What is an Electronic Signature?
An electronic signature is a technical process logically associated with a document which two (or more individuals or organizations (the signatories) agree to rely on in order to express their intent to sign.
Three components are necessary: a document, a signatory and an e-signature tool. While the tool most commonly used for handwritten signatures is a simple pen, electronic signature tools are more complex.
The term "electronic signature" is a broad category that encompasses many types (or levels) of electronic signatures. Depending on the country it is used in, there are differences in purpose, technical implementation, legal and cultural acceptance of electronic signatures.
Most civil law countries (including the EU and most countries in South America and Asia) support a “tiered” approach with higher levels of signature called digital or qualified electronic signatures.
Most common law jurisdictions (US, Canada, Australia, etc.) are typically more technology-neutral. In addition, specific industries (e.g. healthcare or banking) or specific documents (e.g. marriage or adoption contracts) often require a higher level of e-signature or handwritten signature.
What are the laws and regulations in Hungary?
Contracts in Hungary do not necessarily require a signature to be valid (Civil Code, Section 6:63). Under the Labor Code, legal statements can be made without formal requirements, unless otherwise required by regulations or agreement of the parties. Upon an employee’s request, legal statements, which otherwise do not have a written requirement, should be made in writing by the employer.
On July 1, 2016, Regulation (EU) No 910/2014 on electro- nic identification and trust services for electronic tran- sactions in the internal market (the “eIDAS Regulation”) came into force and replaced the former EU Directive on electronic signatures (1999/93/EC). The eIDAS Regulation, directly applicable in the 28 member countries of the European Union, brought uniformity - and much needed clarity - among the EU member states’ local legislation on electronic signatures.
Hungary’s Act on the General Rules for Trust Services and Electronic Transactions ("Trust Act") (CCXXII of 2015) is based on the eIDAS Regulation.
Is an electronic signature valid in Hungary?
Yes! Not only e-signatures are valid ... ... But they are actually more secure.
Under eIDAS, a valid electronic signature may be "simple", advanced or qualified. All three levels of signature are legally valid and defensible in court. However, the probative value (ie. how easily the validity of the signature can be proven in court) will vary depending on the type (or level) of electronic signature as illustrated by the graph below.
E-signatures almost always offer higher guaranties than handwritten signatures, regardless of the level of the e-signature being used:
- the evidence trail associated with superior electronic signature tools will allow defendant to prove the validity of the signature.
- the use of time-stamping and encryption technologies will provide a much higher level of confidence in the integrity of an electronically-signed document compared to the limited level of protection provided by a handwritten original (unless notarized).
Probative value scale
For simple and advanced electronic signatures, in case of challenge of the validity of the signature (most likely, by an employee), it is the employer’s responsibility to bring evidence of the validity of the signature.
Advanced signature solutions typically offer a more robust evidence file in that regard than simple e-signatures solutions.
What level of e-signature is recommended for HR documents?
The vast majority of HR-related documents are suitable for simple or advanced electronic signature. Simple and advanced electronic signature are recommended for documents with a risk factor ranging from low to medium. These are often external documents with limited risk and typically include employment agreements, company policies, employee handbook, performance reviews, expense report, etc. Qualified electronic signatures, on the other hand, would only be justified for very sensitive documents such as credit or life insurance agreements or when specifically required by law: certain uses in the healthcare world, for example, have constraints that require qualified e-signatures.
HR Best Practices: While the decision ultimately relies on how risk-adverse an employer might be, employers might elect to use an advanced electronic signature solution for employment agreements as well as other HR-related agreements, and rely on a strong simple e-signature solution for other less sensitive HR documents such as policies and performance reviews.