A brief reflection on the peculiar nature of employer policies

It is a truth universally acknowledged, that employers must implement policies if they want clear and unambiguous conditions in the workplace. Indeed, the work of employees is usually defined in the necessary detail in the various policies issued by the employer. The larger the organization, the more so. Of the other labour documents, employment contracts usually contain only a few basic conditions (base salary, working hours, place of work, etc.) or provisions that “parrot” the law, while job descriptions (if they are drawn up at all) typically list only the main duties and expectations of the employee. Furthermore, collective bargaining agreements are as rare as a white raven in most workplaces in Hungary.

Policies are unilateral statements by the employer, typically detailing the terms and conditions of employment or providing some kind of benefit (cafeteria, bonus, etc.) to employees.

It is commonly believed that the employer can subsequently amend or revoke the policy at will. This is reinforced by the fact that many employers also expressly reserve the right to amend and/or withdraw the policy. This seems understandable and logical, since the employer has unilaterally set the terms of the policy in advance and is therefore obviously entitled to amend or withdraw it. As it so often is, the reality is more complicated.

In fact, an employer may revoke or amend a policy that provides a benefit to employees to the detriment of employees

if it would be impossible or disproportionately detrimental to the employer to keep the policy unchanged (even if the employer has reserved the right to amend and/or revoke it). It is easy to understand, however, that it would be rather difficult to prove impossibility or disproportionate detriment (and the case law does not yet provide any guidance in this respect). Modification or withdrawal with the consent of the employee might also be an option, but employees aware of their own interests would hardly agree to this. Such a policy is a unilateral commitment which both entitles the employee and obliges the employer (just like an employment contract). It therefore seems that

employers often unintentionally shoot themselves in the foot by including in their policies the benefits they voluntarily grant.

The cherry on top is that the employer’s actual practice (“customary conduct”) may also be considered as a policy from which an employee can also take benefit.

“What is to be done?”,

one might ask, to quote another classic.

  • When issuing new policies, it is obviously worth considering everything beforehand and including any limitations and exclusions of benefits in the policies themselves.
  • It is also advisable to publish the policy for a limited period (preferably one year), as the policy will automatically cease upon expiry (i.e., without revocation), after which the employer can decide without restriction whether, and with what content, to draw up a new policy.

However, the question arises as to what can be done with existing and indefinite policies if they contain employee benefits. Strictly speaking, nothing, as long as this does not create an impossible or disproportionate detriment for the employer. In reality, of course, employers often amend or withdraw such policies as, and when, they feel like it, and it is more than likely that only very few disputes arise from this. However, bear in mind that employees can claim benefits withdrawn due to an unlawfully amended or revoked policy at any time within the three-year limitation period under employment law.