New whistle-blower act (Act XXV of 2023) has just been published in the Official Gazette (25 May 2023), that will affect all organisations with over 50 employees, as they will be required to operate a whistleblowing system.

But who is obliged to maintain the whistleblowing system and from when? Who can make a report and on what subject? Can the system be outsourced, or should it be managed ‘in-house’? Find out more on this in the summary from AZS Partners.

 

1. Who is required to operate the whistleblowing system and from when? *

  • Organizations with more than 50 employees (From 17 December 2023.)
    (e.g.: companies, branch offices, commercial representative offices, NGOs)
  • Organizations with more than 249 employees (From 24 July 2023.)
    (e.g.: companies, branch offices, commercial representative offices, NGOs)
  • Employers subject to the Money Laundering Act* (From 24 July 2023.)

(Among others Credit and financial institutions, real estate agencies, accountants, tax consultants, law firms, etc. regardless of the number of employees*) * The above list is not exhaustive, other employers, e.g.: offshore oil and gas operators, operators of floating installations are also obliged. You may find the full list in Act XXV of 2023 Article 18.)

The employers who employ at least 50, but no more than 249 persons under an employment relationship aimed at employment may jointly establish an internal whistleblowing system.

2. Who can make reports and on what subject matter?

Essentially, any report can be made in the reporting system, as the law identifies the subject matter of the report in a very broad sense. Information about any illegal or alleged illegal act or omission, as well as any other misconduct, can be reported. It can also be reported if the employer enforces behavioural rules that protect public or compelling private interests based on the rules of the Hungarian Labour Code (Act I of 2012).

The personal scope of whistle-blowers is quite broad, as not only current but also former employees can make reports, including job applicants and interns, among others. Also, any person who has or had a contractual relationship as a contractual partner of the employer affected by the illegal act or as an employee of the contractual partner of the employer can also make a report.

3. What decisions must those obligated to maintain the whistleblowing system make in the first place?

Every employer must consider whether to outsource or handle the task "in-house". The employer may designate a person or organizational unit within the organization for this purpose but may also use external assistance through a whistle-blower protection lawyer or other external organization.

4. What are the duties of someone who wants to think about the operation of the whistleblowing system within their own organization?

  • They must appoint a person or organizational unit liable for investigating whistleblowing reports. This could be done through an employer instruction, which, of course, may result as change in the job description of the affected employees.
  • They must develop and document an internal procedural regulation for the whistleblowing process.
  • They must prepare a data protection notice for both reporters and persons affected by the report.
  • Information on the operation of the whistleblowing system and the procedure for reporting should be made "publicly and easily accessible." In practice, this means that if there is a corporate or other website, it is worth uploading it there, and of course employees should also be informed separately.

 

5. What are the duties of someone who seeks "external" assistance?

If the employer outsources the operation of the whistleblowing system, i.e., hires a whistle-blower protection lawyer or external organization to create and operate the reporting system on behalf of the employer, they must conclude a contract of engagement (PoA) for this purpose. When concluding a contract with a whistle-blower protection lawyer, the fact of the agreement must also be reported to the competent bar association.

Of course, in this scenario, too, information on the whistleblowing system procedure should be made public, including the rules of procedure, information on data management and any additional information required by law.

But be aware, employers cannot hire whistle-blower protection lawyer or any external organization whom it has had such any legal relationship (i.e.: retainer agreement or employment contract) in the last five years.

 

This summary does not constitute a legal opinion on a case-by-case basis. If you have any further questions about the above written summary, please do not hesitate to contact us, we are at your entire disposal.


Please feel free to contact us for further advice related to the above or for preparing any risk assessment or corporate governance regulations related hereto. Should you have any questions do not hesitate to rely on our services.