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Publications Employer's obligation to inform, internal abuse reporting system

Employer's obligation to inform, internal abuse reporting system

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​Published on: 31.10.2023 / Reading time approx. 4 minutes


In this newsletter, we would like to inform you about the change in the employer’s obligation to provide information regarding this year's amendment of the Labour Code, as well as about the most important points of the Act on the Internal Abuse Reporting System, which topics can fundamentally affect the operation of companies


Employer's obligation to inform

The amendments to Act I of 2012 on the Labour Code which have come into force on 1 January 2023, include amendments and additions to the provisions on employer’s information obligation. According to the new regulations, employers' obligations in relation to the employment relationship have been significantly expanded and a much more detailed information obligation is necessary for all aspects of the employment relationship. The legislative amendment entered into force in January this year must already be applied to employment relationships established during the year, and the amendment may also affect employer's information issued before 1 January 2023 in the case of the working conditions in the information already issued are changed after 1 January 2023. 

In this context, it is advisable to review the existing employment contract templates and notices.
 

Deadline for information


At the beginning of the employment relationship, the employer is obliged to inform the employee of the provisions specified in the Labour Code. In the case of new employees, the employer must provide the employer’s information within 7 days of the beginning of the employment relationship at the latest instead of the 15 days as it was up to now. We would like to point out that the employer's information obligation does not only concern the beginning of the employment relationship, but a continuing obligation throughout the employment relationship, as the employee must also be informed of any changes in the data covered by the information. It is a significant relief for the employer if he fulfils his information obligation by referring to the respective applicable provisions of the Labour Code or to another regulation related to the employment relationship, in this case the employees do not have to be informed about the change of the referred provision.

Content elements of the information


According to the new regulations, the employer’s information obligation is expanded by the following subjects below:

  1. the person exercising the employer's rights;
  2. the date of commencement and duration of the employment relationship;
  3. workplace;
  4. tasks belonging to the field of work;
  5. the days of the week on which work can be scheduled, the possible time of the beginning and ending of scheduled daily working time, and the possible duration of extraordinary working time and the specific nature of the employer's activity (i.e. whether it is continuous, multi-shift or seasonal);
  6. payroll accounting, the frequency of payment of the salary and the day of payment;
  7. salary and other benefits in excess of the basic salary;
  8. the number of days of leave, the way they are calculated and rules of allocation;
  9. the regulations on the termination of the employment relationship (including the regulations governing the period of notice, the content and formal requirements of the notice, etc.);
  10. the employer's training policy (if any), and the duration of time available for employees for attending training courses;
  11. the authority to which the employer pays the taxes and contributions related to the employment relationship (currently the National Tax and Customs Authority - NAV);
  12. the fact whether the employer is subject to a collective agreement.


Information obligation in the event of work performed abroad


In addition to the above circumstances, in the case of work performed abroad for more than 15 days, the employer must inform the employee, amongst others, of the remuneration applicable in the place of work, as well as the rules for reimbursement of travel, board and lodging expenses, of the accessibility of a single national website containing relevant information on the rights and obligations of the employer providing cross-border services and their workers. This information shall be provided 7 days before the departure abroad.

Internal abuse reporting system

For the efficient detection and investigation of abuses, illegal acts and omissions at economic operators the Act XXV of 2023 on Complaints, Reports of Public Interest as well as on the Rules in Connection with Reports of Abuses has been passed. Below, we summarize what obligations the new law imposes on companies.

Circle of obligated parties


According to the new Act, companies are obliged to set up and operate an internal abuse reporting system through an impartial person or organisational unit designated for this purpose if the number of their employees reaches 50, or organizations subject to the anti-money laundering law, regardless of the number of employees, such as e.g. credit institutions, financial service providers, law offices and all trading companies that accept cash in the amount of HUF 3 million or more. A whistleblower lawyer or other external company can also be contracted to operate the internal abuse reporting system.

Companies with between 50 and 249 employees must comply with this obligation by 17 December 2023, while companies with more than 249 employees already had to set up a system for receiving and investigating complaints by 24 July 2023. Companies with between 50 and 249 employees, can jointly operate an internal abuse reporting system with other companies of that size.

Obligations of the employer in case of notification


The primary obligation of the employer is to designate a person or company responsible for operating the internal abuse reporting system, which - as mentioned above - can also be done by a whistleblower lawyer or another external company, or through a separate entity or person within a company. The criteria of impartiality, independence and lack of any conflict of interest must be met in all cases.
 
The complaint received by the body entitled to the procedure must be handled within thirty days of receipt, and the operator of the internal abuse reporting system sends a confirmation to the complainant within seven days of receipt of the complaint which confirmation must include information on the relevant procedural and data management rules. If the investigation of the complaint is expected to take more than 30 days, the complainant must be informed of this and the reasons for the extension of the deadline must also be mentioned. In the latter case, the period for handling the complaint must not exceed 3 months.
The body entitled to the procedure will keep in contact with the complainant throughout the procedure, may invite him/her to make further statements, and will inform him/her of the procedure and the protection of his/her personal data.

During the investigation of the report, the accuracy of the circumstances recorded in the report must be assessed as well as whether they are suitable for remedying the discovered abuses. Should it be necessary to initiate criminal proceedings as a result of the report, measures must be taken to file the criminal complaint. The complainant must be informed of the result of the investigation or of its omission and the reasons for the omission.

If the report contains data related to a specific person, this person must be informed in detail of the report, the protection of their personal data, and the course of the procedure. This information may only be omitted if it would hinder the investigation of the reported case. The identity of the complainant must not be known to the person concerned by the complaint. The complainant must also be given the opportunity to express his or her point of view on the complaint through his or her legal representative.

Circle of complainants


Written or verbal reports can be submitted in the internal abuse reporting system by the following persons: 
  1. current or former employees of the employer;
  2. future employees of the employer for whom the procedure for establishing an employment relationship has already begun;
  3. contractual partners of the employer (self-employed contractor, sole proprietorship);
  4. quotaholder, managing director, member of the supervisory board;
  5. contractor, subcontractor and supplier or a person under the supervision and control of an agent who has started the procedure for establishing a contractual relationship with the employer, or who is in a contractual relationship or had a contractual relationship;
  6. interns or volunteer workers of the employer.

Protection of the complainant


The investigation of the complaint may be omitted if it is made anonymously, but the personal data of the complainant must be handled confidentially for the entire duration of the procedure, it can only be handled in connection with the reporting procedure, and the person affected by the complaint cannot know them.

The best way to ensure that all employees, former employees, suppliers and subcontractors have access to the internal abuse reporting system is to operate it online, with information on the company's website.

The protection of the complainant is a particularly important element of the law. Pursuant to the strict provisions, any adverse action taken vis-á-vis the complainant as a result of filing the report is illegal, and any adverse action is considered illegal even if it would otherwise be legal.

This includes all unilateral measure by the employer that changes the employment relationship to the detriment of the employee, such as downgrading, transferring of job duties, changing the place of performing work, reduction of the salary, changing working hours and, ultimately termination.

Compliance with the obligations regarding the reporting of abuses is monitored by the Employment Supervisory Authority and compliance with the data protection rules is monitored by the National Authority for Data Protection and Freedom of Information.

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