networking sites, therefore if it is formulated as an unambiguous and specific expectation from the employer’s side, that the employee may not take away the contact list built on the employer’s expenses, he may later not have objections against it. It may be clearly stipulated in the regulation, that upon the termination of the employment relationship those client contacts which the employee gathered in the course of employment must be deleted. It is even a safer solution, if these conditions are stipulated in the employment contract, even if having only a general character. On the other hand it is also in the interest of the employees, thus they might be aware right at the beginning of the employment relationship, what rights are they entitled for upon the termination of the employment relationship and what is the employer’s attitude to building client contacts, having specific view to the non-competition provisions. It arises as a legal question, whether it is a non-competition stipulation if the employee after the termination of the employment relationship should restrain from maintaining contact with certain clients (in which case the condition of validity is the payment of counter value).

According to my standpoint, similarly in case of provisions pertaining to trade secrets, the correctly formulated legal documents may reduce this risk. Prohibition from competition – as arising from its character – means that the employee restrains to engage in activities at the competitors. The employer’s requirement for the contact network is certainly not of such character. If it is not defined in the employment contract or a separate regulation what happens with the LinkedIn account, it is advisable to clarify in what manner and into what extent may the employee keep the contact network he built by the help and in the interest of the employer. Instead of the legal twist and turn, in the practice it is even a more simple solution that the employee may not use, other than equipments owned by the employer and this equipment he is obliged to return upon the termination of the employment relationship without making a copy it.

Naturally the employee may not be hindered from using the earlier created copy database for own purposes in the future. In the case of the LinkedIn contact networks, the employer may easily and externally follow what contact changes does the ex-employee have. If the mutual agreement explicitly regulated the contact system, “private actions” conducted after the termination of the employment relationship may even be sanctioned.

For more information, please contact:
Dr. Andrea Klára Soós