As a Hungarian Employee in Germany – Does Hungarian or German Labour Law Apply to Hungarian Employees Working in Germany? What Should Employees and Employers Pay Attention to in This Situation?

Variety of Applicable Legal Provisions

The answer to the questions raised in the title cannot be summarised in a single short sentence. The complex system of Hungarian, German and European labour law creates a three-tier labour-law framework when an employee with Hungarian citizenship chooses Germany as their place of work. In this article, we aim to provide guidance to readers seeking legal clarity in this dense legal landscape by explaining the applicable legal situation, which is analysed in detail below.

Applicable German Legal Provisions

First, we would like to draw the reader’s attention to the fact that “German legal provisions” does not mean a German Labour Code, because no such code exists in Germany. For historical reasons, German labour law is fragmented: the relevant part of the legal system has not been codified in a single uniform code, unlike the Hungarian Labour Code. The basis of German regulation consists of various German labour-law statutes as well as the German Civil Code.

Why Must Mandatory German Legal Provisions Be Observed Even If the Employment Contract Provides for Hungarian Law?

If a Hungarian citizen performs their work in Germany, the mandatory rules of German labour law must be observed in addition to the applicable Hungarian law, because the employee of an employer registered in Hungary will perform their work duties in Germany. This means that certain German rules apply even if the parties have agreed otherwise in the contract.

In view of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, i.e. Article 8(1) and (2) of Rome I, it is not permissible to derogate from the mandatory rules of the law of the place of work (Germany). This provision also establishes the priority of domestic German labour law as an expression of the principle of lex loci laboris, since where the parties have not chosen the law applicable to the employment relationship, the contract is governed by the law of the country in which the employee habitually carries out their work. This is consistent with Section 3(2) of the Hungarian Labour Code, which would apply only if no choice of law had been made and the place of work were Hungary.

Can the Employer Expressly Reserve the Application of Hungarian Labour Law in the Contract, Excluding German Labour Law, in Order to Circumvent the More Favourable Mandatory German Rules?

In this context, it should first be noted that the parties may validly choose German or Hungarian labour law in the employment contract. However, this choice must not adversely affect the employee’s interests, namely the mandatory labour-law provisions of the country where the work is performed — in this case, Germany. What does this mean in practice? If the parties expressly reserve the application of Hungarian law, Article 8 of the Rome I Regulation does not permit derogation from mandatory German rules. The reason for this lies in the legislature’s enforcement of statutory guarantees due to employees. If both Hungarian and German law contain mandatory rules on a particular issue, the provision offering the higher level of protection prevails. Accordingly, an express choice of Hungarian labour law is possible in the relevant contract, but the mandatory German rules will nevertheless apply.

In Which Country Can the Employee Sue Their Employer?

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 provides special forums for bringing actions where, from the employee’s perspective, the employer has infringed the legal provisions applicable to the employee. Articles 20 to 23 of this Regulation set out rules favourable to employees by securing advantageous forums for bringing claims. These are so-called asymmetric jurisdiction rules, which describe the favourable options available to the employee when bringing proceedings against the employer. In the Hungarian-German context, this means that in the event of a potential legal dispute, the employee may choose to bring an action either in Germany or in Hungary, regardless of the country from which they come or the country in which they are currently staying for lawful employment purposes. This freedom of forum shopping cannot be validly excluded in the employment contract.

Summary

As already noted in the introduction, this issue is regulated on three levels, which is why it is necessary to understand the relevant Hungarian, German and European labour-law framework. In light of this highly differentiated regime, we recommend consulting legal professionals on both the employer and employee side. This can help resolve the situation quickly and without excessive cost, since a potential labour-law dispute can be avoided through a properly drafted employment contract. It is therefore clear that a well-regulated employment relationship is desirable for both parties. Please feel free to contact us for assistance in preparing such arrangements or, where necessary, resolving disputes.