The Hungarian Supreme Court has made a decision in an employment related legal dispute whether the employer can process the data of the employee’s private life, and if so, then what can be the basis and the extent, and how can such data be processed. If you hire employees, you cannot avoid to process their personal data every day. This judgement can be a guidance for you to know what can be the limits of data processing if they contain sensitive data.

What happened?

The employee, who initiated the litigation, had a love affair with his colleague. The employing company didn’t want to maintain the employment relationship with the employee anymore after receiving information about the relationship. In order to terminate the contract without any conflict, the company offered a termination with mutual agreement, but they were not able to come to an agreement. Finally, the employer decided to fire the employee because of the secret relationship.

The employee initiated a litigation against the company, where he requested the court to establish that terminating the employment relationship was unlawful, and requested to return him to his original position, or in case it is not possible he claimed for damages as well.

At first instance the court rejected the request, however in the second instance the court established that the termination was unlawful, and the Curia shared the same view.

What was the problem?

According to the Labour Code, the employee can be requested to make a statement or to disclose certain information only if it does not violate his personal rights, and if it is really necessary for concluding, performing or terminating the employment relationship.

Curia confirmed that the employee’s relationship belongs to his personality rights, and it is also his personal data that can be limited only if it is absolutely necessary due to a reason directly related to the purpose of the employment relationship, and it is a proportionate means of achieving its aim.

In the present case the employer could not prove that processing the data related to the employee’s love relationship was “absolutely necessary” – the leading position by itself is not enough – and they did not prove any harm or damage justifying the termination of the employment relationship.

The court examined furthermore the policies being in effect at the employer, and the conflict of interest rules prescribes that the employee shall report a relationship only in case of family members, with regard to the hierarchical or other legal relationship. Reporting a love affair was not obligatory even according to the policies. Thus the employee did not violate the company policies, that further proves that the termination was unlawful.

How to do it correctly?

We cannot emphasise it enough how important it is to have a clear, true and reasonable justification for the termination. If you would like to refer to that the employee violated a policy of the company, first you should make sure whether he really violated the rules. It is important to examine the text of the policy not to misunderstand the obligations of the employee.

The other important lesson you can learn from this decision is that the policies must be in accordance with the law. From the view of data protection you should keep in mind the principles of “purpose limitation” and “data minimisation” that means you shall use the personal data only for specified, explicit and legitimate purposes, and only in an extent limited to what is necessary in relation to the purposes.

Bad internal rules can create a false sense of security. If you cannot prove that the information about the employee’s private life is absolutely necessary for you, then the employee will win the litigation against you based on data protection and personality rights. As the internal rules might have legal consequences, we suggest preparing it with an expert, or having it approved by such a person so that you won’t have any unpleasant surprises later.