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

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

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.

The End of The Year From HR Perspective

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

The end of the year is coming up fast and there are plenty tasks to arrange at the HR Departments. Among the others, it should be checked whether the holiday due for this year have been scheduled for all employees until 31 December, as well as, if the holiday agreements have been signed for 2020. Before entry into 2020, we wish to provide you with quick to do list and also to call your attention to the latest news and the expected relevant changes.
I. Unused holiday

The question of unused holiday at the end of the year is always a cardinal issue from HR view. Therefore, it is advisable to check if each employee how the annual leaves of the current year stands. Unused leave cannot be redeemed in cash, unless the employment relationship is terminated. Leave must therefore be scheduled even if the employee does not wish to take it.

The general rule is that leave due for 2019 cannot be transferred to 2020. Therefore, the remaining holiday shall be scheduled basically for the year of 2019. However in some exceptional cases it may be transferred to the next year, as follows:

·        If employment relationship began on or after 1 October 2019, holiday may be scheduled until 31 March 2020.

·        If, due to a cause at the employee’s side, holiday could not be scheduled in 2019 (e.g. illness, maternity leave, work incapacity, etc.), it can be scheduled within sixty days of the cause ceases to exist.

·        Leave which commences in the due year and does not exceed five working days in the following year shall be deemed to have been taken in the due year.

·        The additional leave due to the age of the employee may be scheduled until 31 December 2020, if the parties concluded an agreement on it in 2019.

·        In the event of economic reasons of particular importance or any direct and consequential reason arising in connection with its operations, the employer may allocate one-fourth of the employee’s holiday by 31 March of the following year if it is stipulated so in the collective agreement.

II. The case of extraordinary work (overtime)

Considering that extraordinary work has an annual limit, it is highly advisable to check how the company stands in this regard as we approach the end of the year.

In the case of full-time work, up to 250 hours of overtime per calendar year can be ordered.

Collective agreement allows 300 hours per year. Further, the employer and the employee may conclude an agreement on additional working hours so that it must not exceed 400 hours overtime per calendar years. This agreement may be terminated by the employee by the end of the calendar year.

However, the above mentioned annual limit shall apply proportionately if the employment relationship began during the year, for a fixed period or for part-time work. It is important that if the company exceeds the annual extraordinary working time limit, it may face serious fines as a result of any labour inspections.

III. Minimum wage and guaranteed wage minimum

As of January, the minimum wage will be expectedly increased again. In 2018, a two-year agreement was made at the meeting of the Competitive Sector and Government Permanent Consultation Forum to increase the minimum wage and the guaranteed wage minimum with 8%-8 % in 2019 and 2020. Thus, the minimum wage could rise to HUF 161,000 in 2020 and the guaranteed wage minimum to HUF 210,600.

The minimum wage and guaranteed wage minimum shall be published by a government decree which has not been issued yet, but it will be expectedly published until the end of the year.

After the decree has been published, the salaries shall be reviewed and the employment contracts shall be amended accordingly.

IV. Social contributions in 2020

With changes of social contribution there is nothing to do, however from payroll perspective it is good to know that according to the bill No. T/8021 from 1st July 2020 (i) pension contributions, (ii) in-kind and (iii) financial health insurance contributions, and (iv) labour market contributions will expectedly merge so called “social security contribution”. However, the rate remains the same, so in total 18.5%.

V. Working time schedule for the year of 2020

The minister of finance has the right to reschedule the working and rest days around the public holidays which changes shall apply in case of employees working under a fix, general working time schedule.

According to the decree of the minister of finance in the next year 21 August (Friday) and the 24 December 2020 (Thursday) shall be rest days, and the 29 August and the 12 December (Saturdays) 2020 are qualified as working days.

VI. Retirement age in 2020

According to Act LXXXI of 1997 employees were born in 1956 may be entitled to old-age pension when they reach the age of 64 plus 183 days. Therefore, the above mentioned employees will be eligible for pension in 2020.

It is remained unchanged that the employee’s employment shall not be terminated due to the retirement.

GDPR „OMNIBUS” Act overwrites the usual HR process

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

On 26 April 2019, Hungary’s new ‘Omnibus Act’ implementing provisions of the GDPR took effect. This article examines its significant impact on employers and the continuing uncertainty surrounding some of the changes it introduces.

Only a few months ago, employers were required to readjust their processes in preparation for GDPR implementation and now the new so-called ‘Omnibus’ act that amends the Labour Code, among other changes has entered into force (on 26 April 2019). The new regulation requires immediate and very significant work from HR departments, while there are several open issues to be jointly interpreted by labour lawyers together with HR and data protection professionals on how to ensure their daily practice is compliant with the new but ambiguous regulations.

The bottleneck is a result of the fact that Hungarian lawmakers were well behind schedule with implementation of GDPR, leaving employers only a few days to review the new processes, since all employers must comply with all requirements from day one. There is a strong hope that (as has happened in several previous cases) the Omnibus Act will very shortly be corrected by a new amendment.

The GDPR ‘Omnibus’ Act amends 86 acts including the Labour Code in order to comply with GDPR regulations.

This amendment requires the review of labour contracts, HR processes and significant HR policies such as recruitment, selection, new employees’ induction process, operations, the data management of access control systems and use of employer’s devices, just to mention the most common areas concerned.

Employers and all organisations should have complied with the new regulations within a couple of days of entry into force.

Although the new requirements contain more details than the published draft bill, there are still several open issues on how to implement them in practice. For example what is the meaning of, and what are the criteria for the necessity and proportionality test contained in the new regulations in relation to limitations on employees’ personal human rights (in connection with e-mail, internet, device or video surveillance, etc.)? The GDPR only includes the privacy impact assessment and the ‘balancing test’ for ‘legitimate interest’.

The usual process of recording a new employee’s data is basically overridden by the new rule that the employer may only request presentation of an ID card and other personal documents, but no copies can be made, even with the consent of the employee. This will mean that proper identification of the employee would be difficult. The provision of false data by the employee may result in annulment of employment, but with a lack of proper evidence and documentation, the employer may not be in a position to act.

Handling of criminal data records is more strictly regulated, and in the future the basic rule is that no criminal record clearance may be requested from employees. Exceptional and very strict criteria are set for cases when the employer may require an employee to present criminal record clearance, but the precise criteria can be decided by the employer if a serious business risk for the organisation would arise from an employee with undisclosed criminal record working for it.

Finally, the amendment relating to data managed by the biometric access control systems (digital fingerprint, iris/retina scanning, face identification systems), and also the use of the employers’ devices is based on new principles, meaning that a review of internal policies relating to these issues must be conducted.

Amendments with regard to the GDPR has been published

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

The amendments with regards to the GDPR, which was adopted by the Hungarian Parliament on the 1st of April, was officially published today.

In order to harmonize with the GDPR, the amendments modifies over 80 sectorial law, including provisions of the Labour Code.

The majority of the amendments will come into effect at the end of April, but the modifications regarding the national accreditation and the protection of inventions by patents will come into force in May.

Opportunities created by the “overtime act” put into practice

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

Amending Act CXVI of 2018 on the organization of working time and the minimum fee of labor leasing activity (hereinafter: amendment) has been announced on 20 December 2018 and entered into force on 1 January 2019.

In our article we are looking for answers to the following questions; what opportunities the change has actually created for employers and which employers can take advantage of the opportunities created by the change.
The amendment essentially concerns issues related to the organization of working time, in particular the rules on working time banking and overtime.

The new opportunities provided by working time banking are only open for employers with collective agreements, while the opportunities in the area of overtime may be used by employers without collective agreements as well, as follows:

I. Options based on collective agreement

According to the amendment as from 1 January 2019, a maximum of 36 months of working time banking may be introduced on the basis of a collective agreement instead of a maximum of one year. In practice, this means that employers wishing to apply a longer working time frame, an amendment must be initiated to the collective agreement currently in force or; in the absence of a collective agreement in force, a collective agreement must be concluded with the trade union authorized to conclude the collective agreement, including that option.

It is important to note that not only 36 months, but shorter, e.g. a 24-month working time frame may also be included in a collective agreement by the parties.

There is a statutory limit to the extremes of work schedules arrangement within the longer working time banking – in addition to the rules on rest days/rest periods – that the 48 hours a week should be at most an annual average (and not, for example, the average of the three years).

For the time being, it is disputed whether the working time banking of more than one year is harmonized with the rules of Directive 2003/88/EC on certain aspects of the organization of working time. Article 19 of that directive provides that a ‘reference period’ for the calculation of working time or rest periods in a collective agreement may not exceed 12 months.

II. Options based on individual agreements with employees

The annual number of overtime hours can be increased up to 400 hours based on an individual agreement with employees. This option is therefore open to employers which do not have a collective agreement/ do not have a trade union with authorized to conclude a collective agreement.

400 hours is the absolute upper limit for overtime work. Higher amounts cannot validly be stipulated in a collective agreement either.

The employee may terminate the agreement by the end of the calendar year. Termination of the agreement shall not be a reason for termination of employment.

III. Options based on the request of the employee

According to the amendment, overtime (supplement payment) is not generated in situations where the employees themselves request the modification of the working time schedule in advance within 96 hours.

This provision recognizes situations that actually occur in practice, when for example the employee asks for a change in the working time schedule for some kind of personal reasons, e.g. “exchange” a workday with another colleague.

It is important that the initiative really comes from the employee. Using employee’s requests for employers’ interests are abusive, thus illegal.

In relation to the option described above it is also important to take into account the general principle of labor law, that working schedule arrangements, overtime arrangements are possible only if the requirements of healthy and safe work are met. In addition to the economic benefits associated with more flexible working hours, it is important to consider that the employer may be required to pay financial compensation for the damage caused by the workers who are proven overloaded or the accidents and health damage caused to them.

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.

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.

Amendment of the Labour Code

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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

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

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

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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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