Immediate dismissal is perhaps one of the most problematic forms of termination of employment, so it is important for both employers and employees to have a deeper understanding of its rules. Below, two recent decisions of the Supreme Court in Hungary are presented to provide an overview of the legal instrument of immediate dismissal.

A defamatory letter of complaint can destroy the employer’s confidence

In the first case, the plaintiff had an indefinite employment contract with the defendant, a manufacturer of electronic cables for car manufacturers and other companies with a similar profile. In spring 2020, the defendant decided to introduce reduced working hours with regard to the coronavirus pandemic and offered the plaintiff a 20-hour per week contract amendment with reduced wages. After the plaintiff rejected the defendant’s first offer, the defendant introduced three more offers to the plaintiff, none of which was accepted by him.

The plaintiff was then unable to work for a month. After he returned to work, his superior suggested again an amendment to the employment contract and termination of employment by mutual agreement, but the plaintiff did not accept it. His superior then transferred him to the position of machine operator. Two days later, at a medical examination of his fitness for work, the occupational doctor declared that the applicant is temporarily unfit for work, and he was again placed on inactive status from that date.

As a result of these events, the plaintiff sent an email to the company’s managing director, indicating that his superior was taking ‘improper and illegal’ action against him, with the aim of driving him out, i.e., to force him to resign as an employee, which would mean that he would have to leave the company without any severance pay, regardless of his more than 20 years of employment. He also complained that some of his duties were taken away and that other employees were offered 6-hour working schedule, which would have been appropriate for him instead of the offered 4-hour working schedule.

The employer terminated the existing employment relationship with immediate effect on the grounds that the plaintiff had complained about his superior’s actions by stating untrue facts in several statements in his letter and by accusing his superior of improper and illegal conduct. This conduct made it impossible to maintain the employment relationship, since it was a relationship of trust and confidence and the manager had lost confidence in him.

In his lawsuit, the plaintiff claimed that the opportunities which were offered to him were unfair and discriminatory, and his reinstatement as a machine operator was a means of stifling his opinion and that the employer had not offered him the 6-hour working schedule, which he would have accepted. He wrote to the employer’s managing director to share his concerns and to exercise his employment rights.

During the court proceedings, it was established that the defendant was already aware in March that the pandemic would lead to a decrease in orders and revenues in the following period, and that production at the car manufacturing plants was gradually stopped. According to the testimonies, the offered 4-hour and 6-hour work schedules were determined on the basis of whether the position was directly related to production. The applicant’s position was not directly related to production and for this reason he was offered the 4-hour shift, but this did not only affect him, but all white-collar workers.

The defendant proved that it offered the claimant several options after he refused to accept the reduction in working hours. These proposals were described by the plaintiff as illegal and without justification. The reduction in working hours required an amendment to the employment contract, which required the plaintiff’s consent, but the defendant did not unilaterally reduce working hours, but offered them as an option. In employing the plaintiff in the position of machine operator, the defendant took into account the fact that the plaintiff had previously worked in this position for many years.

The plaintiff was a valued employee of the defendant. There was no evidence in the witness statements that the manager had taken tasks away from him and refused to work with him. Until 2017, the plaintiff held the position of technical manager, but it was precisely to relieve his workload, partly at his request, that the defendant created the position of operational technical manager, due to the increased responsibilities.

The court of first instance dismissed the action and the Court of Appeal upheld the judgment. It explained that the termination notice did not have to state each and every untrue fact relied on by the plaintiff, but only referred to them in summary form. The court was therefore required to examine the veracity of the employee’s letter.

In this context, it found that the letter certainly contained a misrepresentation of the truth, stating that the plaintiff had not received a pay rise, since, according to his own submission, he had been offered one or two occasions, which he had not accepted. As for the statement of fact that ‘some tasks were taken away from me’, it was distorted in that the plaintiff had previously been responsible for the entire technical area and had himself requested assistance because of his excessive workload. The plaintiff was wrong to claim that the defendant planned to terminate his employment, as witness statements confirmed that his work was needed and that they did not want to part with him. According to testimonies, the employees whose employment was terminated by mutual agreement during this period received their benefits under the employment contract for the event of termination by the employer. The claimant wrongly accused his employer of illegal conduct, as it had fulfilled its duty to cooperate beyond its legal obligation. According to a previous decision of the Supreme Court in Hungary, a letter which seriously undermined cooperation and was capable of undermining the authority of the superior and insulting his person, both in its nature and in its wording, was a legitimate reason of immediate dismissal.

The Hungarian Supreme Court found the plaintiff’s request for review to be unfounded. In its view, the court of first instance was right to find that the plaintiff had not only expressed his own opinion in his letter to the managing director, but also made statements of fact, and that his letter could not therefore be regarded as a mere expression of opinion. As regards the case-law, the limitation of the expression of an opinion is that it cannot contain untrue statements of fact, because that would constitute an infringement.

The breach of duty and the assessment of its gravity are governed by Article 52 Section 1 d) of Act I of 2012 on the Labor Code, according to which the employee is obliged to behave in a manner consistent with the trust required for the performance of his/her job. The plaintiff, as a member of the management, had a special relationship of trust with the defendant by virtue of his position and was therefore under an increased duty of cooperation. It cannot be accepted that, by circumventing his superior and putting his own interests first, he approached the managing director with his complaints on the basis of false arguments in a manner that was capable of discrediting the immediate superior.

Long tolerated bad practice in the company should not be grounds for dismissal

In the other case of the Hungarian Supreme Court, the plaintiff was employed by the defendant as an account management consultant, where his duties included, inter alia, assisting in the preparation of proposals for the conclusion of housing and savings contracts. The defendant’s statement found that the national average for non-started contracts was 2.84%, while the plaintiff’s was 73.33% (44 out of 60 contracts signed were non-started). In 2017, the plaintiff was the third worst performing employee in the Budapest region and nationally. The report also indicated that the branch where the plaintiff worked had developed irregular sales practices.

The defendant terminated the plaintiff’s employment with immediate effect, citing as grounds for its dismissal the investigations that established that the plaintiff’s sales practices resulted in concluding contracts without actual sales, actual customer demand or administrative performance, thereby causing the employer to expend unjustified costs, and that the payment of the bonus to the plaintiff for the contracts concluded was unjustified.

In his letter of action, the plaintiff pleaded that he was expected to attract the interest of his clients, to provide information and, if there was a willingness to conclude a contract, to prepare a detailed offer, and that he had acted as it could be expected under the circumstances. The testimonies confirmed that the plaintiff closed all contracts with clients who had the intention to purchase a home and only later, due to changes in the clients’ life situation, they were unable to pay the instalments. The reason given by the employer referred to irregular sales practices at the plaintiff’s place of work, but the court of first instance held that this could not be considered as an independent ground for immediate dismissal.

However, the Court of Appeal disagreed and dismissed the plaintiff’s claim. According to the Court, the internal investigations contained information on the failures of the plaintiff, which he was aware of, but did not change his behaviour. It might occur that on occasions, due to a change in the client’s circumstances, he may not be able to meet the monthly instalment, but the percentage of such cases was, in the court’s view, so high for the plaintiff that it could be assumed that the plaintiff acted without assessing the actual client demand, thus seriously compromising the process of contracting to meet high sales expectations.

Then, the Supreme Court disagreed and found that the Court of Appeal wrongly referred to the employer’s legitimate economic interests as a reason for immediate dismissal, because this was not stated in the reasoning of the termination. The Supreme Court confirmed that the court of first instance correctly established the facts, but the court of second instance drew incorrect conclusions from them. Since the termination notice expressly imputed to intentional misconduct of the employee, the court of second instance should have examined whether the plaintiff had indeed committed intentional misconduct, which was set out in the reasons for the termination notice and which made the employment relationship no longer sustainable.

In the termination notice, however, the employer made findings of improper practice not only for the plaintiff but for the whole branch, but did not explain why this had led to immediate termination of the employment relationship only in respect of the plaintiff. And although the employer did impute a number of breaches of duty to the plaintiff, they were not of such gravity as to make immediate termination a lawful measure. The Supreme Court emphasised that unchallenged bad practice tolerated by the employer for a long period of time does not constitute grounds for immediate dismissal.

A brief presentation of these two cases illustrates perfectly that the lawfulness of a termination can depend on a number of factors. The vast majority of employment lawsuits are compensation claims for wrongful termination, so litigants are advised to consult a specialist in employment law, at least for a consultation, as they can offer solutions in certain cases that can avoid or significantly reduce the need for years of litigation and the payment of damages, which can run into millions of Forints.

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