A comparative look at dismissal costs and issues across Europe

Perspectives

A comparative look at dismissal costs and issues across Europe

Employment protection legislation can be very different from country to country. Legislation in some jurisdictions has substantially changed, due to many factors. The International Dismissal Survey details dismissal legislation, and provides dismissal cost projections from an employer’s perspective, in 31 countries.

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Some of the survey’s key findings include:

  • Dismissal costs in surveyed countries differ substantially
  • Generally, dismissal costs in Western-Europe are higher than Central-Europe.
  • Dismissal costs are highest when an employee is dismissed without reason
  • In most countries, the legal grounds for an employer to dismiss employees are restricted and subject to strict formalities
  • In general, there is little or no difference in the cost of dismissal for individual reasons, compared to dismissal for economic reasons
  • Since the last International Dismissal Survey, some countries have substantially changed their dismissal regulations, in response to court decisions, or for simplification and increase of labor flexibility
  • In all surveyed countries, seniority within the company is the key factor in determining the level of dismissal cost

Hungary key findings

  • The Hungarian Labour Code provides that the legal grounds for an employer to dismiss employees are restricted and subject to strict formalities. The reasons for a dismissal may include personal or work-related issues as well as changes in the company's operations. 
  • The notice period of employees in Hungary can be between 30 and 90 days, depending on the duration of their employment relationship. 
  • The amount of the severance indemnity may be as much as six times the employee's absentee fee, and also depends on the length of the employment relationship to be terminated
  • As a result, seniority (the length of service within a certain company) is the key factor in determining the level of dismissal cost in Hungary, similarly to the vast majority of European countries.
  • After the entry into force of the new Labour Code, Hungarian legislation followed the example of certain European countries by offering the option of not paying severance indemnity in cases where the reason for terminating the employment contract is the employee's conduct or his/her lack of specific abilities (other than health-related issues). 
  • The cap for the unlawful dismissal indemnity as defined by the new legislation is still quite generous in European comparison.

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You may download the 2012 report here.

Download the complete International Dismissal Survey for more information.

"Deloitte Legal" means the legal practices of Deloitte Touche Tohmatsu Limited member firm affiliates that provide legal services. For legal and regulatory reasons, not all member firms provide legal services.

"Deloitte Legal" means the legal practices of Deloitte Touche Tohmatsu Limited member firm affiliates that provide legal services. For legal and regulatory reasons, not all member firms provide legal services.

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