In our modern and accelerated world, the classic way of working has become outdated, new forms and trends of working are emerging, employees and employers are interacting without borders. As a result of the global labour market, often the registered seat of the employer and the place where the employee actually performs his work are not in the same country. Thus, many workers in Hungary are employed by foreign employers too. At the same time, the question arises, which country’s law governs the employment relationship, how the workplace is determined, what provisions apply to that.
Determination of the applicable law
The governing rules of private international law recognize the parties’ freedom law choise, i.e., the employer and the employee are entitled to decide which country’s law they wish to apply for. However, it is important to note that this right is not unlimited. Even if the parties choose a certain national law, that shall not jeopardize the application of the generally applicable law (the law of the country where the employee performs his work) with respect to compulsory rules. If the parties agree to apply the law of a third country, but the facts of the case are linked to one or more EU Member State(s), the provisions of the Community law are relevant. In the following, we will focus on cases where the law of an EU Member State applies, either by choice of the parties or in absence thereof, by law.
Reasonably, if the parties choose Hungarian law, the employment relationship will be entirely governed by Hungarian prescriptions, and in particular by the Labour Code, which is also the otherwise applicable law taking into consideration that the work is carried out in Hungary.
On the other hand, if the parties agree to apply a different law (typically the law of the country where the employer has its registered seat), in principle, the provisions of that law will govern the relationship of the parties. However, those Hungarian labour law rules, which are compulsory (i.e. the parties may not agree otherwise), mean an exception to that rule. These rules include for example, basic provisions on holiday, salary, working time.
Employers having Hungarian presence
Despite of the employer having presence in Hungary, the employee working in Hungary may be employed by the headquarter company seated abroad. In those cases, either the seat (premises) of the Hungarian entity, either the home address of the employee, especially in case of remote work, may be established as the place of work. As a general rule, the employer must first certify that the place of work issuitable from an occupational safety and health point of view.
Employers not having presence in Hungary
If the foreign employer has no presence in Hungary (e.g., no subsidiary, permanent establishment or branch), it implicitly results in the employment in Hungary through remote working (according to Hungarian employment rules). With regard to the definition of the workplace, the previous point applies accordingly.
Questions arising from legislation on remote working
The Hungarian legislation states that the employer must ensure that the employee can enter its territory and maintain contact with other employees. According to the provisions introduced for remote working during the state of emergency and effective at the time of the present article’s writing [487/2020. (XI. 11.) Decree], this obligation of the employer is optional, i.e., the parties may derogate from it. It is important to note, however, that this only applies temporarily, for the duration of the state of emergency. If the state of emergency ceases and remote work will again be subject to the general provisions of the Labour Code, the employer must ensure that the employer can access its territory and contact with other coworkers. That may be a particular challenge for foreign employers and will need to be examined on a case-by-case basis.