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Hungary: State Aid for Employment in Reduced Working Time – Summary of the Modified Rules

Hungary: State Aid for Employment in Reduced Working Time – Summary of the Modified Rules

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The Hungarian Government has established a so-called Economy Protection Action Plan in order to respond to the economic situation caused by coronavirus. One of the main pillars of this Action Plan is a state aid for employees for the purpose of retaining workforce set out in Government Decree No. 105/2020 (“State Aid”). As a response to the criticism made by several employers addressed to the criteria for application and granting the state aid, the legal regulations has been recently modified by the Government Decree No. 141/2020.

About the State Aid in general

The State Aid may be provided to those employees agreeing to be employed in reduced working time, provided that the criteria set forth in the (modified) Government Decree No. 105/2020 have been fulfilled (see below). The reduced working time shall reach 25% of the recent working time (i.e. working time applicable at the time of the application for the State Aid) but shall not exceed 85% thereof.

The State Aid may be claimed based on the modified rules as of 29 April 2020, for a maximum period of 3 months.

 The employer and the employee shall apply for the State Aid together. In the case the State Aid is applied for more employees employed at the same site of the employer, the applications shall be submitted at the same time and the State Aid may only be claimed for the same duration regarding all affected employees.

The amount of the State Aid

Lost working time may be 15-75% of the initial working time. The amount of the State Aid shall be 70% of the employee’s net base wage due to the period of the lost working time. Base wage shall mean the base wage of the employee effective on the day of the application for the State Aid.

The Government Decree No. 105/2020 maximizes the eligible sum of net base wage in HUF 214,130 (twice the net monthly minimum wage).

Criteria for the State Aid

The criteria defined by the Government Decree No. 105/2020 shall be met regarding each and every employee concerned by the application. The main criteria are the following:

  • Employing the employee in reduced working time for the duration of the State Aid;
  • In the case the part-time work exceeds 50% of the recent working time, the monthly wage to be paid to the employees shall reach together with the amount of the State Aid the employee’s base wage effective on the day of the application for the State Aid;
  • In the case the part-time work exceeds 50% of the recent working time , the parties may agree on a so called individual development period and payment of wage for the individual development period;
  • The employer undertakes to retain the employment of the employee applying for the State Aid for the period of the State Aid and for one more month, i.e. altogether for a maximum period of 4 months;
  • No overtime can be ordered during the granting of the State Aid;
  • Justification that retaining workforce of the employer is the interest of national economy;
  • Justification that the employer satisfies the legal requirements of distinguished labour relations;
  • Justification that the employer is not involved by any final resolution under dissolution proceeding, liquidation proceeding, bankruptcy proceeding or other proceedings specified in legal provisions tended to its wind up;
  • The employer does not have any payment obligation related to the state aid recovered by the final resolution of public employment service.

Further amendments by Government Decree No. 141/2020

Furthermore, Government Decree No. 141/2020. has introduced following changes:

  • the employer shall not be obliged to prove that he has exhausted all available possibilities of working time schedule;
  • the State Aid may also be applied in case there is a working time banking in progress;
  • the State Aid can also be applied for temporary agency workers and for employees working from home office;
  • the employer is neither obliged to present its economic conditions justifying the employment in reduced working time, nor to prove that is not deemed to be an undertaking in difficulty in accordance with European competition law on 31. December 2019. 

If you have any further questions regarding the above, please contact our employment professionals, who are at your service to answer any employment-related questions raised by the possible epidemiological situation.

By Zoltan Nadasdy, Partner, Edina Czegledy, Counsel, and Adam Gyorgy Bodor, CounselNoerr

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

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