CLV Partners

Labour Code

Information on the changes to the Labour Code in 2023

Dear Clients,

On 21 December 2022, Act LXXIV of 2022 amending certain employment-related laws was published, which includes, among other things, the amendment of Act I of 2012 on the Hungarian Labour Code (“Labour Code“) effective as of 1 January 2023.

The comprehensive revision is mainly due to the correct transposition of two EU directives, but a number of other provisions changes as well. Among the large number of changes, we briefly highlight the most important new rules.

1.              Changes to employment documentation

1.1.         Changes to the mandatory content of employment contracts

The following will no longer be a mandatory element of the employment contract:

  •        place of work,
  •        starting date of employment, and
  •        duration of employment.

Unless otherwise provided, these are governed by the Labour Code, but if the parties wish to derogate from the main rule of law, they may do so by agreement.

According to the law,

  •        the working time starts on the day following the execution of the employment contract,
  •        the working time is indefinite,
  •        the place of work is the usual place of work for the position.

Another new novelty is that, as a main rule, wages shall be paid by bank transfer, and parties can only derogate from this main rule by mutual agreement.

In the case of fixed-term employment, if the duration is maximum 12 months, the probationary period shall be pro-rated, and after termination, no probationary period may be imposed for a second employment in the same or similar position. Employers should therefore review the standard contracts they use to ensure that they contain the right content for the future.

1.2.       The employer’s notification obligation

The notification obligation of the employer has been tightened: instead of the current 15-day deadline, the employer shall provide the necessary information in writing within 7 days from the starting date of the employment relationship, and in case of change, on the date of change.

In addition, employers will in future be obliged to provide information on their training policy and the name of the authority to which they pay employment-related taxes, currently the Hungarian Tax Authority.

1.3.       Notification before secondments abroad

The legislation states that for secondments of more than 15 days, employees shall be informed of the rules and conditions governing the remuneration applicable in the place of work, the reimbursement of travel, subsistence and accommodation expenses, and the availability of the unified national website (i.e. the OMMF) containing relevant information on the rights and obligations of the employer providing cross-border services and the employees posted.

1.4.       Certificates and declarations relating to new types of leave, exemptions

The amendment to the Labour Code contains a number of new rules regarding vacation, exemptions from work, prohibitions on dismissal, information requirements – as a result of which employers will need to assess the documentation to support entitlements – including parental leave, paternity leave, the duration of care for a relative, and the background documentation for termination without notice.

2.      Exemption from availability and work – extension of cases

The Labour Code already contains a list of cases in which the employee is exempted from his/her obligation to be available and work.

According to the amendment workers are exempted from these obligations if they are caring for a relative who needs care for serious health reasons or personal care for a person living in the same household as the worker, but for a maximum of 5 days. During the period of care, the employee is not entitled to give notice.

3.            Options for parents

3.1.       Paternity leave and parental leave

The amount of leave for fathers will be increased from next year, to a unified 10 working days. Fathers whose children are born or adopted between 2 August and 31 December 2022 will also be entitled to the amended paternity leave until the end of February 2023. For the first 5 working days of paternity leave absence fee, while the for the second 5 working days 40% of the same absence fee shall be paid .

Parental leave has been introduced, which by its very name is granted to both parents. It is granted for 44 working days up to the age of 3 of the child, provided that the employee has been employed for at least one year by the employer. The rules for taking parental leave are the same as those for paternity leave, except that it may be taken up until 30 June 2023. For the period of the parental leave 10% of the absence allowance shall be paid for the whole period.

Both leaves are granted at the employee’s request and the requested date may be postponed by the employer in exceptional cases. However, if it the leave not been granted by the date of termination, there is no cash payment, but the employee may roll over its entitlement.

It is also a common rule that during the period of leave under these entitlements, the employer shall not terminate the employment by dismissal.

3.2.      Possibility of amending employment contracts for parents with children

In addition to the current entitlement, a significant benefit is that an employee can apply until its child reaches 8 years for

  •        change of workplace,
  •        change to working hours,
  •        teleworking, or
  •        part-time employment.

The request shall be made in writing by the employee, stating the reasons, and the employer shall give written reasons for refusing the request within 15 days. The refusal of a request may be challenged in court, but the possibility of an extra-judicial hearing of these proceedings has been removed, so in practice it does not provide a real solution. However, employers are encouraged to keep transparent and accurate records of their labour needs in order to avoid disputes.

4.           Disputes

4.1.       Abuse of rights

The rules on employment law claims based on abuse of rights are amended. The new legislation sets out how the burden of proof is shared between the parties.

The burden is on the claimant (the employee) to prove the facts, circumstances and prejudice on which the claim is based, while the burden is on the decision maker (the employer) to prove that there is no causal link among the above. The significance of the change is that if the employee’s claim of abuse of rights is acknowledged by the court, the employee is entitled to request the restoration of his employment relationship by the court.

4.2.      Reasoning obligation

In exceptional cases, the employer is not obliged to give reasons for termination (e.g. in the case of termination during the probationary period). However, under the new rules, the employer is still obliged to give reasons, if the employee believes that the termination is due to one of the following reasons and requests the reasons for termination. The alleged reasons can be:

  •        working time allowance for care,
  •        paternity leave,
  •        parental leave,
  •        taking unpaid leave to care for a child, or
  •        the submission of applications under the previous point.

In the case of an employee’s request, the employer has 15 days to justify the termination. In practice, this means that the employer shall always be prepared to justify the reason for termination.

The above changes will typically come into force on 1 January 2023, applicable also to already existing employment relationships – although the legislator leaves a certain implementation period for businesses.

If you have any questions about the above, please contact us. Of course, we will also provide you with details of any further changes in the context of a personalised, partner-specific information session.

 

dr. Papp Anna Katalin

dr. Csabai Marianna

 

Exemption from work during adoption

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.

Aid Provided To Employment Is Very Limited

The Hungarian government announced that they are going to wage support the wages to those employees that who are still able to work.
The the maximum amount of Wage Subsidy shall be HUF 74,900 / employee. However, in order to request the employee and the employee jointly shall apply for the wage subsidy on cinditionsconditions that they both comply with even the company has to meet certain extensive criteria and which this further limits it’s use. The employers must also present its measures taken or is expected to take to overcome the economic difficulties and to exhaust the working time available for rescheduling work and that is operation is a national interest which is undefined category at the moment. Application for the Wage Subsidly may be submitted from the 16th of April 2020. In order to be eligible compliance with the strict requirements must be substantiated by fully comprehensive and detailed documentation. Should an application refused by the authority, no appeal or any legal way is allowed.

Government decree containing further derogations from the labour code for example:as the employers can unilaterally introduce a framework of working time up to 24 months.

Derogations in the application of Labour Code for the duration of state of emergency

Effective as of today (19 March 2020) until 30 days after the end of state of emergency, the Labour Code shall be applied with derogations as a part of the economic measures announced yesterday. Please see our brief summary as follows:
1. Derogations to be applied unilaterally by the employer:

a) employer may also amend the announced work time schedule within 96 hours of the start of the daily working time; it is important to note that the rules of announcing annual paid leave/ vacation did not change and must be notified 15 days in advance;

b) employer may unilaterally order home office/ remote work for the employees;

c) the employer may implement the necessary and justified measures to check employees’ health status. The Government Decree does not specify the measures necessary and justified, therefore the employers must consider this for themselves, in compliance with the data protection legislation and the HDPA’s legal opinion, as the application of the GDPR has not been suspended for the duration of the state of emergency. It mainly relate to the mostly popular planned fever measure which may only be applied with the restrictions provided by the HDPA.

Collective agreement provisions deviating from the above may not be applied for the duration of the state of emergency, which also means that in any other question the Collective Agreement is applicable.

2. Derogations to be applied by the separate agreement of the parties:
The Government Decree fully extends the possibility of separate agreement between the employer and the employee, which may derogate from the provisions of the Labour Code. It may only be interpreted – although there is no express provision – that it allows the employers to agree with the employees on conditions that are detrimental to the employees – while earlier the Labour Code only allowed deviation in favour of the employees. In that way, thus allowing the establishment of specific and flexible rules for the duration of the state of emergency.

3. The right approach would be if before conclusion of the separate agreement with employees in matters are beyond the above cases and regulated in the Collective Bargains, the employers consult with the Trade Union and the Works’ council if the planned deviations will affect the bigger group of the employees.

The economic measures of the Government in relation to the coronavirus epidemic

On 18 March 2020 the prime minister has announced exceptional economic measures to reduce the impact of the coronavirus epidemic.

According to these measures, in the following sectors the employers shall not pay contributions after their employees, and the contributions of their employees are also significantly reduced (they shall not pay pension contribution, and health insurance contribution is reduced to the minimum set by law) until 30 June 2020:

• tourism
• hospitality ( gastronomy, hotels etc.,)
• entertainment
• sport
• cultural services
• passenger transport

In the above sectors, lease agreements may not be terminated and the amount of rent cannot be raised during this period.

Taxi drivers under ‘small enterperneurs” tax payers are exempted from tax payment.

The tourism sector is also exempted from paying the tourism development contribution.

The Government Decree foresees further legislative changes. We are monitoring for further possible government measures continuously.

The purpose of the publications announced on our website is to provide a brief, concise information on certain issues. The content of this website and the publications is not exhaustive and does not constitute a legal advice. Should you have any specific questions or inquires regarding any issues investigated by our publications, please contact us and we will be happy to be at your disposal.

Amendment of the Labour Code

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.


News on the amendments of Act I of 2012 on the Labour Code

According to the working paper available at the Government’s website, Act I of 2012 on the Labour Code (hereinafter referred to as the “Labour Code”) and other labour-related regulations – such as the Act III of 1952 on Civil Procedure, Act XCIII of 1993 on Labour Safety and Act LXXV of 1996 on Labour Inspection – are expected to be amended with effect from 1 January 2016. The planned amendments affect e.g. the regulations regarding the working place, termination and severance payments as well.

We will continuously inform you about the abovementioned amendments of the Labour Code if the single bill will become available.
 

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:

The amendment of the Hungarian Labour Code

With the effective date of 01 January 2015 some provisions the Labour Code (Act No 1 of 2012) have been amended, as follows:
According to the previous provisions, based on the respective request of an employee, an employer was obliged to amend the working time of the employee to part time (half of the general full working time) provided that his or her child was younger than the age of three. From 01 January 2015 on, this provision has been extended so that if an employee is caring for three or more children, the obligation concerning the amendment of the working time to part time employment shall be applied until the age of five of the child. As this new rule introduced the definition of the “employee caring for three or more children”, the Labour Code now includes the definition of the employee who shall belong to the above category. Accordingly, an employee caring for three or more children shall be, any person who as a parent – within the meaning of the Act on Family Support –
i. is eligible for family allowance and receives or received childcare fee or childcare allowance, or
ii. received or receives child-rearing allowance.

The rules concerning the eligibility for annual leave have also been amended, accordingly an employee shall accrue holidays during the entire term of the sick leave, i.e. the previously applied 30 days limit have been abolished from the Labour Code.

According to the amendments, the employment contract of an executive employee cannot deviate from the provisions set out in Section 65 (3) a), b) and e) of the Labour Code. This means that employees receiving treatment related to a human reproductive procedure as specified in law (i.e. employees are protected during the treatment for a maximum of six months from the date the treatment begins) shall be considered as protected employees and therefore, the employer cannot terminate their employment during this period. (The termination protection rules set out in Section 65 (3) a) and b) of the Labour Code have already been applicable also to executive employees even before 01 January 2015.) The parties cannot deviate from this provision even with their consent in the frame of the employment contract.

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

Dr. Marianna Csabai
Dr. Boglárka Kricskovics-Béli
Dr. Nóra Óváry-Papp

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