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Employers’ tasks related to the implementation of EU Directive 2023/970 on equal pay and pay transparency

News, Employment, labour law / / , , ,

The deadline for the implementation of Directive 2023/970/EU (hereinafter: “the Directive“), published on 17 May 2023, which aims to reinforce the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms, into Hungarian law is approaching, and must be met by 7 June 2026. Although the specific Hungarian legislation will be known after the Directive has been implemented, it is already necessary to refrain from any action that would jeopardise the aims of the Directive, so employers should also keep the rules in mind in their internal processes and include compliance with the Directive on their 2026 to-do list.

Purpose of the Directive

The Directive sets minimum requirements to ensure that men and women receive equal pay for work of equal value. It applies to employers in both the private and public sectors and to employees who have an employment contract. Entry into force will be phased in, but from June 2026 large companies with 250 or more employees will have to comply.

Basic principles of the Directive

To achieve the aims of the Directive, we need to see what we mean by equal work or work of equal value and what we need to look at when we talk about pay. Work of equal value is work that is considered to be of equal value in a non-discriminatory and objective, gender-neutral way, in accordance with gender-neutral criteria.

Accordingly, there may of course be differences in pay, but these need to be justified by objective criteria, independent of the sex of the employee. In terms of remuneration, all elements of pay must be taken into account in the comparison, be they basic wage, bonuses, transport allowances, so the Directive looks at all benefits received directly or indirectly, in cash or in kind, by the employee under the employment relationship.

In order to assess and ensure equal value for work and equal pay, the Directive requires the application of a pay structure that allows for the assessment of whether employees are in a comparable situation, based on objective, neutral, gender-neutral criteria. These criteria may, in particular, be relevant to the skills, responsibilities, working conditions and conditions of the job in question and their assessment must not lead to direct or indirect discrimination on grounds of sex.

Member State and employer obligations

The Directive sets out a number of obligations for both Member States and employers.

The Member States are responsible for collecting and regularly communicating data on pay gap and for setting up the necessary monitoring mechanisms and appointing a monitoring body to protect workers’ rights.

There are also a number of obligations for employers. It is important to ensure that, at the application and selection stage, the applicant is informed of the initial pay or its range, based on the criteria for the position concerned, and, where applicable, of the provisions of the employer’s collective agreement in relation to the position. It has to be ensured that the candidate can conduct an informed and transparent negotiation of the position.

In order to provide the relevant information, it is advisable to bear in mind that this data is sensitive for the employer and may therefore be subject to a confidentiality obligation. On the other hand, the collection and processing of the necessary data of the applicant should be in line with the GDPR rules.

During the employment relationship, employees will need to be informed of the criteria used by the employer to determine their pay, pay levels and pay increases. In addition, the Directive gives employees the right to request and receive information in writing about their individual pay levels and the average pay levels, broken down by gender, for categories of employees who perform the same work or work of equal value as them.

On the basis of these data, employers will also have additional reporting obligations on their gender pay gap survey, depending on the number of employees.

Legal remedies, enforcement

The Directive also provides for remedies for employees in order to achieve its objectives and to fulfil the employer’s obligations, and in such proceedings the employer has the burden of proving that there has been no discrimination. Interestingly, the Directive allows for legal costs to be charged to the employer even if the employee has reasonable grounds for bringing proceedings.

Concluding thoughts

The Directive sets out a number of complex obligations for employers to reduce the gender pay gap and promote the principle of equal pay.

Although the specific rules will become known when the transposing legislation is published, the framework of the rules is already visible and no less favourable conditions for employees can be expected at Member State level.

It is advisable to start preparing for these obligations now, to review internal processes in the light of the Directive and to keep them in mind when making any changes, both in recruitment, selection and employment, as the transition may take longer and affect several areas – labour law, data protection – in the event of mandatory implementation. Based on the expected employer obligations, we believe that employers who know the depth of information they need to provide to employees and the reports they need to prepare in advance will be the ones who will comply well with the Directive and Member State rules.

Image source: Freepik.com

Changes in simplified employment

News, Employment, labour law / / , ,

Simplified employment is an atypical employment relationship that offers the possibility to work in a more flexible framework than the general rules. The specific provisions can be found in Act LXXV of 2010 on Simplified Employment (“Simplified Employment Act“), whereas the provisions of Act I of 2012 on the Labour Code (“Labour Code“) serve as a background rule. This year, there are several significant changes to the rules on simplified employment, which will be or have been introduced gradually in two stages. This article summarizes these changes.

Amendments effective from 2 February 2025

  • Changes concerning taxes

Employers are required by law to pay a specific contribution for their employees working under the Simplified Employment Act. The amount of this tax is based on a percentage of the minimum wage applicable on the first day of the month in question, thus the increase in the minimum wage also affected the amount of the tax payable. It is also important to note that the percentage of the minimum wage per employee and per calendar day has also increased, i.e., the following percentage of the minimum wage applicable on the first day of the month shall be paid:

  • 75% (compared to 0.5% previously), i.e. HUF 2 200 per day for seasonal agricultural and touristic work;
  • 5% (compared to 1% previously), i.e. HUF 4 400 per day for occasional work.

There was no increase for film industry extras, thus, the tax rate remained unchanged at 3%, i.e. HUF 8,700 per day.

It is important to note that these new provisions will only apply to employment relationships concluded after 1 February 2025. Accordingly, if an employment relationship was established on or before 1 February 2025, the rate of tax will be based on the previous rules.

  • Employee benefit entitlement

An employee employed in a simplified employment relationship is not considered to be insured, but is entitled to pension, accident health care and job-seeker’s allowance.

The amount of the pension benefit is adjusted to the minimum wage applicable on the first day of the month in question, therefore the amount has already been increased from 1 January 2025. Under the amendment to the Simplified Employment Act, the percentage rate has also increased from 2 February 2025. On this basis, the pension is calculated on the basis of the following percentages of minimum wage on the first day of the month:

  • 1% (compared to 1.4% previously), i.e. HUF 6 100 per day for seasonal agricultural and touristic work;
  • 2% (compared with 2.8% previously), i.e. HUF 12 200 per day for occasional work.

There was no change for film industry extras, which remained at 2.8%, i.e. HUF 8 100 per day.

Amendment to take effect from 1 July 2025

  • Annual limit, introduction of electronic enquiry system

In the future, employees will be allowed to work up to 120 days per year under a simplified employment relationship. This change is of particular importance, as the duration limit previously applied only to the specific employer-employee relationship, but now it will have to be taken into account for all the simplified employment relationships of the employee established in a given year. Hence, the number of working days worked by the employee in the context of simplified employment must be aggregated, irrespective of the employer. In order to enable employers to verify that the employee concerned has not exhausted his/her annual “limit” of 120 days, the National Tax and Customs Administration (“NAV”) will provide them an electronic enquiry system.

Given that this limit will be introduced during the year, the 120-calendar day limit will be taken into account from 1 July 2025 when calculating the duration of employment in 2025.

Summary

It can therefore be concluded that the cost of simplified employment has increased this year, and the rules on the annual limit have made this type of work more restrictive than before.

However, we would like to point out that on 11 March 2025, the Government submitted an act proposing to ease the rules on simplified employment, such as the general limit of 120 days and the possibility of extending the limit with an additional 90 days for occasional agricultural work, with effect – as planned – from 1 January 2026. The provisions of the proposal will be detailed in a separate article, once it is adopted and officially published.

For more information on simplified employment, please have a look at the information brochure (unfortunately, the information brochure only available in Hungarian language) on the following link issued by the NAV.  If you have any further questions on this topic, please do not hesitate to contact us.

Image source: Maria Turkmani, Pexels.com

Key Provisions of the 2025 Labor Law Amendments

News, Employment, labour law / /

At the end of 2024, Act LVII of 2024 on labour-related provisions (“Amending Act“) was published, introducing new regulations for labour-related legislation for 2025. The Amending Act includes changes to the Act I of 2012 on the Labour Code (“Labour Code“) and the Act XCIII of 1993 on Labour Safety (“Labour Safety and Health Act “). In this article, we summarize the main provisions of the Amending Act.

  • Key provisions affecting the Labor Code:
  • The period to use paternity leave increases from 2 months to 4 months, considering its limiting nature. An important new provision is that employers shall not give notice to employees during paternity leave, even if they are executive employees.
  • Employees will be exempt from the requirement of availability and from work duty for up to two hours if their work obligations exceed eight hours on the day of an election or referendum. They will also be entitled to an absence fee for the duration of their absence. This amendment of the Labour Code aims to ensure employee participation in elections without financial or employment-related disadvantages.
  • The Labour Code already provided that the working time of an employee performing stand-by job or a relative of the employer, if they have a written agreement with the employer, may be increased to a maximum of 24 hours per day in the case of a daily working time schedule and to a maximum of 72 hours per week in the case of a weekly working time agreement. Given that this type of agreement can be very burdensome for the employee, the Labour Code provides the possibility for the employee concerned to terminate the agreement. In order to bring Hungary into compliance with EU law, the above-mentioned rules on the termination of a written agreement are being amended. According to the Amending Act, in the case of a work time frame exceeding 6 months, the employee may give 15 days’ notice to the last day of the calendar month after the expiry of 6 months.
  • The Amending Act, in the light of the interpretation of the law so far, specifically provides that employees are entitled to a 100% wage supplement for overtime work on public holidays.
  • Key provisions affecting the Labour Safety and Health Act:
  • According to the provisions of the Amending Act, documents generated in the context of occupational safety and health activities (e.g. documents on risk assessment or periodic safety review) must be kept by employers in an up-to-date condition at their headquarters or premises in such a way that they are accessible to the parties concerned, in particular employees. According to the reasoning, this is necessary because the Labour Safety and Health Act has not yet stipulated where occupational safety and health documents should be kept. In a number of cases, the occurrence of exceptional events has revealed that employers are not fully aware of their obligations, and employees and their representatives have not been able to get to know the provisions that are applicable to them. Both physical and electronic storage methods are acceptable.
  • In view of the increased amount of the OSH fines, the Amending Act introduces the possibility for employers to be allowed by the authority to pay in instalments, thus protecting smaller companies or, where appropriate, companies in financial difficulties. It is important to note, however, that if any instalment is not paid in time, the full amount of the remaining fine will be due.

The provisions of the Amendment Act take effect on January 1, 2025. Employers are advised to review their practices at the beginning of the year, particularly regarding the storage of occupational safety and health documents. This is crucial as the OSH authority’s scope includes ensuring compliance with all occupational safety regulations and enforcing them through administrative measures. The amendments to the Labor Code are equally important. For instance, should an employer terminate an employee during paternity leave and the termination is challenged in labour court, the court may rule the termination unlawful.

If you have any questions regarding the above, our Office is at your disposal.

(Image Source: Pavel Danilyuk, pexels.com)

Rules on occupational safety and health in 2025

News, Employment, labour law / /

At the end of December 2024, a legislative amendment was published in the interests of legal competitiveness which also includes changes to the field of occupational safety and health. In this article, we summarise the new rules of Act XCIII of 1993 on Occupational Safety and Health (the “Occupational Safety and Health Act“) that will enter into force in 2025.

Simplification of the document preparation obligation

The employer is obliged to carry out risk assessment, risk management and the determination of preventive measures before the start of the activity and in justified cases. From 1 January 2025, the obligation to carry out periodic assessments under the Occupational Safety and Health Act has been extended to 5 years (compared to 3 years previously). These obligations now also apply if the employer’s scope of activity changes.

In addition, the legislation allows for the risk assessment to include a prevention strategy and the provision of personal protective equipment, so that these no longer need to be set out in a separate document.

Changes to the persons authorised to carry out tasks in the field of occupational safety and health

In many cases, the Occupational Safety and Health Act makes the performance of certain occupational health tasks by persons with professional qualifications subject to the approval of an occupational physician, but the legislator has considered that in certain cases it is appropriate to omit the medical approval and that persons with specific professional qualifications may perform certain occupational safety and health activities independently, thus making it easier for businesses.

Thus, from 1 July 2025, the occupational safety and health tasks required during the preliminary examination from an occupational safety and health point of view, the preparation of the occupational safety and health content of the rescue plan, the preparation of the occupational safety and health training agenda may be performed independently by a person with specialist medical degree in occupational medicine, occupational physician, occupational hygiene, public health epidemiology, preventive medicine and public health, or a person having qualification as a public health epidemiological inspector or supervisor. The tasks may continue to be carried out by a person qualified as a public health inspector or supervisor with the approval of an occupational physician.

The tasks relating to the occupational safety and health content of the risk assessment will also be carried out by persons with the qualifications listed above; this facilitation will also apply to employers with up to 50 employees classified the lowest, so-called class III risk category. This will also apply to the tasks related to the development of the occupational safety and health content of the prevention strategy from 1 July 2025.

For the same reasons, the scope of those entitled to carry out occupational safety and health tasks concerning the internal policy for the provision of personal protective equipment and the implementation of a working environment which does not pose a risk to health will also be amended from 1 July 2025. These tasks will be carried out by a medical doctor providing basic occupational health services or a person having qualification as a public health epidemiological inspector or supervisor. With medical approval, the tasks may continue to be performed by a person qualified as a public health inspector or supervisor.

Summary

The changes that came into force on 1 January and those that will be introduced later, on 1 July, will make it easier for businesses to comply with the safety and health requirements, both administratively and operationally.

If you have any questions about the practical application of the changes or compliance with any other occupational safety and health rule, our Office will be happy to help.

(Image Source: Luis Quintero, pexels.com)

The Supreme Court took an important decision regarding the postal delivery of termination notices

News, Employment, labour law / /

According to the facts underlying the decision, the employee had moved from his registered address but failed to notify the employer of this change, despite being contractually obligated to do so. At the same time, the employee arranged for a so called “mail forwarding services” with the post office.

After the employee moved out, the employer sent a termination notice by post (to the previous address), which the employee has received as proved by the return receipt. Subsequently, during the communication related to the termination process of the employment relationship the employee indicated that the termination had not been delivered to him. However, the employer relying on the evidence of the return receipt dismissed the claim and proceeded with further steps, such as deregistering the employee.

For the reasons set out above, the employee filed a lawsuit against the employer, claiming unlawful termination of the employment relationship. During the legal proceedings, it was established that the postal worker had not acted in compliance with the delivery procedures when delivering the mail: despite the mail forwarding service, the termination notice was delivered to the employee’s former address, and the postal worker had failed to verify the identity of the person who received it.

The employer argued that the postal worker breached the forwarding agreement between the employee and the post office, but this breach should not affect the termination and could not be held against the employer.

However, the court did not accept this argument. Under the provisions of the Labour Code, in the event of a dispute, the burden of proof regarding proper delivery of a legal statement lies with the party making the statement—in this case, the employer. Since the employer was unable to demonstrate that the delivery was carried out properly (through no fault of its own), the Supreme Court declared the termination unlawful.

The decision highlights that, even if an employer acts lawfully when arranging the postal delivery of a termination notice, unforeseen circumstances outside the employer’s control may still result in adverse consequences, creating a potential risk for the employer. Therefore, before delivering any kind of an employer’s acts, it is advisable to consider alternative delivery methods and assess whether those might be preferable to postal delivery.

(Image source: sl wong, pexels.com)

Key Information in connection with housing allowance

News, Employment, labour law / / ,

Introduction

Pursuant to Government Decree No. 403/2024 (XII. 18.) on housing allowance for employees (hereinafter the “Government Decree”), published in December last year, employers may provide housing allowance to their employees within a specified budget starting from January 1, 2025. This new type of non-wage benefit is also beneficial for employers, as it is subject only to a 15% personal income tax and an 18% social contribution tax. This article summarizes the main questions and considerations related to this allowance.

Key questions and advantages of the benefit

Housing allowance is available to employees under the age of 35, with a maximum annual amount of HUF 1.8 million, equivalent to a maximum of HUF 150,000 per month, provided the employee’s employment relationship lasts throughout the year.

The allowance can be used to pay off housing loans or rent. According to the Government Decree, employees can request the allowance by specifying their housing-related purpose. Employers are required to transfer the amount of the allowance to the bank account provided by the employee. Although the Government Decree does not explicitly state this, the Government communication suggests that in case of loan repayments, employers may transfer the allowance directly to the banks. Currently, the situation remains uncertain as it is unclear whether new regulations will be adopted or if banks themselves will establish additional conditions.

It is important to note that employees bear the primary responsibility for compliance with the legal requirements related to this benefit. If an employee receives housing allowance in an amount exceeding what they actually pay for rent or loan repayments, the tax authority will impose a penalty for the difference; additionally, the excess amount will need to be paid as personal income tax.

Summary

Although the legislator has already established some basic rules regarding the allowance, we strongly recommend to employers to consider the following during its implementation:

  • Establish internal policies outlining the conditions for providing the allowance, thereby minimizing tax and labour law risks and setting detailed rules in advance;
  • Prepare an appropriate statement for employees requesting the allowance which justify the purpose and type of the allowance, as well as the details of communication;
  • Identify the necessary documentation to be retained for verifying the allowance and ensure proper handling of this information from a data protection perspective.

Should you have any questions regarding the above mentioned, please do not hesitate to contact us.

(Image source: Timur Saglambilek, Pexels.com)

New rules of aptitude tests

News, Data protection, Employment, labour law / / , , ,

Partial abolition of the employer’s obligation to provide an aptitude test

The subject of much debate and uncertainty in recent months has been the abolition of the compulsory assessment of employees’ fitness for work by employers. The officially communicated legislative aim of the phase-out is (also) to reduce the administrative burden on companies. The purpose of this newsletter is to provide guidance to our clients on the changes and their associated responsibilities.

1.  The previous rules

Previously, the Labour Code and the Occupational Safety and Health Act generally stipulated that employers must provide an occupational fitness assessment free of charge for the employee before the start of the employment and at regular intervals during the employment. Unless the firm’s activity or the requirements of the job were subject to an exception rule, the general rule for the assessment of fitness for work was the NM Decree No. 33/1998 (VI.24.) (the “Decree“).

2. Legislative changes already in force and expected

In order to reduce the aforementioned corporate obligations, both the Labour Code and the Occupational Health and Safety Act were amended with effect from 1 September 2024.

However, the new wording did not fully clarify the obligations of companies. According to the regulation, in general cases, i.e. not covered by a specific occupational requirement (e.g. military service), the test must be carried out if the employer decides to continue the practice in the absence of an obligation or if the law continues to require it.

In the latter case, the draft of the proposals for public consultation have been published in recent weeks, several of which will enter into force in the coming days which aim to clarify when testing is mandatory. Our understanding is that those firms will continue to be obliged to carry out aptitude tests who are operating in the sectors covered by the drafts (e.g. construction, commerce). However, even for firms falling under the sectoral classification, only those workers who, by virtue of their job, fall into the categories listed in the same drafts (e.g. workers exposed to increased risk of accidents, of noise, of manual handling of loads over 10 kg; or workers who also work night shifts). There is one case in which the determining factor will not be the sectoral classification and the job, because if the employee works at night on a regular basis or for at least a quarter of his or her annual working time, he or she falls within the mandatory scope of the test, irrespective of the employer’s sectoral classification.

3. Proposal

Based on the above, it would make sense to recommend that companies should first check whether they fall within a sector covered by the drafts, and then, as a second step, assess the jobs covered by the obligation and organize the aptitude test for these employees.

However, the Occupational Health and Safety Act continues to provide as a general rule that the company is responsible for ensuring that the health of the worker is not adversely affected by his or her employment. This obligation can only be fulfilled with a high degree of certainty if the company assesses the potential risks to the employee on a case-by-case basis, taking into account the specific nature of the job. In the light of this, we recommend that companies should, as far as possible, maintain the aptitude test for all employees in accordance with the Decree until the detailed rules (including regulations related to the implementation of the Occupational Health and Safety Act) are known in their final form.

It is worth noting that the change has not only an employment law but also a data protection dimension, as the test regime is now in many cases based on the company’s decision, which requires additional data processing documentation.

Welcome two new lawyers to the CLVPartners© team!

News, team / / , , ,

CLVPartners© Law Firm is pleased to announce two new talented professional team members, Eszter Bohati and Anikó Hrebenku who have recently joined our team.

Eszter has more than 10 years of experience in the legal profession, 8 of which she spent in international law firms, advising on labor law, immigration, and data protection issues. She assists the law firm’s Clients in solving their everyday legal problems in  English and Hungarian and draws on her previous experience to provide personalized, high-quality solutions.

Anikó graduated from Eötvös Loránd University in 2017 and successfully admitted to the Budapest Bar Association in 2021. She gained remarkable experience at several law firms through the years in civil and labor law. She mainly supports our Clients in employment law, company law, and data protection issues in English, German, and Hungarian.

Please join us in welcoming Eszter and Anikó to our team. We are convinced that with their diverse backgrounds and exceptional skills, their arrival will further enhance our firm’s capabilities and performance to deliver excellent services to our Clients.

Our law firm retains Top-Tier Firm Rankings in The Legal 500 EMEA 2024 Edition

News, Ranking / / , ,

We are delighted to announce that we have again been ranked as a top-tier firm in The Legal 500 EMEA 2024 edition. Our services have been ranked in Employment and Commercial, Corporate and M&A practice areas. The reviewers appreciated among others our multinational clientele in various sectors, a key area of strengths in assisting our clients with digital transformations, and our extensive expertise in cross-border transactions.

The Legal 500 EMEA guide provides researched coverage of over 80 countries and over 2,700 ranked law firms. Researchers are free to make ranking decisions on merit alone. Ranking is conducted annually, providing a detailed qualitative assessment of various factors including work conducted by law firms over the past 12 months and historically; experience and depth of teams; specialisms and ancillary services; and, importantly, opinions of law firms” clients,

It is a special honour to be part of this publication and we are thankful to our clients who provided these excellent feedback on our performance.

We are happy to share some of the Testimonial given by our Clients to Legal 500 EMEA team:

“The team is proactive, quick to respond and eager to find a business-satisfactory solution to all problems.”

„I have received the answer to our queries quickly and professionally, the problems were reviewed from a wide perspective and always a bigger picture was taken into account to find a satisfactory solution to the query or challenge.”

„Our direct contacts are Anna Katalin Papp and Barbara Seregély. They are always available for us, we can always count on their cooperative work, they are professionally well prepared. If there are some changes in the legislation, they always draw our attention to them.”

„Working for many years with CLV, we met young and experienced colleagues, and all gave their full expertise in their fast replies. CLV is capable of working on an international level in relation to multinational tasks, which is important for us.”

„They all speak a high level of English and are well prepared. In terms of timing of meetings, we always received flexibility according to our needs. In case of very specific questions, they have experts to provide the adequate explanation.”

„The relationship is really good, and open minded. The advisor is ready to think out of the box, and not tied strictly to the question, if they can help with their advice.”

CLVPartners has been recognized again in Chambers Europe Legal Guide 2024

News, Employment, labour law, Ranking / / , , ,

We proudly and gladly announce that CLVPartners Law Firm has been recognized again by Chambers  and Partners in their 2024 rankings! This is a prestigious recognition of our team’s hard work, dedication, and expertise. Being ranked by Chambers and Partners is a true honor, and we are grateful for our clients’ trust and support, which motivates us to continue delivering our services with the highest standards of professionalism.

We are also delighted to share the assessment of CLVPartner’s legal service and the feedback of our valued clients what they told to Chambers and Partners for ranking purposes:

“CLV is excellent at handling complex and sophisticated cases, providing us with comprehensive advice covering all aspects that are relevant to us.”

 “The firm was prepared with knowledge, giving practical solutions on legal questions and unclear situations.”

 “CLV’s strongest trait is that they understand and assess cases from a practical perspective.”

 Marianna Csabai, our Senior Partner is also ranked as notable practitioner.

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