As many already know, the provisions of the Labour Code (LC) have changed substantially with effect from 1 January. Amid the many changes, however, there’s one in particular that may escape employers’ attention but could end up costing them dear: the broadening of the burden of proof on employers.
With effect from 1 January 2023, the most comprehensive amendment of the LC to date took place. The new provisions essentially transpose two EU directives into Hungarian law, and their main goal is to improve work-life balance and create more transparent and predictable working conditions.
Taking the objectives declared by the EU one step further, the Hungarian lawmakers simultaneously changed the burden-of-proof provisions relating to abuse of rights. An abuse of rights occurs if a party has the right to take a certain measure, but does not exercise this right in accordance with its purpose. While an employee could still claim abuse of rights in the past, from January: the employer will need to prove that its otherwise lawful action was not meant to circumvent a fundamental right of the employee. And this imposes a significant additional burden and often considerable documentation challenges on employers.
Let’s take a look at a few examples.
Termination of employment citing restructuring
Let’s say the employer lawfully terminates the employment of an employee citing restructuring as the cause. This employee had previously had a conflict with his superior. If the employee believes the real reason for the termination was its conflict and not the restructuring, he can assert a claim against the employer citing abuse of rights (and can even request the reinstatement of his employment based on the new rules).
Under the previous provisions of the LC, the employee had the burden to prove the basis for any claim of abuse of rights by the employer. In this situation, the employee should proved that the real reason for the termination was not the restructuring but his conflict with his superior. In contrast, according to the new rules, it is the employer who has to prove that he did not terminate the employment of his employee due to the previous conflict, i.e. there really was a restructuring that justified the termination and that he was not simply citing that as an excuse.
Dismissal of an employee during a trial period
During a trial period, an employer is entitled to terminate the employment of any employee without having to provide reasons. Suppose, however, that during the trial period the employer becomes aware of the employee’s intention to have children. If, in such a situation, the employer terminates the employment contract during the trial period, due to the right granted by the LC, the employee can argue that the reason for the termination was in fact related to her plan to have children.
From now on – if the employee cites an abuse of rights – the employer bears the burden of prove that the termination had nothing to do with the employee’s plans to have children. In other words, even though the employer would not usually be required to provide reasons in such a case, a need arises indirectly for the employer to justify, if necessary, why he terminated the employee’s job during the trial period. Or at least to properly document the reason for the termination, and to ensure that he is able to defend the decision if it is subsequently challenged.
Bonus or special benefits for certain groups of employees
Let’s say the employer introduces a special bonus-type benefit to which, based on the fulfilment of certain criteria, only some of the employees become entitled (for example, the introduction of an employee stock-ownership plan). If, in such a case, an employee believes that she was unfairly left out of the group of potential beneficiaries, he may assert a claim against the employer in this regard. In such a procedure, the employer will be obliged to justify the principles based on which he decided on the range of beneficiaries and to prove that he complied with the requirements of appropriateness, good faith, fairness and equal treatment.
As the examples above show, the new regulations mean that employers will have to find a justification for their actions in certain cases – in other words, they will have to be able to prove what they did not do or, for all intents and purposes, that they had a legitimate reason for taking certain measures. And this imposes additional requirements on employers, even if the measure they had taken was lawful.
For now, it is still uncertain what kind of evidence the court will accept and how the employer can prove that his actions were motivated by objective or lawful reasons. But, as we have long known, the hardest – often impossible – thing is to prove why something that is not there is not there, or why we did not do what we did not do. For this reason, any employer who wants to be sure of coming out on top in a possible employment case should make sure he is well armed in advance.