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overtime

The End of The Year From HR Perspective

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.

Opportunities created by the “overtime act” put into practice

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.