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COUNTRY OVERVIEW

Employees are represented on the boards of Hungarian companies with more than 200 employees. Both unions and employers were consulted on how the directive was to be implemented in Hungary and the unions expressed concern on the role they had been given. However, this did not lead to a wider public debate.

For further information on the SE legislation, such as the choice of SNB members, click on the more button.

Employee representatives make up one third of the members of the supervisory board in companies with more than 200 employees.

The bill transposing the directive was presented to the National Reconciliation Council (OÉT), in which unions, employers and the government were represented, in February 2004 before being debated in parliament. It was discussed in both plenary and committee sessions and some minor changes were made as a result. However, the unions were unable to change the way that the selection of Hungarian members of both the SNB and the SE representative body was left in the hands of the works councils, rather than the unions, as this followed the arrangements already agreed for European works councils (see section on the position of unions and employers).

The implementation of the directive, where the government took an essentially minimalist approach, (see László Neumann September 2004) did not lead to a wider public debate. There have been, however, subsequent changes to the system of employee representation at board level, which represents a potential weakening of the employees’ position.

Form of transposition

Directive was implemented through legislation in May 2004, well before the October 2004 deadline.

The legislation implementing the directive on employee involvement in European companies was passed by the Hungarian National Assembly on 24 May 2004, published on 28 May, and came into effect on 8 October 2004. The title of the legislation, which also adapted Hungarian law to the Regulation on European companies, is Act XLV of 2004 on the European Company (2004. évi XLV. törvényaz európai részvénytársaságról).

Special negotiating body (SNB)

Selection of national members

Hungarian members of the SNB are chosen by the works councils, with direct elections if there are no works councils. Unions have no role.

Hungarian SNB members are appointed by the works council, the central works council, if one exists, or the central works councils jointly where there are several (Article 21).

If one of the companies or workplaces involved does not have a works council, the employees concerned should elect a representative to attend the meeting of the works council to make the choice. More than half of the employees involved should vote for the election to be valid (more than one-third if the election is rerun) (Article 22).

There is no role for unions in choosing SNB members, despite the fact that in the Hungarian system of employee representation at workplace level many rights are shared between the works councils and the unions at the workplace.

External trade union representatives

External union representatives in Hungary can be appointed to the SNB.

The Hungarian legislation states clearly that trade union members who are not employees of the companies involved “may also be appointed” to the SNB (Article 21). However, the fact that the choice is in the hands of the works council may make this fairly unlikely in practice.

Financing of experts

Funding not limited to a single expert.

The Hungarian legislation on funding does not limit funding to a single expert. It simply states that the company is liable for “justified necessary expenditure in connection with the operation” of the SNB. However, there are limits on the total amount of expenses to be borne by the participating companies, which are in line with those in the Hungarian Labour Code (Article 28).

Standard rules under the fallback procedure

Allocation of national seats on SE representative body

Basically, same arrangements apply as for SNB members – Hungarian members are chosen by the works councils, with direct elections if there are no works councils.

Almost the same arrangements which apply for the choice of Hungarian members of the SNB also apply for the choice of Hungarian members of the SE representative body – known as the representative body (képviseleti testület) in the Hungarian legislation. In other words, they are chosen by the works councils and if there is no works council they are directly elected by the employees (see section on SNB). The one significant difference from the position on the SNB is that, in the case of the representative body, trade union members who are not employees of the company are not specifically permitted to be members (Article 35).

Budget of representative body

The company should bear the expenses of the representative body, and there are no limits on the number of experts.

The company is obliged to cover the costs of the representative body. These specifically include organising meetings, interpreting services, accommodation and travel expenses of members and “experts’ fees”. The fact that the representative body may seek the assistance of “experts to assist it in its duties” is also explicitly stated. As with the SNB, there are limits on the extent of the costs to be borne by the company, which are in line with those in the Hungarian Labour Code (Article 40).

National procedure for the allocation of board seats

The mechanism for choosing board members is left to the SE representative body – but members of the representative body itself may not be board members.

The legislation does not set out in detail how Hungarian employee representatives at board level are to be chosen. It states that employee delegates at board level “shall be selected, appointed or recommended by the representative body from among the employees of the European company”. However, the Hungarian legislation also states that members of the representative body may not be chosen as board members (Article 48).

Misuse of procedures and structural change

Misuse of procedures

The issue of misuse of procedures is not covered by the Hungarian legislation.

There is nothing in the legislation that covers the situation where procedures are misused to deprive employees of their right to participate in company decisions.

Structural change

There is no requirement in the Hungarian legislation to renegotiate the agreement if there has been structural change.

There is nothing in the legislation that requires the agreement to be renegotiated if there are structural changes after the SE has been set up.

Position of trade unions and employers

Both unions and employers were consulted on the legislation implementing the directive. The unions were unhappy about the fact that they had no role in the choice of Hungarian SNB and SE representative body members but were unable to obtain changes in this area.

In the discussions in the tripartite National Reconciliation Council (OÉT), one of the key points of issue was the way in which Hungarian SNB and SE representative body members were to be chosen. In the draft text proposed by the government, the choice lay with the works councils. However, the unions proposed that the choice should be given to them, with works councils only acting if there were no unions. This was opposed by the employers. The question of the legal position and relative influence of works councils and unions at the workplace has been one of the major issues in Hungarian industrial relations in recent years, and the balance between them has varied over time.

In this case the government was unwilling to change its view that the choice of SNB and SE representative body members should be given to the works councils, as it was able to argue that was already the position for Hungarian SNB members for European works councils. The unions had not raised any objections to this procedure at the time (see László Neumann September 2004).

L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)

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