In certain cases, the Hungarian Labour Code does not require the dismissal to be justified by Employer. But what, if despite that, the employer gives justification for the dismissal? Is it possible for the Labour Court to review the legality of such non-mandatory justification? And can the defect of this non-mandatory justification render the dismissal unlawful? In its recent decision, the Hungarian Supreme Court examined the above question concerning that analyse the decision in our article.

1. Facts

The employee (“Employee”) has worked at employer (“Employer”) as a telephone operator since November 2016. The parties stipulated a three-month probationary period in the employment contract.

The Employer terminated the employment relationship by dismissal, referring to that he replaced the Employee with a former employee, therefore he did not need the work of the Employee in the future.

2. First instance court decision

In his statement of claim, the Employee requested the Employer, among others, to pay compensation due to his lost wages on the ground of the unlawfulness of the dismissal.

The labour court („First Instance Court”) partly accepted the claim, explaining that according to the Labour Code, none of the parties shall justify the dismissal without notice during probationary period.[1] However, continued the First Instance Court, in case the dismissal is justified by the Employer, he shall be liable for the lawfulness of the justification.

Considering the above, the First Instance Court reviewed the „non-mandatory” justification of the Employer, which, in his opinion, did not meet the requirements set forth by the Labour Code in respect of the dismissal without notice.

Indeed, the Employee did not commit wilfully or by gross negligence a grave violation of any substantive obligations arising from the employment relationship; and he did not engage in conduct that would render the employment relationship impossible. Furthermore, the Employer did not rely on these circumstances in his dismissal.

The First Instance Court also stated that the dismissal of the Employer did not contain justufucation about “quality change”, that is the replacement of the Employee for an employee with higher qualifications, therefore the First Instance Court considered the dismissal without notice of the Employee as unlawful.

3. Second instance court decision

The regional court acting at second instance („Second Instance Court”), which decided on the appeal of the Employer, party reversed the judgment of the First Instance Court, by stating that during the probationary period, the employment relationship can be terminated with immediate effect without justification, but according to the judicial practice, in case  the justification is not necessary for the declaration, but the party gives a reason, he is liable for the conformity of the latter.[2]

According to Second Instance Court, the First Instance Court wrongly examined the existence of the reason of the dismissal without notice at the assessment of the dismissal of the Employer, since the Second Instance Court was on the opinion, that the existence of the reasons, justifying the so-called “regular” dismissal should have been examined in this case.

However, according to the Second Instance Court, the dismissal of the Employer did not meet the requirements of the “regular” dismissal either, because the dismissal was not justified with the behaviour or the ability of the employee, or with the employer’s operations.

Furthermore, the cause of the dismissal should have been clearly recognisable, but according to the Second Instance Court, this was not fulfilled as the Employer did not refer to explicitly to the “quality change”.

4. Decision of the Supreme Court

The Supreme Court (“Curia”) found the request for judicial review against the second instance court decision of the Employer substantiated on the following basis.

The Curia repeated the standpoint of the Second Instance Court, according to which the employer is liable for his justification even if this is not mandatory on the basis of the legislation.

However, the Curia added that the existence of a justification does not requalify the dismissal to a different type of dismissal, that should be justified in accordance with the Labour Code, for this reason the compliance with the additional requirements governing the latter types of dismissals should not be examined.

According to the Curia, the reality and relevance of the reasoning of the Employer should have been assessed in this litigation, which, according to the Curia, were complied with, as the Employer actually employed his former employee, and therefore he did not need the work of the Employee in the future.

The Curia added that the Employer should have not proven the “quality change” as he did not refer to it explicitly.

Based on the above, the Curia repealed the final judgment and reversed the judgment of the First Instance Court and rejected the claim of the Employee.

5. Assessment of the decision

It can be established, that the three court acting in this case have drawn different conclusions from the same facts.

According to the Labour Code, as a main rule, an employment relationship can be terminated in two ways, by dismissal, formerly known as the “regular” dismissal from the one part, and dismissal without notice from the other. Common feature of the above two types of dismissals is that both of them shall be justified.

The dismissal during the probationary period can be considered as a different, third type of termination of employment, as the employment relationship can be terminated with immediate effect, without any justification.

The First Instance Court assessed the dismissal of the Employer under the rules of the dismissal without notice, while the Second Instance Court assessed it under the rules of the “regular” dismissal, so the courts automatically applied the rules of the two “justified” dismissals, due to the existence of the justification, given by the Employer.

According to the argument of the Curia, the sole fact that the Employer has given a “non-mandatory” justification can not requaliy the dismissal to a “regular” dismissal or a dismissal without notice, therefore the extra requirements for the two latter cannot be applied here. Consequently, the Employer is only liable for reality and relevance of the justification of the dismissal.

It can be concluded, that the decision of the Curia confirmed the judicial practice concerning “non-mandatory” justification.

Consequently, it is enough if the justification of the dismissal during the probationary period meets the general requirements of reality and relevance.

To answer the question of the article, the court can examine the lawfulness of the non-mandatory justification of the dismissal, but it cannot qualify it to another type of dismissal.

Based on the above, we advise that in case the law does not make it compulsory to reason the dismissal, the employer do not reason its dismissal.

[1] Section 79 (1) of the Labour Code

[2] Judicial decision No. 2005.328.