Hungary: Employment protection in relation to business transfers

Phase: Management
Employment protection in relation to business transfers
Last modified: 18 October, 2021
Оригинални назив:

2012. évi I. törvény a Munka Törvénykönyvéről; 2006. évi IV. törvény a gazdasági társaságokról; 2013. évi V. törvény a Polgári Törvénykönyvről; 2013. évi CLXXVI. törvény az egyes jogi személyek átalakulásáról, egyesüléséről, szétválásáról

Енглески назив:

Act I of 2012 on the Labour Code; Act IV of 2006 on Companies (Companies Act); Act V of 2013 on the Civil Code; Act CLXXVI of 2013 on the Transformation, Merger and Demerger of Legal Entities (Transformation Act)


Article 36-40 of Labour Code; Article 67-76 of Companies Act; Article 3:39-3:47 of Civil Code; Article 14,18 of Transformation Act


Under the Hungarian law, a transfer of undertakings occurs if:

  • a legal succession takes place by operation of law ('universal succession'); or
  • if an independent unit (such as a strategic business unit, plant, shop, division, workplace, or any section of these) or the tangible or intangible assets of the employer are transferred by agreement to an organisation or person ('business transfer').

The universal succession is regulated by Act IV of 2006 on Companies (the Companies Act). The act deals with registering companies when a succession takes place. For a universal succession, the change is automatic and employment contracts are taken over by the new entity with a continuation of the provisions of the contract. Examples of such are transformations, mergers, demergers and 100% changes of ownership. Individual transfers, or the transfer of partial assets of the company, by contrast, require an agreement between the transferor and the transferee. This is regulated by the labour code, under the heading 'Transfer of employment contracts upon the transfer of enterprise' (section 36).

According to the Council Directive 2001/23/EC, this refers to 'a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary'. This directive has been implemented in the Hungarian law.

Although public sector jobs are not explicitly exempted, other more specific rules may apply in these cases as they are regulated by conditions other than the labour code.

All employees whose employment relationship is in force at the time of the transfer including 'inactive' employees (those on sick or maternity leave at the time of the transfer) are covered by the regulation. There are no provisions regarding the situation of the self-employed or subcontractors in the context of succession or business transfers, although it may be the case that they are considered 'concealed employment' and - discovered at the time of the transfer - are reclassified (Civil Code 6:92 and Labour Code 27(2)) to employment contracts with substantial fines and unpaid tax claims imposed.

Employment contracts (both permanent and fixed-term contracts) in force at the time of the transfer must remain unchanged when taken up by the transferee. After the transfer, transferees are allowed to make suggestions in regards to changes to individual contracts, particularly in regards to changes of workplace or position, however, the employee is entitled to refuse such suggestions and the employer may not terminate their contract as a result. However, employees are also not at liberty to refuse the transfer and such can be seen as a ground for dismissal.

Employees' benefits must also remain unchanged for a period of at least one year after the transfer has occurred. Mandatory pension benefits will automatically transfer, meaning that time spent in employment with the transferor must be counted as continuing employment by the transferee.

In terms of liabilities, the general rule is that all rights and obligations arising from employment relationships will be transferred to the transferee at the time of transfer. However, both parties are jointly liable for claims arising prior to transfer, provided they were made within one year. If an employment contract is terminated by the transferee within one year of the transfer for ordinary dismissal or through the completion of an employment contract, the transferor will be liable for compensation in relation to such a termination.

Employers are also not allowed to dismiss an employee as a direct consequence of the transfer, however, little legislation exists to regulate when a dismissal is considered to have breached this rule.


No information available.

Cost covered by
  • Employer
Involved actors other than national government
  • Employer organisation
  • Works council
No, applicable in all circumstances
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