A new legislation: the Complaints Act will enter into force

Firstly, it is necessary to highlight that the aim of the new legislation is to introduce a strict whistleblowing system through which it can be ensured that any kind of unlawful or presumably unlawful conduct can be reported – even anonymously – to the companies and that companies are obliged to investigate such reports in a regulated manner.

The fact that practically anyone can file a report aggravates the issue, and thus makes the compliance with the new legislation even more difficult for the companies. Since not only the current, former or even future employees of the company can file a report, but also, among others, its contractors (e.g. suppliers, subcontractors), trainees, volunteers and senior management as well.

It is required from every organisation and company to set up an internal whistleblowing system and thus to apply the legislation, which:

• employs at least 50 employees, or
• conducts such activities (e.g. credit institutions, financial service providers, auditors, traders in goods who accept cash of HUF 3 million or more) that makes them a subject to the Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing regardless of headcount, or
• conducts special activities (e.g. offshore oil and gas operations outside the borders of the European Union as licensees or operators) regardless of headcount,

For businesses with fewer than 50 employees, there is no obligation under the Act, but they can set up an internal whistleblowing system on a voluntary basis.

The legislation sets out the deadlines for meeting the obligations in two stages:

• companies with at least 50 but no more than 249 employees must set up an internal whistleblowing system by 17 December 2023 at the latest;
• companies with 250 or more employees and companies carrying out activities specified in separate legislations (mentioned above) have much less time to set up the system, with a deadline of 24 July

Without being exhaustive, the legislation imposes the following obligations on the companies:

• establish an internal whistleblowing system with the report capability both in writing and verbally;
• provide clear and easily accessible information on the operation of such a system, the whistleblowing procedure, the systems and procedures stipulated in the Complaints Act;
• designate a responsible and impartial internal or external person or a team to manage the whistleblowing procedure;
• have an inspection within a maximum of 30 days from receipt of the report;
• do not take any harmful or wrongful measures which might negatively affect in any manner the person who filed the report;
• establish strict data protection rules due to the anonymity.

In the light of the above, the first step is therefore to establish a whistleblowing system that complies with the legal provisions of the Act or to review the compliance of any existing system.

In this context, it is necessary to emphasize that companies with more than 250 employees are obliged to set up an independent whistleblowing system, so it is not sufficient to adopt the existing whistleblowing system of the parent company, it must be adapted to the Hungarian legal provisions set out in the Act and operated independently. 

We kindly draw your attention to the fact that the summary recorded above is of a general and informative nature, please feel free to contact our Firm with any questions or for additional information.

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