The Hungarian Parliament has adopted Act XXV of 2023 on the notification of violations, also known as the Complaints Act, which will come into force on July 24, 2023.
Under the new legislation, companies will be required to adopt and operate an internal whistleblowing system through which employees, contractors, subcontractors, and third parties can report any wrongdoing, unfair practice, or abuse (e.g., sexual harassment, corruption, discrimination, etc.).
Who is affected?
|Number of people employed||Employer not subject to the Anti-Money Laundering Act||Employer subject to the Anti-Money Laundering Act|
|Under 50 employees||Optional||Mandatory|
|50 employees -249 employees||Mandatory||Mandatory|
|Over 249 employees||Mandatory||Mandatory|
The legislation distinguishes between small and medium-sized enterprises (SMEs) and large enterprises:
- AS A GENERAL RULE, SMALL AND MEDIUM-SIZED ENTERPRISES MUST BE READY TO RECEIVE COMPLAINTS AND NOTIFICATIONS BY DECEMBER 17, 2023, AND LARGE ENTERPRISES BY JULY 24, 2023.
- SMES CAN ADOPT AN INTERNAL WHISTLEBLOWING SYSTEM JOINTLY, WHILE OTHER STAKEHOLDERS NEED THEIR OWN WHISTLEBLOWING PLATFORM, CODE OF CONDUCT, DEPARTMENT, OR EXTERNAL SUBJECT PROTECTION OFFICER/ADVOCATE.
What to do?
It is necessary to adopt a system that allows workers and third parties to report illegal or suspicious acts in the workplace.
- employers must be prepared to handle personal data that involves changing existing disclosures (GDPR) or, in their absence, develop the necessary policies. The whistleblowing system must be designed in such a way that the personal data of the whistleblower and any other relevant person cannot be disclosed to persons other than those investigating the whistleblowing.
- have a whistleblower protection officer (either internally through human resources, or externally through a whistleblower protection attorney)
Who can manage the system?
The whistleblowing system can be managed by a designated impartial person or department within the company or by an external service provider. As an external service provider, the system can be operated under contract by a whistleblower protection lawyer or another external organization. Any complaint must be conducted objectively. Accordingly, an investigator cannot be a person related to the person or action involved in the complaint.
How is a notification made?
The law does not specify the type of notification channel. Notification can be made verbally or in writing.
IT IS ADVISABLE TO PROVIDE FOR BOTH WRITTEN AND VERBAL NOTIFICATION AND TO PAY ATTENTION TO THE REQUIREMENTS FOR AN IMPARTIAL INVESTIGATION.
What can be notified?
Information about illegal or alleged illegal acts or other types of abuse.
The legislation provides specific protection for the whistleblower. This means that if the notification is made legally, the whistleblower cannot suffer retaliation.
- Verification of the proper existence of the system by the Labor Inspectorate
- Data protection fine
- Obstructing the reporting of abuse or taking unfavorable action against the whistleblower results in liability for infringement
|OUTSOURCING AS A POSSIBLE SOLUTION TO ENSURE THE LEGITIMACY OF THE INVESTIGATION, IT IS ADVISABLE TO OUTSOURCE THE TASK AND OPERATION OF THE SYSTEM, AS THIS IS THE BEST WAY TO ENSURE IMPARTIALITY AND AVOID CONFLICTS OF INTEREST. THE LEGITIMACY OF THE SYSTEM IS BASED ON THE RESPONSIBILITY OF THE PERSON IN CHARGE OF THE INVESTIGATION AND THE PROPER REGULATION OF THE REPORTING PROCESS.|
If you have any further questions about the above, please do not hesitate to contact our colleagues who will be happy to assist you quickly and efficiently, particularly in drafting or amending the necessary information, rules and regulations.