Hungarian Parliament Adopts New Whistleblowing Act

• Published date: 05 June 2023
• Subject Matter: Employment and HR, Privacy, Compliance, Data Protection, Whistleblowing
• Law Firm: Kinstellar
• Author: Mr D'niel Péter and Szabolcs Szil'gyi

The Hungarian parliament has adopted a new law¹ implementing the EU directive on the mandatory protection of (even anonymous) whistleblowers² , which in many respects imposes stricter rules on companies and puts whistleblowers in a more favourable position. The new law, which repeals the previous rules on complaints and whistleblowing,³ poses significant challenges to most of the companies concerned; however, it is also in the interest of the companies to have an efficient whistleblowing system, as management may obtain information from whistleblowers and correct underlying problems that could result in serious sanctions for the company if detected by authorities, or the correction could serve to increase operational efficiency.

1. Scope of companies concerned

• Under the new regime, companies with at least 50 employees are, as a general rule, required to set up an internal reporting channel. When considering the headcount threshold, not only direct employees but also other persons who perform work under a mandate or contractor arrangement should be taken into account.
• Companies with less than 50 employees are not required to but may set up and operate an internal reporting channel to promote and maintain legal compliance.
• As relief for employers with at a headcount between 50 and 249 employees, it is possible for them to set up and operate a joint internal reporting channel instead of a stand-alone system.

2. Internal reporting channels

The new law introduces a three-step system for reporting abuse, under which

• the first step is an internal reporting channel, through which individuals can report within the company;
• the second step is the so-called external channel, which concerns reporting to the competent authorities and
• as the third step, the individuals concerned may make their announcements public if specific conditions are met.

The internal reporting channel may be operated by a designated person or department of the employer and must be independent in this function, i.e., cannot be instructed by the employer. If a company does not wish to operate the reporting channel internally, it may appoint a whistleblowing attorney or another external organisation for such task.

3. Obligations of the companies concerned

The main tasks and obligations of the companies that are obliged to set up an internal reporting channel are to:

• set up the channel and designate the person, department or external agent to operate it;
• comply with strict data protection...