CLVPartners

CLV-02
Menu

Employment, labour law

Labour law related changes in 2019

Medium-sized companies, Employment, labour law, Start-ups /

Mandatory and guaranteed minimum wage – Childcare benefits – Sick pay – Pension
Government Decree No 324/2018. (XII. 30.) determines the amount of the mandatory minimum wage. The mandatory minimum wage for full-time employees increased with 8% as of 1st January 2019, from 138,000 to gross 149,000 HUF. The guaranteed minimum wage paid to skilled workers rose by 8% as well in the case of completion of full time working as of 1st January 2019, from 180,500 to 195,000 HUF.

Due to the increasing minimum wage the amount of the childcare benefits (GYED), the benefits for university students and graduates grew as well as the sick pay as of 1st January 2019. The eligible families are entitled to a maximum of 208,600 HUF in childcare benefits. Students enrolled in a bachelor’s program will be eligible for 104,300 HUF support and students enrolled in a master’s program for 136,500 HUF. The daily maximum of sick pay increased from 9180 HUF to 9933 HUF.

The amount of pensions amended favorably. The pensions (including among others retirement pension, widows’ pension, orphans’ allowance etc.) increased with 2,7% with the effective date of 1st January 2019. The amount of minimum pension remained unchanged (28,500 HUF).

Labour law related changes in 2019 Read More »

Employee Stock Ownership Program as a possible alternative to cafeteria

Company groups, Employment, labour law, Medium-sized companies, News / / , , , ,

The Employee Stock Ownership Program (ESOP) – which has been introduced in 2015 – may offer a beneficial and flexible alternative to cafeteria for employees from a taxation point of view.
The point of ESOP is that the company’s employees acquire shares in their employer. The main purpose of the ESOP system is to create ownership interest for the participating employees. Although the employees become owners, they do not have voting rights; therefore, they have no say in the employer’s operations. Their shares only entitle them to receive payments through the company.
The law on ESOP has been changed from 1 January 2019. In this context, existing legal rules have been clarified and additional guarantee rules for employee ownership interest have been established.
The greatest advantage of ESOP lies in its taxation. Rather than the employees would be a subject to a 45% tax burden on their salary, they may receive a part of their salary with only a 15% tax burden as an ’investment income’ through the ESOP.

Employee Stock Ownership Program as a possible alternative to cafeteria Read More »

The income related tax changes in 2019: the new type of social contribution tax (SZOCHO)

Employment, labour law, Medium-sized companies, News, Start-ups / / , ,

The Act LII of 2018 on the social contribution tax was published on 31 July, 2018 and it will significantly increase the tax items payable after the wages and other incomes from January 1, 2019.
The termination of healthcare contribution (EHO) and SZOCHO with the rate of 19.5% on income instead of EHO are considered to be significant changes of the new regulation.

The new provisions clearly increase the dues of the employers, e.g. increasing tax rate after the fringe (non-wage) benefits, increase of tax base for calculating and the tax rate in case of dividend income, and the significant reduction of tax reliefs. Therefore during planning of wages for the next year, the following new rules shall be considered.

In case of the income withdrawn from the business account, dividend income, entrepreneurial dividend fund, capital gains income, the maximum amount of SZOCHO shall be increased to19,5 percent of twenty-four times of the minimum wage, which shall be HUF 645.000, – calculating with the minimal wage in the present year – from the current amount of HUF 450.000. In addition, the base of SZOCHO payable after the insured member of general partnership, limited partnership and limited liability company shall be 112,5 percent of the minimum wage.

Generally the pay office/employer shall pay SZOCHO, however in some special case the private person earning the income shall pay the SZOCHO. There are special legal provisions regarding assignment, temporary agency work and employment relationship established by more than one employer.

Abolished tax reliefs

– tax relief for young employees under 25 years and employees over 55;
– tax relief for participants in Karrier Híd Program;
– tax relief for research and development activity;
– tax relief enforceable by the employer employing doctoral candidate employees or students participating doctoral education determining by the Act CCIV of 2011 on the national higher education;
– tax relief for permanent job-seekers;
– tax relief in connection with the payment of child care allowance and benefit.

Please note that the tax relief which may be claimed for definite period of time shall not be ceased automatically by 1 January, 2019. These may be obtained during the entire validity period.

The following group of people will be entitled to tax reliefs from the next year:

– the unskilled workers and employees in agricultural positions;
– people who have been out of job for a particular period of time;
– woman nursing three or more children,
– disabled employees,
– workfare workers.

Only one type of tax relief shall be claimed regarding any employee at the same time. In case of eligibility for more tax reliefs, the employer may decide, which tax relief to claim.

The income related tax changes in 2019: the new type of social contribution tax (SZOCHO) Read More »

About the labour law related changes in 2019: the cafeteria allowances and the taxes of the retired employee’s salary

Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

The Act XLI of 2018 on the alteration of the tax law and other related acts, furthermore on the super-tax of immigration was published on 26 July, 2018 and it will significantly amend the system of the cafeteria allowances and makes the employment of the retired persons more favourable from the next year.

We summarize the essence of the changes as follows:

– only the so called “Széchenyi Pihenőkártya” (SZÉP Card) will remain in the favourable tax category (34,5% in the next year) with a frame of HUF 450.000.-/year;
– the following allowances fall under the tax category of 40,71% in the next year: SZÉP Card over the frame detailed above; gift voucher once a year, up to max. 10 % of the wage minimum;
– all other allowances will be calculated based on the general rules, with the general tax rate as salary in the next year.

What to do in connection with the above mentioned changes:
– review of the cafeteria policy;
– review and appropriate amendment of the documents containing the cafeteria allowances (employment contracts, information letters).

In the next year in case of pensioners employed under the Labor Code no social contribution and social contribution tax (szocho) have to be paid. With regard to that the pensioners (falling into the above mentioned category) will be not entitled to social security allowances.

About the labour law related changes in 2019: the cafeteria allowances and the taxes of the retired employee’s salary Read More »

The labour law related changes in 2018

Employment, labour law, Medium-sized companies, News, Start-ups / / , , , , , , ,

A summary regarding the labour law related changes in  2018 – mandatory minimum wage, social contribution tax, healthcare contribution, simplified contribution to public revenues, childcare benefits, sick pay, cafeteria rules, statutory retirement age

The labour law related changes in 2018

Government Decree No 430/2016. (XII. 15.) determines the amount of the mandatory minimum wage. The mandatory minimum wage for full-time employees increased with 8% as of 1st January 2018, from 127,500 to gross 138,000 HUF. The guaranteed minimum wage paid to skilled workers rose by 12% in the case of completion of full time working as of 1st January 2018, from 161,000 to 180,500 HUF. The social contribution tax (SZOCHO) and the amount of the healthcare contribution (EHO) reduced from 22% to 19,5%. The simplified contribution to public revenues (EKHO) also decreased, the employer shall pay 19,5% EKHO instead of the previous 20%.  

Due to the increasing minimum wage the amount of the childcare benefits (GYED), the benefits for university students and graduates grew as well as the sick pay as of 1st January 2018. The eligible families are entitled to a maximum of 193,200 HUF in childcare benefits. Students enrolled in a bachelor’s program will be eligible for 96,600 HUF support and students enrolled in a master’s program for 126,350 HUF. Female university students or graduates are eligible for an extra year of child support up to the child’s second birthday. Moreover, fathers also eligible to claim baby-care allowance (CSED) in more cases from 1st January 2018. The daily maximum of sick pay increased from 8500 HUF to 9180 HUF.   

In addition to the above, the cafeteria rules have changed. New cafeteria element: a student loan reimbursement as employer benefit can be provided tax free up to the installments but not more than 27,600 HUF monthly. The conditions for a tax free housing allowance eased, the ceiling price of this benefit became higher (nearly 83,000 HUF). The burden on employers reduced from 43,66% to 40,71% in case of certain specific benefits (Erzsébet vouchers, hot meals at the work place, monthly public transport ticket, school starting support, contribution to a voluntary health fund/pension fund). The costs of cafeteria cash payment and benefits may be granted as Széchenyi Recreation Card („SZÉP” Card: accommodation, catering, leisure) remained the same 34,22%, if it does not exceed 450,000 HUF. 

The statutory retirement age increased to 63,5 year and the amount of pensions amended favorably. The pensions (including among others retirement pension, widows’ pension, orphans’ allowance etc.) increased with 3% with the effective date of 1st January 2018. The amount of minimum pension remained unchanged (28,500 HUF).

 

The labour law related changes in 2018 Read More »

Amendment of the Labour Code

Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

In case of executive employees the parties may deviate from the provisions of the Labour Code, except some provisions where the Labour Code expressly prohibits deviation. A new provision is that the employment contract of the executive employee shall not deviate from the provisions of § 128 of the Labour Code, meaning that the executive employee shall also be entitled to an unpaid leave until the child’s 3rd birthday for the purpose of childcare.

In case of pregnancy or human reproduction process, if the employee informs the employer on the above facts only after the termination notice has been handed over, the employer may unilaterally and without the employee’s consent decide to, but is not obliged to withdraw the termination notice within 15 days after the employee informed the employer on her condition.

§ 297 of the Labour Code has been replaced by new provisions. Pursuant to that, in case a foreign employee carries out work in Hungary in frame of cross-border provision of services, if the Hungarian party (receiver of the services) knows, or has reasonable grounds to know that the foreign employer has failed to comply with its obligation to pay wage and contributions after the employee, the Hungarian party will be jointly and severally liable with the foreign employer. It has also to be noted, that the parties may not vary from this provision in their contract.

As a general rule of the Labour Code a daily rest period of at least 11 hours shall be granted to the employees. The Labour Code contains several exceptions to this rule when a daily rest period of at least 8 hours is sufficient. From 2017 standby work will not be an exception any more, thus, 11 hours rest period has to be granted to these employees instead of the 8 hours presently stipulated by law.


Amendment of the Labour Code Read More »

Amendment of the act on benefits of disadvantaged employees and the amendment of several acts

Employment, labour law, Medium-sized companies, News, Start-ups / / , ,

From 2017 the amount of the rehabilitation contribution payable by the employer shall be nine times the minimum base salary for full-time employees on the first day of the current calendar year.

 

 

Amendment of the act on benefits of disadvantaged employees and the amendment of several acts Read More »

Amendment of the Personal income tax act

Medium-sized companies, Employment, labour law, Start-ups /

As of 2017 the “cafeteria system” will be transformed, according to which the scope of the categories of cafeteria benefits (“cafeteria”) and certain benefits which are not considered as cafeteria (“certain benefits”), will change. In addition to this from 2017 the employer may also grant a maximum amount of net HUF 100.000,- in cash to the employee per year as part of the cafeteria with the reduced tax rate.

The amount of the reimbursement of the costs of travelling to work is partly tax-free. Currently the tax-free amount is HUF 9/km. In the future an amount of HUF 15/km will be tax-free.

The definition of “posting” has also been clarified. From August of 2016, posting shall mean any official or business travel ordered by the employer, not including the travel to work and the travel between the residence or place of stay of the employee and the seat or establishment of the employer.

 

Amendment of the Personal income tax act Read More »

Amendment of the Civil Code – managing directors

Company groups, Corporate law, Employment, labour law, Medium-sized companies, News, Start-ups / / , , , ,

Until now, the company and the managing director were jointly and severally liable towards third persons for non-contractual damages caused by the managing director in his executive capacity. Pursuant to the new provisions, only then will the managing director be jointly and severally liable with the company against third persons, if he has caused the damages wilfully in his capacity as managing director.

Furthermore, the amendment clarifies that the managing director’s liability for wilfully caused damage extends not only to non-contractual damages but also to contractual damages (until now contractual damages could only be claimed from the company, and not from the managing director).

 

Amendment of the Civil Code – managing directors Read More »

We are ranked in the Chambers EUROPE guide

Company groups, Employment, labour law, Medium-sized companies, News, Start-ups / / , ,

The prestigious Chambers and Partners also ranked CLVPartners in the Chambers EUROPE guide in Employment and in the Life Science areas.

Chambers wrote about our CLVPartners based on the clients’ opinion that “the team is known for growing strength in advising international and domestic clients, in sectors such as pharmaceuticals, retail, entertainment, on cross-border TUPE transactions, employment restructuring and redundancy cases. Boasts expertise in collective bargaining agreements, data privacy issues and negotiating with works councils and trade unions.”

The full results available here: http://www.chambersandpartners.com/108/23/editorial/7/1#22609124_editorial

25 April 2016

 

Should you have any questions regarding the above, please feel free to contact us.
Dr. Marianna Csabai
H-1126 Budapest, Tartsay Vilmos u. 3.
Tel: + 36 1 488 7008
Fax: + 36 1 488 7009
E-mail:

 

We are ranked in the Chambers EUROPE guide Read More »

CLVPartners
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.