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12 April 2023

Hungary's brand-new whistleblowing regime

On 11 April 2023, the Hungarian Parliament adopted a whistleblower protection act setting aside the previous one first adopted back in 2013. The new rules aim to finally transpose EU Directive 2019/1937 into the Hungarian legal system and impose substantial obligations on employers. The amendment will enter into force on the 60th day after its publication, which is expected in the upcoming days. This means that all employers concerned must be prepared to apply its new provisions during the summer.

What should employers do?

One of the key obligations imposed by the new act is that employers with 50 or more employees must set up an internal whistleblowing system. Employers with at least 50 but no more than 249 employees have the option to establish a whistleblowing system jointly.

By the internal whistleblowing system, the employer may decide to handle the incoming report fully internally (e.g. via HR) or include a whistleblower protection attorney.

How to handle the report and personal data?

The whisleblowing system must be designed in such a manner that the personal data of the whistleblower and of any person affected by the whistleblowing may not be disclosed to anyone other than the authorised persons. A key obligation is that a whistleblowing report may only be transferred to a third (non-EU) country if the recipient agrees to fully comply with the rules of the Hungarian whistleblowing act. In other words, if a Hungarian company that is a member of an international group of companies wishes to transfer the whistleblowing report to a third country, the recipient may wish to make a written declaration of its commitment to comply with the Hungarian whistleblowing act and to conclude a contract to this effect.

If the employer engages a whistleblower protection attorney to handle the whistleblowing reporting, the attorney is obliged to maintain confidentiality with regard to the personal data that allow the whistleblower to be identified, i.e. the attorney may only forward the whistleblowing report to the employer by concealing the identity of the whistleblower. The whistleblower may waive the confidentiality obligation in writing. In such a case, the identity of the whistleblower may also be transferred to the employer along with the report.

What can be reported?

The act lists some grounds for this (e.g. sexual harassment, corruption, discrimination, etc). In addition, employers are allowed to establish special rules of conduct, the breach of which may be reported by employees within the framework of the whistleblowing system. These can be employer-specific grounds, e.g. violations of internal expense policies or conflict of interest rules. The employer must publish these rules in the locally usual manner. 

In light of the above, employers with 50 or more employees will now have to start working on establishing their whistleblowing systems in due time to be fully in line with the new legislation. The timeframe is rather short because by the end of summer these systems should already be in place and fully functioning.

authors: Kinga Hetényi, Alexandra Bognár, Áron Hegyi