Implementation of the Whistleblowing Directive in Hungary – Who is obliged to set up an internal whistleblowing system?
Last spring, the Hungarian Parliament adopted Act XXV of 2023 on complaints, notifications of public interest and rules on the notification of abuse (the “Complaints Act”), which, among other things, contains provisions for the domestic implementation of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (the “Whistleblowing Directive”) and repeals the previously applicable Hungarian Complaints Act. The Act entered into force on 24 July 2023 and contains several new provisions compared to the previous Complaints Act (for example, the mandatory establishment of an internal whistleblowing system, the scope of persons entitled to make a whistleblowing report or the reports that can be made), so companies that have established their internal whistleblowing system under the previous Complaints Act should also pay attention to compliance.
Under the new Complaints Act, an employer that employs 50 or more persons in an employment relationship is required to establish an internal whistleblowing system. From 17 December 2023, employers of at least 50 but no more than 249 persons in an employment relationship will be required to set up an internal whistleblowing system. And those employing 250 or more persons have had to set up their system from 24 July 2023. Note that, regardless of the number of employees, employers subject to Article 1(1) and (1a) of Act LIII of 2017 on preventing and combating money laundering and terrorist financing (“AML Act”), among others, must establish an internal abuse reporting system.
Unfortunately, in our view, the mandatory establishment of an internal whistleblowing system and the subjects of the Act are somewhat vaguely defined in the new Complaints Act. Pursuant to the Act:
- Employment relationship: any legal relationship in which an employee performs an activity for and under the direction of an employer for remuneration or self-employment.
- Employed person: a natural person who, for remuneration, performs an activity for and under the direction of an employer in an employment relationship or who carries out an activity for his/her own benefit.
- Employer: a person who employs a natural person under an employment relationship.
It can therefore be seen that the law covers not only employees but also other “persons employed” in a legal relationship (e.g., reporting individuals/self-employed persons). If a company employs a total of at least 50 persons in an employment relationship, it is obliged to set up an abuse reporting system.
A company may choose to set up an internal abuse reporting system even if it is not otherwise required to do so under the law. However, it is important to note that if a company chooses to operate an internal whistleblowing system voluntarily, it must comply with the Whistleblowing Act in the same way as if it were a mandatory case, i.e., it cannot apply the provisions of the Act only partially (e.g., only to employees) by individual choice.
In relation to the whistleblowing system, it is the responsibility of the relevant employer to draw up the relevant policy and data management information or to align such existing documents with the rules of the new Whistleblowing Act. We would, of course, be glad to assist our clients in this respect.
