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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.

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 Csabai & Papp Law Firm’s ESG Commitments for 2024

News, ESG, sustainability / / , , ,

CLVPartners Csabai and Papp Law Firm is actively seeking opportunities to integrate sustainability considerations into decision-making processes and day-to-day business. At the same time, we recognize the importance of working in a safe, ethical, and sustainable manner. Our ESG commitments for 2024 are as follows.

  1. We are dedicated to fostering an inclusive and diverse workplace, promoting equal opportunities and fair treatment for all employees irrespective of gender, race, ethnicity, or background.
  2. We strive to minimize our carbon footprint, adopting sustainable practices in our operation, by digitalizing most of our processes and we encourage our clients and partners to act in the same manner. Also, our employees are encouraged to adopt sustainable behaviors, and we offer flexible working arrangements to reduce commuting emissions.
  3. We are committed to ensuring work-life balance for our employees, continuing to provide education and training opportunities for them and organizing social events beyond work.
  4. Integrity, transparency, and compliance form the foundation of our governance practices. We conduct business ethically and transparently. Our corporate values guide our interactions with stakeholders and our partners.

From 1 January 2024, certain labor legislation was amended and new provisions will be introduced.

News / / , ,

The most important changes are described below.

1. Legislative changes in the field of labor law

1.1    Introduction of the employment certificate

The employer shall issue a certificate of employment upon termination of employment, except in the case of occasional work relationship. The amendment ensures that employees do not receive several different documents when their employment relationship is terminated, but only one single document containing all the necessary information, either in electronic form or on paper.

The certificate of employment will be issued in electronic form, the content of which will be laid down in a decree by the Minister responsible for employment policy. The employment certificate will be made available on paper at the request of the employee.

The employer issues the certificate of employment to the employee within five working days of the last day of work in the case of termination, or within five working days of the termination of employment in other cases.

The content of the certificate of employment is supplemented

1.2   Retention obligation

An important new rule is that from January, not only employment documents containing information on earnings and income related to the insured or former insured person’s insurance status, but also all such data and employment certificates must be kept for five years after the insured or former insured person reaches the retirement age.

However, the obligation for employers to keep records will be phased out from 1 January 2025, so that the obligation will only apply to records generated up to 31 December 2024. In future, the data needed to establish the pension benefits will be contained in the public registers.

1.3   Allocation of vacation time

According to the Labour Code, the employer shall grant the additional child leave at the time requested by the employee too. The employee must notify the employer of his/her request for such leave and regarding the parental leave at least fifteen days before the start of the leave.

1.4   Rules on working in front of a screen

Employers are still obliged to ensure that continuous screen time is interrupted by breaks of at least ten minutes per hour, but the amendment removes the limit of 6 hours of screen time per day and the 75% limit on daily working time.

1.5   Suitability for the job

As of 1 September 2024, there will be no general obligation for workers to undergo an occupational health examination. Legislation may specify the types of work for which the employee’s suitability shall be examined before taking up work and on a regular basis during the life of the employment relationship, and employers may also order it.

The mandatory cases will be defined by ministerial decree.

2. Legislative changes in the field of labour safety

2.1    Rules on professional qualifications

As a result of the changes the relevant act, it is now possible to perform certain occupational health tasks defined in the legislation with a professional, but non-medical qualification.

2.2   Occupational safety education

The employer must provide the employee with health and safety training when starting work, when the workplace or job changes and when the requirements for safe and healthy working conditions change.

As of 1 February 2024, the legislation allows employers to provide the training for activities, jobs and positions defined in the decree of the Minister responsible for employment policy by providing the employee with the general training topics.

The handover can also be done by publishing the educational content on an internal electronic network accessible to the employee.

2.3    Rules on accidents at work

The employer must also investigate the circumstances of the accident at work that does not result in disability for work and must determine the method and documentation. There is a new protocol template to be fulfilled in those cases.

2.4   Workplace EHS representative

The novelty is that the legislation sets a deadline for the election of the labour representative. If the employer is obliged to elect an EHS representative, the election must be held within six months of the date on which the obligation arises. In an employer where there is an elected EHS representative, the election thereof must be held within three months after the expiry of the mandate of the safety representative.

Government Decree 462/2023 (X. 5.) on emergency measures for the protection of the labour market and the population of Hungary was published

News, Employment, labour law / / , ,

The Decree which was published on 5 October envisages a comprehensive re-regulation of the residence and employment conditions of third-country nationals in Hungary. 

The Government Decree prohibits the application of Act L of 2023 on guest workers during the period of the state of emergency. The Act otherwise lays down the conditions of residence and work of guest workers, i.e. third-country nationals from non-neighbouring countries, who come to Hungary for work purposes, as well as the rules for a single residence permit, which enters into force on 1 November 2023, but cannot be taken into account for the time being. 

At the same time, the Government has also decided to propose new legislation on immigration and employment, which is expected to fundamentally change the rules applicable for third country national in the future. 

If there is any progress in this area, we will of course inform you immediately. 

The draft Hungarian legislation transposing the Whistleblowing Directive has been adopted

News / / , , ,

On the last day of February, the Government submitted a new draft law transposing Directive 2019/1937 on the protection of persons who report violations of EU law, i.e. the “Whistleblowing” Directive (the “Directive”) into domestic law. The aim of the legislation is to allow employees and contractors in companies with 50 or more employees to report abuses and breaches of law in the company without fear of retaliation and to ensure that these reports are investigated by companies according to a pre-defined procedure.

If passed by Parliament, the Bill will enter into force 60 days after its publication, so there is likely to be a short timeframe for compliance to be developed.

Satellite workplace and employees

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

The term ‘satellite workplace’ or ‘satellite employee’ is becoming increasingly common. In this article, we present these concepts from a labour law perspective.

What is a satellite office and who is a satellite employee?

A satellite workplace is when an employer employs employees living in a geographical location other than the registered seat of the employer in a way that these employees work partly from home and partly from offices run by the employer in a location separate from its main seat, such as rented premises, co-offices, branch offices, in short satellite workplaces. Employees employed in such arrangements are called satellite employees, who, although they belong to the organisational unit of the employer’s headquarters in terms of the employer’s organisational structure, may be physically present in another organisational unit of the employer during the course of their work.

What benefits can we expect?

There are many advantages to running a satellite workplace. For example, when recruiting new employees, the distance between the employee’s home and the employer’s seat may not be a primary consideration.  The model can be used to provide a wider range of employment opportunities for candidates living in locations other than the employer’s headquarter. This allows a larger pool of employees to be selected for the most suitable position, which is a competitive advantage, especially in jobs which are difficult to fulfil.

The employment structure avoids the negative effects of teleworking, such as professional isolation and blurring of the boundaries between work and private life.

Satellite working can also be a solution in temporary situations, when a company wants to expand into a new market or location, or when a project requires certain colleagues to work temporarily in a place differing from the company’s main address.

The perception of satellite employees from a labour law perspective

From a labour law point of view, satellite employees are teleworkers, given that they work at a location separate from the employer’s seat. Teleworking takes place irrespective of whether they work in an office run by the company or provided otherwise.

Under Hungarian law, the teleworking agreement must be included in the employment contract. The employment protection requirements vary depending on whether the work related to a particular job is performed with or without the use of a computing device.

Opportunities for implementation

There are several opportunities for creating satellite workplaces. The company can provide working conditions in its own or in a longer-term leased office space for exclusive use or it can arrange office services with community office providers. The number of satellite employees, the amount of costs that can be absorbed and the planned duration of the whole structure may be factors in choosing the most advantageous option.

Cross-border satellite work

The satellite work model can be envisaged not only within a country but also across borders. There are no barriers to cross-border employment, but there are a number of considerations to be taken into account, including:

  • employment protection rules,
  • tax considerations (tasks involved in setting up an establishment),
  • rate of pay, currency of payment,
  • comparison of costs and savings to be made,
  • equal treatment,
  • business confidentiality and data management, data security requirements.

In summary

Working in a location other than the employer’s seat can address a number of challenges that are increasingly important today, such as the need for companies to choose colleagues from a larger labour market. However, to avoid potential tax and labour law risks and unnecessary costs, it is essential that entities take their decisions with all aspects of satellite employment in mind and carefully consider them.

Motivation of white-collar workers

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

In the first part of our series of articles, we looked at the motivational options available to companies for their physical employees (blue-collar workers). For intellectual employees (white-collar workers), the same options as described above can be applied, but companies may also be interested in other reward possibilities.

It has always been a challenge for employers to retain the talented (executive) management of the company and encourage them for better performance and thus improve the company’s profitability. At the same time, the motivation system works well only, if the business leaders also consider these colleagues as an asset of the company and are willing to “give a slice of their cake”. This is because these executives contribute greatly to the corporation’s success.

“He/she doesn’t look at the firm as his own.” “I paid him/her a high salary for years, yet he/she left us and went to the competition.” We have come across countless times such and similar statements as a consultant. But why would an owner, an entrepreneur expect, whether with an international background or leading a family business, the managers to give their hearts and souls for the company and put their personal life and leisure back, when they do not benefit proportionately from the company’s success? Of course, mapping out the real proprietorship challenge is not a purely legal task. Nonetheless, there are several corporate, commercial, and employment law agreements to motivate management. Not only the owners, but also people who develop the organization by being responsible for HR, coaching, as well as the company’s tax or finance managers should be aware of those solutions.

The following few examples make the benefit system transparent, thus being predictable and strengthening the employer brand, increasing loyalty within the business and encouraging higher performance of key personnel.

Shareholdership – with limitations

Whether a legal person operates in the form of a limited liability (Kft.) or as a private company limited by shares (Zrt.), it has the option to grant shareholdersip with different legal rights with the purpose of recognizing colleagues who play a key role in the profitability. Such solutions do not need to provide equal or proportionate rights (for example, in terms of voting rights or dividend entitlements) and may be for a definite period (i.e. duration of legal relationship with the entity).

Other favorable options

Whether in an employment or contractual relationship, the owner of a company always can formulate favorable rules in relation to employment, and thus, among others, implement tax-efficient performance incentives at the company such the following ones:

  • increased or reduced notice period in proportion to seniority;
  • insurance, health insurance, private health care packages
  • a higher amount of severance payment, based on the number of years spent at the company;
  • “alumni” benefits (either directly or through a fund, insurance company) available after the termination of the employment relationship with the company;
  • benefits provided to the employee’s family,
  • providing longer unpaid leave (sabbatical leave).

The planning and systematization of the above-detailed benefits may have an impact on tax administration, and thus, on the total cost of the benefits. It is therefore worth structuring the benefit plan carefully from a tax perspective, considering the given circumstances.

The loss and replacement of a middle or senior manager imposes a significant financial burden on businesses. That is because not only the time and cost of recruiting the right person should be considered, but also the alternative costs of handing over processes, integrating a new colleague, rebuilding the entity’s reputation, the loss of the company’s know-how, customer base and building long-term loyalty. It is therefore in the fundamental interest of firms to rethink how they can reward the work of their valuable co-workers and support their loyalty through transparent and predictable remuneration systems.

Incentive schemes for blue-collar workers

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

 

INCENTIVE SCHEMES FOR BLUE-COLLAR WORKERS

The increased demand for labour, the emigration of skilled manual workers – either to a company in a neighbouring city or across the border – places a significant burden on companies’ HR colleagues. There is a recurring need to develop appropriate incentive schemes that increase the appreciation of high performing colleagues and help retain employees.

According to our experience, a compensation system will only be viable, if it is based on well estimated employee needs and a comprehensive knowledge of the options available under labour law. In this article, we would like to draw attention to solutions that go beyond the (also significant) remuneration policy.

Wages and Compensation

 The most trivial correlation is that if an employee earns more, he/she is more likely to stay with the company. In our experience, a proper salary model is undoubtedly an important tool, but not the only one, as employees already take into account other incentives in addition to their wages, which are effective if the conditions are tailored to the employer and the job and diversified according to e.g. presence, performance, quality. The social needs of employees (e.g., tax-free allowances, holiday allowances, etc.) are increasingly important. Employers must be very precise and accurate in defining compensation to avoid labour law and tax risks, for example the classification of compensation as wage, which can lead to serious tax payments and penalties later.

Transparency

 It is important that the employees understand the benefit and that compensation was objective. If, for example, an allowance is based on the company’s results, it must be comprehensible to all employees concerned without the need to read the company accounts. A transparent system leads to greater employee loyalty and increases trust in the employer.

Transparency is often used as a synonym of objectivity at companies, even though the two terms do not have the same meaning. Objective and subjective benefits differ as in the latter case the employer has at least some discretion over the actual payments. However, it is important for both systems to be drafted in a clear and comprehensive way – in our view, this is in the interest of both parties. An example is the combination of group and individual bonuses in the case of a manufacturing company. A dual bonus system ensures that employees not focus only on their own performance, but also on the performance of the team as a whole – that results in making them better off financially, but also in achieving other HR policy objectives (cohesion, team spirit, loyalty).

Predictability

A principle that makes a reward system successful and is closely linked to transparency is predictability. For blue-collar workers, it is of major importance that their livelihood is secure not only immediately, but also in the distant future. It is therefore worthwhile to set short- and medium-term goals in a structured way.

Communication

Entities very often ignore the importance of communication. Whether we are talking about verbal feedback or incentive schemes, positive feedback is much more effective than punitive – disincentive – regulation. In case of physical workers, it is equally important that the company’s core values are expressed to them properly (also in the daily cooperation), and that they can expect the same from the coworkers. It is pointless to proclaim that an employer protects personal rights if it monitors premises illegally. However, it is also important to be aware of the legal aspects of the timing and content of communications, as in many cases these qualify as binding commitments to the employer for the future.

Opportunity for promotion

Ambitious and talented employees should be constantly monitored and provided with the opportunity for development, promotion or training. That will help to retain the most loyal people in the long term. For employers, however, it is of paramount importance to include appropriate labour law guarantees in the agreement with such employees.

As a conclusion, Hungarian labour law provides a very wide range of incentives for blue-collar workers, which not only provide additional benefits for employees, but can also guarantee companies the retention of a secure workforce. However, knowledge and understanding of the basic challenges and the most optimal labour law and tax aspects of possible HR solutions are essential for successful implementation.

Should you have any questions regarding the above, feel free to contact us.

CLVPartners contact us

Exemption from work during adoption

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

Pursuant to the amendments of Act I of 2012 on the Labour Code (“Labour Code”) effective as of 1st September 2020, the employee shall be exempted from the requirement of availability and from work for a maximum of 10 working days per year during the period of preparation for adoption.

The pre-adoption phase provides an opportunity for parents intending to adopt and the child to be adopted to meet, introduce themselves and start to get to know each other before the adoption. Also during this period, the living conditions of the parents wishing to adopt will be assessed, counseling will be provided by the child protection service and, if required, a free adoption course will be conducted.
As the procedure involves a number of tasks for the employee, the legislator considered it necessary to exempt the employee from his/her requirement of availability and work during this period.

The exemption is available to both prospective parents, who are entitled to an absence fee for this period. The exemption shall also apply in the case of an executive employee, from which the employment agreement of the executive employee may not deviate.

The conditions for claiming the exemption are defined by the Labour Code as follows:
– exemption from availability and work is possible on the basis of a certificate issued by the adoption organization;
– the employee may claim the exemption within 90 days following the issuance of the certificate;
– the employee shall inform his/her employer at least 5 working days in advance of his/her intention to claim the exemption;
– the employee must be exempted on the dates specified in his/her request, therefore it is up to the employee to determine the dates;
– the Labour Code does not stipulate that the exemption of 10 working days should be granted to the employee only continuously, therefore the employee may request that the exemption be granted in several installments within 90 days from the issuance of the above-mentioned certificate.

If you have any questions regarding the above, please feel free to contact us.