Challenges and Inconsistencies in Hungary's Labor Law

Challenges and Inconsistencies in Hungary's Labor Law Presented by: Dr. Solymosi-Szekeres Date: 19 June 2023 The Normative effect - HR • Scope of Normative effect  Who have concluded it,  Who at the time of conclusion of such agreement were or later became members of the association that is a party to the collective agreement  NOT: non-union members, BUT • Application of the Benefits of the CA to non-union members: in favored laboratories (Günstigkeitsprinzip, favorability principle) • LC Art. 9(3) Unless otherwise provided for by this Act or any other laws and regulations, where a right arising from an employment relationship is differently regulated by the employment contract or working regulations, an agreement concluded between the works council and the employer, a collective agreement or by law, the most favorable right for the worker shall apply. - HU • Scope of Normative effect  Who have concluded it,  Who at the time of conclusion of such agreement were or later became members of the association that is a party to the collective agreement  AND the non-union members • The normative part applies to all workers employed by the employer In Connection With The Legal Nature Of Hungary: - LC Section 276 (2): A trade union shall be entitled to conclude a collective agreement if its membership of workers at the employer reaches ten per cent • Of all workers employed by the employer • Of the number of workers covered by the collective agreement concluded by the employers interest group - Based on (the insecure) LRIS's data, STRONG FREE-RIDER effect, (more than 65%)* - (free rider: non-union member employee under the normative effect of the CA) - Reason: low trade union density - Problematic: LC allows in the CA for deviations to detriment of employees The Legal Nature Of The CA - HR • Dual legal nature  Treated as an agreement • The Constitutional Court has denied the character of a regulation  Prof. Vinković: “reasons for this are probably pragmatic and the result of fears that the Constitutional Court might be exposed to frequent requests to review the constitutionality of certain provisions of numerous collective agreements” - HU • Labor Code (LC.) § 13  'Employment regulations' = collective agreements • Controversial legal nature  The LC elevates the collective contract to the level of a statutory provision,  Quasi-legislation  BUT unfortunately: Labor Code contains few rules on collective agreements, doesn't provide clear guidance • Agreement - what if it is invalid?  Nullity - interested parties (ALSO the trade union which was not party to the agreement but which subsequently 2 became entitled to conclude an agreement  Avoidance - ONLY the parties of the agreement In Connection With The Normative In Hungary - INCONSISTENCIES in judicial practice on the legal consequences of the invalid CA, especially by the normative effect - The Curia applies the in favorem laboratoris principle in the case of the application of an invalid collective agreement of all employees employed by the employer → Mfv.1.10.885/2007/3.* • The employer unlawfully terminated the employment of the employee and at the same time, in the termination document, agreed to pay a higher severance payment by reference to a collective agreement. • Another court: the collective agreement was invalid on the grounds of false representation. • Curia: the undertaking given in the notice of termination obliged the employer to pay the higher severance pay due under the collective agreement.* • The provisions of the invalid collective agreement more favorable to the employee survive in the employer's declaration => in favored laboratories principle Q. Which System Is Better For The Employees And The Employer? - - - - Normative Effect of the CA • Employer, trade union member employee • Employer and all employee CA Rules covering union members • Advantageous and disadvantageous rules • Advantageous and disadvantageous rules CA Rules covering non-union members • ONLY advantageous rules - IN FAVOREM LABORATORIS • Advantageous and disadvantageous rules In favored laboratories principle • By VALID CA  On non-union member employees • By INVALID CA  On all the employees, if there is a declaration from the employee Problem wheel in HU - Strong free rider effect - High standards in the LC - 10% in the trade union is enough - CA is often disadvantageous - Low union density