labour law

Employee Stock Ownership Program as a possible alternative to cafeteria

Company groups, Employment, labour law, Medium-sized companies, News / 2019.01.14. / cafeteria, Employee Stock Ownership Program, employment law, ESOP, labour law

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.

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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 / 2018.08.03. / cafeteria, employment law, labour law, retired employee

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.

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Amendment of the Labour Code

Employment, labour law, Medium-sized companies, News, Start-ups / 2016.07.20. / employment law, executive, Labour Code, labour law

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.

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

Employment, labour law, Medium-sized companies, News, Start-ups / 2015.11.01. / employment law, Labour Code, labour law, severance payments, termination, working place,

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:

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The amendment of the Hungarian Labour Code

Company groups, Employment, labour law, Medium-sized companies, News, Start-ups / 2015.01.18. / employment law, Labour Code, labour law, part-time

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

CLVPartners news

The amendment of the Hungarian Labour Code Read More »

Employee Stock Ownership Program as a possible alternative to cafeteria

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

Amendment of the Labour Code

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

The amendment of the Hungarian Labour Code

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