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Hungarian Labour Law Changes Coming into Effect on 1 July

Hungarian Labour Law Changes Coming into Effect on 1 July

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The Act on the termination of the state of emergency declared by Government Decree No. 40/2020 and on the transitional provisions in connection with the termination of the state of emergency were was adopted on 16 June 2020, meaning that the special provisions introduced during the state of emergency will not be applicable or may be of limited application subsequently. Dr. Nóra Óváry-Papp, lead attorney and dr. Helga Lieszkovszky, associate of Baker McKenzie Budapest summarize the expected changes in the legislative environment regarding the termination of the state of emergency. 

The proposal on the transitional provisions contains numerous rules on the specific application of the provisions of Act I of 2012 on the Labour Code (hereinafter referred to as: Labour Code) during the period following the termination of the state of emergency. Pursuant to Government Decree No. 47/2020, the employer could depart from the provisions of the Labour Code regarding the communication of work schedules until 1 July 2020. Subsequently, work schedules will need to be communicated in compliance with the provisions applicable before the state of emergency was declared, meaning that the employer must modify the already communicated work schedule at least 96 hours before the start of the daily working hours according to the work schedule in order for the modified work schedule not to qualify as overtime work. The transitional provisions do not affect the rules of the Labour Code allowing employers to modify a work schedule within 96 hours in justified cases without the modified work schedule qualifying as overtime work, upon the occurrence of unforeseen circumstances in the employer’s business or financial affairs.

The employer is entitled to unilaterally order home-office or remote work for the employee until 1 July 2020., following which, the employer must adhere to the provisions applicable before the state of emergency, meaning that where remote work exceeds 44 working days or 352 scheduled hours, the agreement of the parties will be necessary. Thus, if the employer wishes to employ its employees in home-office or through remote work after 1 July, it is necessary to consider the amendment of the employment contract, the review of the applicable regulations and the preparation of the risk evaluations with regard to the long term and regular home office or remote work.

The employer may take necessary and justified measures to ensure the health of its employees until 1 July 2020. The opportunity of the employer and the employee to depart from the provisions of the Labour Code by mutual agreement also available until 1 July 2020. 

Employers are allowed to unilaterally use a reference period scheduling system for a period of 24 months* during the state of emergency; which is significantly longer than the maximum four and six month long reference periods allowed by the Labour Code.The termination of the state of emergency will not affect reference period scheduling established during the state of emergency. Subsequently, the use of reference period scheduling for longer than six months will only be allowed with the permission from the minister responsible employment in case of an investment for the purpose of creating jobs by the employer. The employer in this case would be allowed to establish reference period scheduling or a payroll period – with regard to the applicable provisions of the Labour Code – for a base period of maximum 24 months, if the implementation of the investment is in the interest of national economy.

Certain inspections for work safety purposes may be delayed for 60 days following the termination of the state of emergency (such as the inspection of dangerous work equipment). This does not affect the obligation of the employer to prepare risk evaluations in compliance with the provisions of labour protection law, and to review the risk evaluations with regard to the pandemic and employees' return to work.

The proposal contains transitional provisions on the social security contribution tax and the social security contribution payment subsidies, which will be available until the end of June 2020.

The job-retention subsidies introduced during the state of emergency (the reduced-hours subsidy and the subsidy related to research and development employees) may be requested until 31 August 2020 according to the transitional provisions of the proposal. The requests must therefore be submitted by 31 August regardless of the fact that the payment of the subsidy may take place after that date.

In contrast, the final date to apply for the subsidy aimed at the creation of jobs, available from 18 May 2020, is not set by the proposal. Therefore this subsidy will be available until the revocation of the publication that established it.

*In Hungary, the employer can organize the employee's working time in a flexible way, through applying a so-called reference period scheduling system rather than applying a fix 8 hours per day / 40 hours per week system. If an employer adopts such a reference period system, the normal working time of the employee may be scheduled in a way that it may exceed the general 8/40 hours limit, but still must be within the 12/48 hours limitation and in the average of the reference period must correspond to the general 8/40 hours limit. This is referred to as "reference period" herein.

By Nora Ovary-Papp, Lead Attorney, and Helga Lieszkovszky, Associate, Baker McKenzie

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