According to the first-instance court verdict, RTL Magyarország lawfully terminated the employment of the ex-CEO, reports[1]. The case dates back to 2015, when the employment of the ex-CEO was first terminated by way of an ordinary dismissal. In the meantime, however, evidence emerged in the course of an internal investigation that the ex-CEO allegedly provided his wife with a company car and a chauffeur; furthermore, he allegedly malpracticed with regard to invoices and production costs. As a result, RTL Magyarország “reclassified” the termination to extraordinary termination and, in the law suit – launched by the ex-CEO against the employer – RTL Magyarország submitted a counter-claim. Thus, instead of receiving a payment of HUF 300 million, the ex-CEO was obliged to compensate an amount of HUF 120 million to RTL Magyarország. The verdict is not final and binding yet.

But what shall this “reclassification” of termination mean under the Hungarian Labour Code?

The reason for an ordinary dismissal by the employer may be (i) the employee’s behavior in connection with the employment; (ii) the employee’s capability regarding work; or (iii) the employer’s operation.

In contrary, an extraordinary dismissal with immediate effect can be applied in cases when the infringement by the employee is material (willfully or by gross negligence infringes a significant obligation) or the employee conducts in a way which otherwise makes it impossible to maintain the employment. In these exceptional cases, the employer needs to act promptly; thus, the extraordinary dismissal has to be delivered within a short deadline as of becoming aware of the infringement.

As regards the date of termination, the significant difference between ordinary and extraordinary dismissal is that, if an ordinary dismissal is communicated to the employee, a so called notice period shall commence on the following day, while in case of an extraordinary dismissal the employment terminates immediately.

The term of notice period may vary; the mandatory minimum is 30 days. Nonetheless, depending on the length of the employment, it may be extended by a maximum of 60 days. Moreover, the parties to the employment relationship may agree on a longer notice period up to a maximum of 6 months.

It follows from the above that, if light is shed on a material breach of a significant employment-related obligation during the notice period, the employer may exercise its right to extraordinary termination of employment even during the notice period. It is irrelevant as to whether the employee was exempted from work.

As a result, the employment terminates immediately and the employee shall not be entitled to any severance payment. In extreme cases and subject to the facts of the case, the employer may even launch a law suit for the compensation of its damages caused by the employee.