As a Hungarian Employee in Germany – Which Country’s Employment Law Applies to Hungarian Employees Working There? What Should Employers and Employees Pay Attention To in Such a Situation?

The maze of applicable legal rules

The question raised in the title cannot be answered in a single sentence. As a result of the sometimes complex interaction between Hungarian, German and EU employment law, a three-level regulatory framework applies where a Hungarian citizen chooses Germany as the place of work. In this article, we seek to provide guidance to those looking for legal orientation by unpacking this legal situation. A detailed analysis follows below.

Applicable German legislation

First of all, when we refer below to the body of “German legal rules”, we do not mean a German labour code, since no such code exists in Germany. For historical reasons, the German employment-law regime is highly fragmented: unlike the Hungarian Labour Code, most of the relevant rules are not contained in one single codified statute. Instead, German sector-specific employment statutes and the employment-law provisions of the German Civil Code (BGB) form the backbone of the German regulatory framework.

Why must the mandatory provisions of German law be observed even if the employment contract may otherwise choose Hungarian law?

In this situation, where a Hungarian citizen performs work in Germany, the mandatory provisions of German employment law must also be observed alongside the Hungarian rules agreed in the employment contract, because the employee of a Hungarian-registered employer will perform work on German territory. This means that certain German rules cannot be disregarded even if the parties have agreed otherwise in the employment contract, where doing so would place the employee in a less favourable position.

In light of Article 8(1) and (2) of Regulation (EC) No 593/2008 of the European Parliament and of the Council, commonly known as the Rome I Regulation, the mandatory provisions of the legal regime of the place where the work is carried out — in this case, German law — may not be derogated from. The same provision also reflects the primacy of German domestic employment law as an expression of the lex loci laboris principle: where the parties have not chosen the law applicable to the employment contract, the contract is governed by the law of the country in which, or from which, the employee habitually carries out their work in performance of the contract. This is consistent with the jurisdictional rule reflected in section 3(2) of the Hungarian Labour Code, since in the absence of a choice of law the Hungarian Labour Code would apply only if the place of work were Hungary.

Can the employer expressly choose Hungarian employment law in the employment contract in order to avoid mandatory German rules?

In this context, it should first be clarified that the parties may validly choose either German or Hungarian employment law in the employment contract. However, employee interests may not be prejudiced in doing so, meaning that the mandatory employment-law rules in force in the country where the work is performed — Germany — must continue to be respected. In practice, if the parties expressly choose Hungarian employment law in the employment contract, Article 8 of the Rome I Regulation still prevents derogation from mandatory German rules. The reason for this is the legislator’s insistence on protecting the employee’s fundamental statutory guarantees. If, in relation to a particular issue, both Hungarian and German law contain mandatory provisions, the higher level of employee protection prevails. This is also supported by section 3(1) of the Hungarian Labour Code. Accordingly, Hungarian employment law may expressly be chosen for the contract, but the mandatory application of German rules cannot be circumvented because those rules protect the employee’s legally safeguarded interests.

In which country may the employee sue the employer?

If the employee considers that the employer has acted in breach of the applicable legal rules, special forums for bringing claims are provided by Regulation (EU) No 1215/2012 of the European Parliament and of the Council, commonly known as the Brussels I Regulation. Articles 20 to 23 contain rules granting employees favourable forums for bringing claims. These are asymmetric jurisdiction rules: they determine the favourable conditions under which an employee may sue the employer. In a Hungarian-German context, the employee may, at their option, bring proceedings in either Germany or Hungary in the event of a dispute, regardless of which country they come from or in which country they are currently working. This freedom of forum shopping cannot validly be excluded in the employment contract.

Összefoglalás

As noted in the introduction, this issue is regulated on three levels, so it is advisable to be familiar with the relevant Hungarian, German and EU employment-law rules. Given this highly differentiated regulatory framework, we recommend involving a legal expert on both the employer and employee side. This can help resolve the situation quickly and cost-effectively, particularly because a potentially lengthy employment dispute may be avoided by preparing an appropriate employment contract. It is therefore clear that an orderly employment-law relationship between the parties is desirable for both employer and employee. Please feel free to contact us if you require assistance in establishing such a relationship or resolving an existing dispute.