AI is gradually becoming part of everyday HR practice in Hungary. Tools already support recruitment, onboarding, and talent and performance management. More advanced systems – like AI-powered HR assistants and workforce planning tools – can also be expected.
While these developments bring efficiency, they also carry legal and ethical minefields. From discrimination risks to workplace rights and handling of sensitive personal data, these systems can cause serious issues if not managed properly.
The recently adopted EU AI Act classifies many AI use cases in HR as high-risk, triggering strict compliance duties. Some tools, such as emotion detection in interviews, could even fall into prohibited categories.
Hungarian employers must assess each AI use case carefully – not just for legal compliance but also to avoid reputational risks and protect employee rights.
This article outlines Hungary’s regulatory framework for AI in HR and highlights key areas for employer attention.
Employers’ New Compliance Role
Under the AI Act, employers using AI in HR are not just passive users – they are considered deployers of high-risk systems with specific legal duties.
These include ensuring human oversight in critical decisions, especially those affecting hiring or promotion. Employers must also conduct fundamental rights impact assessments (FRIAs) to evaluate potential effects on privacy, equality, dignity, and due process. Transparency is key: the logic behind AI decisions must be documented and explainable to those affected. Finally, employers must maintain documentation and system logs to show how the AI operates and how risks are managed.
These duties reflect the serious risks AI can introduce in hiring and evaluation – areas where bias, if unchecked, can have a lasting impact.
AI Literacy: A Compliance Essential
Starting February 2025, the EU AI Act requires basic AI literacy from all deployers of high-risk systems. For HR, this means two things:
First, HR professionals must be trained not just in using AI tools but also in how they work, what they can and cannot do, and what risks they carry. Without this understanding, teams may not spot unfair outcomes or explain decisions clearly.
Second, employees must also be trained. They should know when AI is used, what safeguards are in place, and how to raise concerns. Internal policies should define roles, limits, and accountability. These should be accessible and ideally backed by disciplinary rules. Without guidance, shadow AI use could expose companies to cyber risks or data leaks.
Fighting Bias and Discrimination
Discrimination is a top risk in AI-assisted HR. Hungarian law bans both direct and indirect discrimination across categories like gender, age, religion, disability, and union membership.
AI decisions may reflect bias from imbalanced data (e.g., favoring male employees), historical discrimination, or flawed model design.
To reduce risks, employers should involve HR and legal early, check training data for bias, test outcomes for fairness, and document AI-influenced decisions.
Hungarian Labor Law: Clear Boundaries
Hungarian labor law imposes strict limits on how employers use AI, particularly for data and monitoring. AI may be applied only if necessary for the job and proportionate in its effect on rights. Data must be limited to what’s needed for employment or legal claims. Monitoring may not intrude on private life. Biometric tools are restricted to high-risk cases (e.g., protecting life, health, or financial assets above HUF 50 million). If AI affects working conditions or rights, employers must consult the works council at least 15 days in advance.
Failure to comply with these rules can result in labor law violations or enforcement action.
National AI Law on the Horizon
Hungary is preparing its own AI law. The government has decided to establish an AI Council and launch a regulatory sandbox. A draft bill may reach Parliament in the coming months. Once adopted, new obligations could follow (such as tailored FRIA requirements).
Getting Ahead of the Curve
As AI moves deeper into HR, legal and ethical risks will only grow. HR professionals must act now: understand how these tools work, build internal safeguards, and keep decisions fair, lawful, and human-centered. This is not just about compliance; it is about protecting employees, preserving trust, and shaping the future of work responsibly.
By Janos Tamas Varga, Managing Partner, and Endre Varady, Partner, VJT & Partners
This article was originally published in Issue 12.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
