More

Workers’ freedom of association rights in Hungary have been considerably strengthened since free elections were held in 1990, but Hungary also has consistently faced criticisms that it has failed to adequately implement existing labour laws, according to trade unions and organizations that monitor freedom of association rights. From a legal perspective, Hungary has the basic framework for workers’ freedom of association protections in place. The Constitution protects workers’ rights in both the private and public sectors to form and join unions and also the right to strike. Collective bargaining rights are secured by statute. In 1957, Hungary ratified both ILO Convention 87, concerning freedom of association, and Convention 98 on the Right to Organize and Collective Bargaining. Moreover, in the years leading up to 2004, when it joined the European Union, Hungary took a number of strides to improve workers’ rights, including increasing some penalties and enacting a groundbreaking equal rights law that offers some prospect of improving protections for union members.

Criticisms about adequate statutory enforcement emerge in the context of a union movement suffering fundamental shifts in key indicators of strength: membership, density, collective bargaining coverage and ability to undertake strikes. Since 1990, union membership has fallen dramatically. By one measure, there were about 976,000 union members in 2004.  Government tax data reflect much lower totals, closer to 600,000 members. By comparison, in 1990, there were close to 4.0 million (compulsory) members. A related issue is that union density has continued to decline (according to one survey) to the point that it stood at about 17% in 2004, a stunning drop from a level of 65% in 1995. Public sector density is much higher, about 27%. A 2004 government survey found that just 33% of workers had a trade union presence at their worksite. Finally, collective bargaining is dominated by company – not sectoral – agreements. Bargaining coverage has been slowly declining in scope, covering fewer and fewer workers, dropping from 45.2% in 2000 to 39.5% in 2002 (about 1 million workers), according to the government. One structural issue that dominates coverage is the fact that Hungary has an emerging share of small companies. Only 10% of workers in companies with less than 49 employees were covered by an agreement as of 2004.

Just as most collective bargaining occurs at the company level, the Hungarian trade union movement also is decentralized in nature. That fact is also reflected at the national level, which has fragmented into six different confederations, often at odds with each other over strategy and legislation. The two confederations with the largest self-reported membership were the National Confederation of Hungarian Trade Unions (240,000 members) and the Forum for the Co-operation of Trade Unions (270,000). Other union confederations include the Confederation of Autonomous Trade Unions (120,000), the Democratic League of Independent Trade Unions (100,000), the Confederation of Unions of Professionals (105,000) and the National Federation of Workers' Councils (56,000). Given the declining trends noted above and facing an ongoing series of critical challenges, these confederations are understaffed and underfunded. Compared to other European countries (e.g., Finland), Hungarians view trade unions relatively poorly compared to other institutions.

Throughout this decade, the ICFTU has reported on multiple cases of freedom of association violations. Trade union members and officials have suffered discriminatory and retaliatory conduct (including harassment, demotion, transfer, suspension, and termination and forced resignation) because of their status or for exercising their legal rights. “Many companies do their best to marginalise trade unions and to make it impossible for union activists to work or to eliminate them altogether” by “driv[ing] them . . . out of the company,” observed one expert on Hungarian labour relations in 2006. Unions also have raised complaints about employers’ failure to follow procedural rules and overly lengthy court proceedings. For instance, a 2003 survey found that companies often fail to provide information and consultation rights as provided by law. Finally, the use of low sanctions against employers undermines the deterrent effect of well-intentioned laws meant to protect trade unions and their members. In this type of environment, unions and independent commentators have reported that workers are afraid to exercise their rights for fear of retaliation.

That fear of job loss, combined with ineffective enforcement and trade unions’ relative lack of power and resources are factors contributing to low strike rate in Hungary. From 2000 to 2004, the average was less than 30 per year, many of which were short in duration and involved few workers. Hungary had one of the lowest strike rates in the EU from 2000 to 2004 (just 11 lost working days per 1,000 employees).

Trade unions even suffered through a bleak period in the late 1990s when a conservative government diminished their social dialogue voice and went so far as to abolish the Ministry of Labour in 1998. The election of a new government in 2002 reversed that exclusionary policy and presently, unions have significant representative roles on a variety of tripartite labour organizations such as the National Interest Reconciliation Council (including the confederations noted above), the Economic and Social Council, and the National Public Sector Interest Reconciliation Council as well as 31 bipartite committees that are designed to encourage sectoral bargaining.

RIGHT TO FORM AND JOIN TRADE UNIONS

Hungary’s Constitution guarantees the right to establish or join trade unions “to protect and represent the interests of employees.” The Labour Code, § 15(1) and Act II of 1989 on the Right of Association, § 1, ensure workers’ rights to form and join unions.

Pursuant to statute, a union must be composed of at least ten persons with internal rules, a lawful purpose, and elected representatives. A union’s statutes only need list its name, purpose, location and a democratic structure of governance. The Labour Code specifies that unions’ purpose is to “promote and protect” employees’ interests at work. A union must register with the appropriate court, but registration cannot be denied if the above requirements have been met. There is no prohibitive barrier to entry, such as a registration fee, and the government’s only role is formalistic approval. Trade unions are free to set up branches in companies as well as to join national or international confederations. The armed forces, including the police, are allowed to form associations to represent members.

Workers, including public sector workers, are free to join or not to join any union. Closed shops are prohibited. Non-Hungarians with residence permits may join a union or become an officer. Union membership fees are tax deductible and, if requested by members, a company must deduct any fees (free of cost) from workers’ wages and transfer them to the appropriate union. The freedom of association rights that accompany membership status are strong. Employers cannot demand that a union member disclose his or her trade union status or, more broadly, take any discriminatory decision based on a worker’s membership in a trade union or activity on behalf of a trade union. Likewise, companies are barred from making any benefit contingent on trade union membership or non-membership.

Trade unions also have organizing rights to access and communicate with their members. Union representatives who do not work for a company are guaranteed access to worksites, if advance notice is provided and a union member works there. Companies and public sector employers also must provide unions with free space at work for use during or after working hours. Employers must provide unions (and works councils) with the opportunity to provide their membership with necessary information and data about union activities in manner that is customary or appropriate. Union representatives have the right to paid time off to perform work related duties. The minimum amount is two hours per month for every three members of the union (not including bargaining negotiations), regardless of union size. Works council members are entitled to be paid up to one-half time off to perform their duties.

Workers have the right to create workers’ councils in addition to trade unions. Since 1992, workers in companies with 51 or more employees can elect their own workers’ council. Workers in companies with at least fifteen workers can elect one representative. In companies with more than one workers’ council, a central workers’ council is created. Workers’ councils range in size from three (for up to 100 employees) to 13 members (for more than 2,000 employees). Public employee councils are governed by Act XXXIII of 1992 on Public Service Employees. Employers cannot interfere with works council elections.  IThe presence of a workers’ council depends on the overall size of a company as well as the presence of trade unions. In practice, workers’ councils are closely linked to trade unions. A recent study revealed that about 70% of workers’ councils are either entirely or mostly run by trade union members, a comparable level to that found in Germany. (The same union-based trend applies in public sector workers’ councils.)   About 84% of larger companies (more than 250 employees) have workers’ councils, compared to about 27% of workers in companies with 50-99 workers.

Both trade unions and works councils have statutorily-created information and consultation rights (but unlike Germany, no substantive co-determination rights) about a wide range of workplace economic and personnel issues (but not issues involving individual workers). If a workers’ council does not exist in a workplace, then the company must consult with any trade union on these issues (that formerly only applied to works councils). Act VIII of 2005 (amending the LC). Moreover, companies must provide fifteen days of notice to the workers’ council about any plans that require consultation. If the workers’ council or union objects, the company cannot implement any plan for at least seven days. But as a general matter, workers’ councils have limited power to change employers’ plans. Workers’ councils cannot call or support a strike. Beginning in 1998, workers’ councils temporarily had the power, only if no union was present, to conclude “bargaining agreements” with companies. But that power was removed in 2002.

As a practical matter, companies do not always provide data and consult. A 2003 survey found that the information and consultation processes for workers’ councils proceed as planned about 33% of the time, but that the process fails the same amount of time. The large majority of representatives also complained that companies did not provide them with adequate background materials. Moreover, only 21% of workers’ councils hold regularly-scheduled meetings, according to the survey. A significant finding was that about 25% of representatives surveyed stated that companies “often” violated their rights. A workers’ council can sue if a company violates its information and consultation obligations.

Trade unions also have workplace information and consultation rights. A company must ask for a union’s opinion (not just provide information about) fundamental work-related issues that affect a large group of workers at least fifteen days before any such change occurs. Companies must provide annual wage-related information. Unions also can demand that employers provide information about economic and social welfare issues. In theory, employers are required to supply the data requested and to explain their decisions. Unions also have the power to initiate dialogue and express their opinion on workplace issues. As noted above, in practice, unions have had to rely on the courts to enforce these rights, but the Labour Code does not cite any possibility of a sanction.

Two new laws allow workers an alternative, limited voice in corporate affairs. Workers have rights to appoint one-third of the members to the supervisory boards of specific Hungarian public companies with 200 or more full-time workers. Workers’ councils make the selections after consulting with unions. However, the law allows (over objections by Hungary’s unions) a workers’ council to exercise an opt out provision in agreement with a company. Companies with just one “unified” board may be exempt from any such worker appointments. In 2004, Hungary enacted a law to provide workers in large European companies with information and consultation rights. Workers’ councils, not unions, have responsibility to appoint representatives. To date, the impact of this law has been minimal because only a handful of such councils have been created. Under both laws, representatives are protected against discrimination to the same extent as workers’ council members.

RIGHT TO COLLECTIVE BARGAINING

Trade unions in Hungary have the right to conclude collective agreements. Collective bargaining is inextricably linked to the principle of freedom of association and the right of a union to “protect and represent” its members, but it is not cited in the Constitution. Even after many significant revisions to the Labour Code since 1992, the ILO still contends that aspects of the bargaining process violate fundamental freedom of association rights.

Unions and employers and their confederations can conclude collective agreements and in practice this occurs without government interference. A union must be “independent” of the employer to sign an agreement. A collective agreement is binding on the parties and is enforceable. They can have a wide scope, including “any work-related issues” and procedures. An agreement generally cannot deviate from the Labour Code unless it is more favorable for a worker. Likewise, a lower-level agreement can only deviate favorably from an agreement with broader scope. However, employers have leeway to deviate from the law in negotiating issues such as pay, working time, and rest periods.

If a representative union or an employer proposes collective negotiations, both parties have an affirmative duty to participate. Overarching that duty, the Labour Code provides that employers and unions shall act in “good faith and fairness” and have a duty to cooperate in the course of exercising their rights and fulfilling their obligations -- all of which help to build effective negotiations. As noted above, employers must provide fundamental data that can be critical for bargaining purposes. Employers have an annual duty to propose an agreement to the representative unions regarding negotiation of wages clauses in an existing agreement. The Labour Code does not mandate that an agreement should be reached. A union can request a speedy court hearing about an employer’s failure to negotiate, but the law fails to designate any remedy.

While collective bargaining is allowed at all levels, local, sectoral and national, bargaining overwhelmingly takes place at the plant level. The larger the size of a company’s workforce, the more likely it will be bound by a collective agreement. By comparison, collective agreements are virtually non-existent in very small companies. Since 1998, the number of contracts has remained fairly steady and heavily weighted toward single employer agreements. In the private sector, there have been about 1,300 agreements registered each year and an average of 63 multi-employer agreements. In the public sector, which has a higher degree of union presence, there have been about 2,000 single employer agreements per year and an average of 10 multi-employer agreements.

Since 1992, the Labour Minister may extend collective agreements to an entire sector, after consulting the relevant social partner organization. The parties must request an extension and must “represent” the sector in question. Sectoral union representativeness is determined by examining if a union is the “most significant” in its sector, considering facts such as its membership and works council election results. Unions can challenge in court extension denials. As a practical matter, these extension provisions have had little overall impact on the structure of collective bargaining. As compared to other European countries (e.g., Germany) sectoral-wide agreements only comprise a fraction of the total number of employees covered by agreements. In 2004, the government estimated that extension provisions covered only 56,000 workers.

Hungary has a statutory process for unions to obtain needed recognition from employers to conduct negotiations, gain information and consultation rights, and represent union members in social dialogue organizations. While it is relatively easy to form a union, it is more difficult for both private and public sector unions to obtain representative status. In the private sector, a union can gain representative status if its candidates receive at least 10% of the votes in the last workers’ council election at that worksite. In the alternative, a union that represents at least 66% of the workers of the employer in the same profession also is representative. Unions also must satisfy representative criteria to become eligible to participate in Hungary’s social dialogue organizations.

A representative union must pass higher thresholds to earn collective bargaining rights. Only one collective agreement can be concluded with an employer to cover its workers. Trade unions have five possibilities to earn representative status and negotiate collective agreements, all of which are based on workers’ council election results and, importantly, all of which require the support of at least 50% of the workers. First, a union may bargain individually with an employer if its candidates earned more than 50% of the votes in the workers’ council election, if it is the only union present. Second, if more than one union is present at a worksite, the unions are only entitled to sign an agreement if they jointly have won more than 50% of the votes cast in the workers’ council election.  The third option is a variation of the second, and provides that the “representative” trade unions which each have earned at least 10% of the votes cast, and that together have received more than 50% of the votes, can jointly negotiate an agreement. Fourth, a union has the right to bargain individually, even if other unions are present, but only if it has won more than 65% of the votes cast in the workers’ council election. Fifth, if no union wins more than 50% of the vote, then they still can negotiate an agreement, but it must be approved by more than 50% of the eligible workers. Regardless of representative status, all trade unions have a right to attend negotiating sessions, even if they are not deemed to be representative.     

The ILO’s Committee on Freedom of Association and the Committee of Experts on the Applications of Conventions and Recommendations, have found that aspects of § 33 of the Labour Code violate Conventions 87 and 98. Both CEACR and CFA assert that Hungary has set the thresholds to obtain representative status at unreasonably high levels (65% individually and 50% jointly), so that in effect, the law prevents those trade unions with the strongest support from concluding collective agreements with an employer. They have recommended that the thresholds be reduced and also that unions be allowed to negotiate on behalf of their members, even if they have not reached 50%/65% threshold. However, the Hungarian Constitutional Court held in 2004 that § 33 did not violate the Constitution.

Public sector unions also have to pass representativeness hurdles before they are granted bargaining rights at local, county, sectoral and national levels. Act CXXIV of 2004, amending Act XXXIII of 1992, substantially revised the tests for representativeness. Previously, public sector unions gained representative status based solely on the outcome of workers’ council elections, as is presently the case for private sector unions. Public sector unions have been critical of workers’ councils in general and this method of gauging representativeness in particular. Now the law also approves representativeness status along the same categories set forth in § 33 of the Labour Code, but based on union membership levels.  As a general matter, a union or unions (if more than one is present) must represent a minimum of 25% of the total number of employees at the worksite to earn bargaining recognition rights. Also, the law allows an individual union bargaining rights, where joint efforts fail, if its membership includes at least 50% of the workers at the worksite. A public sector union also must satisfy specific fact-based tests involving membership to gain recognition at the county, sectoral or national level. Once designated as representative, a trade union has the opportunity to participate in sectoral or national social partner organizations.

Disputes about collective labour interests (non-legal disputes) may be settled by conciliation, mediation or arbitration. Mediation procedures also apply to public sector employees governed by Act XXXIII of 1992. As a practical matter, mediation and arbitration are rarely used, compared to conciliation. Conciliation begins when a party presents a written statement and negotiations cannot exceed seven days. If a union challenges an employer’s proposed conduct, the employer cannot implement it during the conciliation. The parties also can use mediation, if they jointly agree. Arbitration is required in specific cases, such as a union’s right to communicate with its members and use the employer’s facilities and the operation and election of the workers’ council.

RIGHT TO STRIKE

The Hungarian Constitution provides workers with the right to strike. Act VII of 1989 on the Right to Strike implements that fundamental right, broadly stating that the right may be exercised “in order to secure their economic and social interests.” While the right to strike is guaranteed, unions face practical challenges and legal obstacles to call a strike. The industrial relations atmosphere in Hungary is relatively peaceful and strikes rarely occur. Union-organized demonstrations or petitions are much more common than strikes.

As drafted, the right to strike includes both workers and trade unions within its scope. However, most strikes, when they do occur, are called by trade unions. Unions must make the decision to call a sympathy strike, which are expressly allowed by law, or a strike of civil servants. Workers’ participation in a strike is voluntary. A worker cannot be forced either to take part in a strike or to be prevented from participating in a strike. Moreover, employers cannot coerce workers involved in a legal strike.

Limited categories of workers cannot exercise the right to strike, including the judiciary, military personnel, police, and civilian national security forces. Unions that represent members of the armed forces and police officers have limited authority to pursue legal action to resolve any disputes. Public sector workers have a limited right to strike, that only may be exercised as provided by a 1994 agreement signed between the government and public sector trade unions. The agreement, which covers about 100,000 civil servants, has been criticized for its overly restrictive requirements.

The Council of Europe’s Committee on Social Rights contends that 1994 Agreement restricts civil servants’ right to strike and violates Article 6§4 of the European Social Charter. First, the Agreement violates Article 6§4 to because it requires that any strike must be approved by a majority of union members. The Committee has found that this “threshold was so high” that it unduly restricts the right of trade union members to take collective action.  Second, the 1994 Agreement violates the Charter because it prevents any strikes by those officials with "a fundamental function,” including about 10,000 to 15,000 officials who exercise the power to hire, discipline and fire workers. Hungary has failed to justify this restriction. Moreover, the exclusion sweeps too broadly given that civil servants’ right to strike only may be restricted as set forth in Article 31; for example, if the civil servants perform duties affecting public interest or national security. Finally, given the flawed and restrictive nature of the 1994 Agreement, a union formed subsequent to 1994 understandably may be reluctant to sign it. However, it would then be barred from calling a strike because only signatories may strike. Thus, the Agreement unduly restricts the right to strike because trade unions and members of trade unions who are not parties to the agreement can not call a strike.

Unions must participate in a non-binding conciliation before a strike begins or it can be declared illegal. In the private sector, the cooling off period must last at least seven days (or for nine days in the civil service). During the conciliation process, unions are allowed to conduct strikes up to two hours in length. Sympathy strikes also are exempt from the statutory conciliation requirement. If the negotiation fails, or if the employer refuses to participate, then a lawful strike may start.

Certain types of strikes are illegal or restricted. Unions cannot launch a political strike and cannot use blockades. No strike may be organized with the goal of violating the Constitution or if a union has the alternative possibility of litigating the “measure or default” of the employer. No strike by a union is allowed during the course of a collective agreement in order to force a change in the agreement – a peace obligation. A strike that would immediately and “seriously threaten human life, health, security or the environment, or interfere with the prevention of a natural disaster, is barred. In addition, unions are restricted in their ability to strike against employers that provide basic public services (including transport, telecommunication, electricity, water or gas services) unless adequate services can be maintained during the strike. The parties must agree on the level of services prior to any strike. Id. The Supreme Court has found that a strike is not necessarily unlawful even if it does result in the interruption of normal service. By the same token, the Supreme Court also has found that the practice of using non-striking employees to work overtime to mitigate the damage of any strike is not in and of itself coercive.

Labour courts have jurisdiction to rule on the legality of a strike. There is no set time limit for an employer to challenge a strike in court but a court must rule within five days after a complaint is filed. If a strike is lawful, then workers may not be penalized for either initiating or participating in it. They should not be fired, although this has occurred in practice. Striking workers are not entitled to wages or government benefits. The cutoff of wages and benefits is a critical issue in Hungary, since unions generally have small strike funds. By contrast, if a strike is unlawful, then a union or its members could be liable for damages and an employer could move to fire strikers, although the statute is silent on this point.

Hungarian unions have urged reform of the Right to Strike Act that would include provisions to allow for the formation of strike committees and picketing and prohibit strikebreaking and lockouts. All the political stars would have to be in line to reform the law since a two-thirds Parliamentary majority is required to pass a law on the right to strike.

PROTECTION OF TRADE UNION MEMBERS

As of 2004, Hungary has strengthened its statutory protection against union-based discrimination for private and public sector workers. The 2003 Equal Treatment and Promotion of Equal Opportunities Act (AET) is comprehensive in scope. It prohibits discrimination on the basis of a person’s union membership. The prohibition encompasses all aspects of the employment relationship beginning with recruitment, including issues such as promotion and training and continuing through termination. Following passage of the AET, the Labor Code’s anti-discrimination provision, § 5, was amended to accord with the AET and now simply states that “the principle of equal treatment shall be observed in respect of the employment relationship.” (The Constitution does not list union status as a protected non-discriminatory category, but the list of protected categories is non-exhaustive and prohibits discrimination “on any grounds whatsoever.” )

As a general matter, the scope of the law includes private sector employers and a long list of specified public sector organizations, including the Hungarian State and local governments and other authorities.  The AET also establishes use of the common principles of direct and indirect discrimination and that courts must apply a shifting burden of proof. It also creates new causes of action for harassment and retaliation.

Beyond the AET’s non-discrimination prohibition, the Labour Code guarantees trade union officials and elected representatives, as well as workers’ council representatives, specific protection against discriminatory treatment. If an employer takes a specified adverse action against a trade union official – including temporary assignment, transfer to another worksite for at least 15 days, transfer to another workplace or another employer, or dismissal -- then it must first request consent from that official’s trade union. After receiving notice, the union must reply in writing within eight days if it objects to the proposed action. If the termination is based on extraordinary circumstances demanding swift action, then the union must reply within three days after it receives notice. Union officials are entitled to § 28’s shield for one year after their term of office expires (as long as he or she served for six months). If a union denies a company’s request to fire a representative, then the company litigate in Labour Court, asking the Court to fire the employee.

Any trade union official or worker who has suffered discrimination because of their union status also has the added protection of reinstatement to his or her original position. Upon request, an illegally fired worker generally must be reinstated to his or her original position. However, an employer can request that a worker not be reinstated, even if a dismissal is unlawful.  If a worker is not reinstated, a court can order a company to pay between two and twelve months salary. ut reinstatement is mandatory in cases where there is a finding of a discriminatory dismissal or where the employer has fired an elected trade union representative without consent of the union (§28) or by use of an extraordinary termination procedure (§96).

Hungary’s Labour Code also offers workers general protection against unlawful dismissal. Employers must adhere to procedural and substantive rules in cases of ordinary and extraordinary dismissal (severe cases). In cases of ordinary dismissal, an employer must provide real and substantial reasons. An employer also must provide paid written notice, ranging between 30 to 90 days, depending on length of service. Workers generally have the right to be heard prior to the dismissal. In cases of ordinary dismissals, a worker is entitled to a severance payment that ranges from one to six months salary depending on length of service.

A worker who has suffered discrimination because of union activities or status can pursue his or her case before an administrative agency or in the civil or labour courts. A prosecutor also may bring a criminal case. A worker can file a claim with the Equal Treatment Authority (ETA) or the Labour Inspectorate (OMMF). The ETA, created in February 2005, has broad investigatory and enforcement authority. It has the power to investigate complaints of discrimination, conduct administrative hearings, and impose sanctions. If a violation is established, it can, among other sanctions, order that the discrimination stop, publish its decision, and impose a fine ranging from about €200 to 26,000, depending on the circumstances. ETA decisions can be appealed to court.

Workers also have the right to pursue legal claims in Labour Court and seek backpay, pecuniary and non-pecuniary damages and reinstatement. The court can apply a range of sanctions. As a general matter, it has the power to declare any illegal individual or collective agreement void. In cases of unlawful dismissal, companies must pay lost wages (as of the date of final judgment), damages, and any severance payment that is due. As noted above, it can order reinstatement or payment in lieu of reinstatement.

A worker also may raise a claim of discrimination in civil court based on a violation of the principle of equal treatment as an “inherent right.” If a violation of the law is found, a court may impose a variety of sanctions, including a declaration that the practice is illegal, compensation, a cease and desist order, restoration of rights for the worker, or a fine paid to the state.

PROTECTION FOR FREEDOM OF ASSOCIATION RIGHTS

Weak enforcement of labour laws in Hungary has been an area of concern for unions and workers and the subject of legislative reform efforts in recent years. At the plant level, unions and works councils have a role to play in helping to enforce freedom of association rights. But that effort is limited given that neither organization has any significant presence in smaller workplaces and, as a general matter, many workers are not covered by collective agreements. In workplaces where unions or workers’ councils are present, studies have shown that larger workplaces are more likely to have strong grievance procedures in place.

Aside from grievance procedures created by collective agreement, unions also have limited statutory authority to challenge an employer’s unlawful conduct if such conduct directly affects workers or unions. As a general rule, a union’s right to object does not apply if a worker may individually pursue litigation, unless the company has attempted to fire a union official in violation of § 28. A union must object within five days, and if the employer contests the allegations, the parties must then negotiate. If negotiations fail, a union may sue. The Labour Court must rule within fifteen days. In theory, the company may only implement the challenged measure after a resolution by the parties or a court’s final decision, but it may not do so during negotiations and litigation. In practice, however, unions have argued that this right is an ineffective tool to prevent illegal conduct. Workers are hesitant to sue because litigation may open the door to retaliation against them, including the possibility of dismissal. If individual workers do not sue, then unions may be prevented from effectively challenging an illegal practice.

Under the Labour Code, unions cannot file court cases on behalf of individual members, but they may assist members by providing legal advice or representation, when authorized to do so. They also may sue to enforce a legal dispute arising from a violation of the Labour Code, or a collective agreement or workers’ council agreement. But the passage of the AET has introduced new litigation tools for unions to combat discrimination. According to the statute, unions now have the right to represent a victim(s) in legal proceedings, if authorized to do so.  In addition, the AET provides trade unions with the opportunity to litigate (either in court or before the AET) a violation of the “principle of equal treatment” on behalf of their members. In theory at least, these representation rights under the AET could allow a trade union to effectively deter or fight discriminatory conduct that might otherwise go unchecked under the Labour Code.

Two government institutions help to monitor and enforce labour laws. As noted above, the newest such organization is the ETA. It will have an enforcement role to play in the future, but at this early stage, it is underfunded in comparison to its mandate and, to date, it has not made a significant impact. As of July 2006, ETA only employed fifteen employees. In 2005, it fielded 491 claims and that number almost doubled in 2006. However, it only has made 27 findings of discrimination, ten with a fine, and, to date, none of these findings have involved union-based claims of discrimination.

The Labour Inspectorate, OMMF, also is responsible for enforcing labour laws, including non-discrimination rules, in more than 900,000 companies covering 4 million workers. As of 2004, OMMF had 220 inspectors who focused on labour issues.  It routinely has uncovered extensive violations of labour laws (e.g., in 2004, 17,346 employers committed violations involving 271,864 workers), but just a fraction of workplaces are inspected annually. The focus has not been on illegal conduct against unions or their members. By way of example, in 2004, OMMF found 24 violations relating to unions, affecting 468 workers. From 1999 to 2002, it uncovered an average of 18 violations per year in this category.  These cases represent less than 1% of all cases inspected. OMMF can only investigate discrimination cases upon request and workers often are reluctant to contact it. It can fine employers but the relative amount of fines issued was “very low” compared to the extent of violations, according to the Council of Europe.  For example, the maximum fine for discriminatory hiring was just €435. Given that background, unions have criticized the inspection system as ineffective because it is underfunded, lacks inspectors, fails to enforce labour law violations, and low fines do not deter illegal conduct.  However, in 2005, the law was changed to allow for the possibility of more severe penalties, up to as much as €20,000 for companies with less than 20 employees or €40,000 for larger companies.

Hungary has two voluntary routes for mediating labour disputes, neither of which has had a significant impact yet. The Labour Mediation and Arbitration Services agency (MKDSZ) was created in 1996, but so far its role in resolving labour disputes has been limited. First, it does not play any role in individual employment litigation. Second, even in the area of collective labour disputes, it has been underutilized, generally dealing with just a handful of cases per year. Individual litigants who file claims of discrimination in civil court, as of March 2003, also may use mediation pursuant to Act LV of 2002 on Mediation. Yet in 2004, there were just 34 mediations on employment dismissals.

Hungary’s courts also help to enforce labour laws, but observers have raised some concerns about whether the threat of litigation poses an effective deterrent given the relatively slow pace and low damage awards. Since 2000, there have been about 26,000 labour court cases filed annually. No specific data is available about the breakdown of the caseload, but about one-third of cases filed allege unlawful dismissal. In 2005, the average length of time for a civil court case in Hungary to be resolved was 13.6 months, although dismissal cases involving requests for reinstatement are processed more quickly. Judges agree that awards for non-pecuniary damages are only nominal. As for court costs, a worker may pursue a discrimination claim in civil court, but generally must pay relatively significant court fees. A plaintiff who sues in labour court does not have to pay court costs, but may be liable for an employer’s litigation costs or expert fees. Conciliation is mandatory in all Labour Court cases prior to a hearing. The conciliation generally is brief and its impact has been “insignificant.”

Analysis provided by Philip Simon, OSCE/ODIHR consultant.

Posted: May 2007

Hide