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Control over Employers to be Increased in 2021

Control over Employers to be Increased in 2021

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The economic situation caused by the coronavirus pandemic has highlighted the need for regulations that protect jobs and can respond effectively to the challenges of the economic environment and the labor market of this unprecedented time. It is essential for labor market actors to maintain and promote jobs that provide legal employment and to create such jobs as widely as possible, therefore, the Hungarian Government issued a bill about employment services, subsidies and employment supervision to the Parliament for legislation.

The objective of the bill is to increase support for employers, minimize COVID-19 impacts and aid jobseekers to respond quickly to the needs of the labor market and to make more efficient use of budgetary and European resources.

Employment promotion services and grants would be freely available to those unemployed who are looking to get a job, and those employees who need help keeping their jobs. Setting up this system would be the joint responsibility of the Government, local governments, employers and employees and their advocacy organizations together. These services can be provided by the state employment body or registered employment service organizations. Services provided by the state employment body are to be funded from the Economic Protection Employment Fund or from EU funds.

In the case of the provision of employment aid, the recipient of the aid has to enter an official contract. In case the aid was unrightfully issued, it has to be repaid by the recipient including transaction interest and default interest. If requested specifically in a case which deserves special consideration with regard to illegible subsidies already paid, the head of the public employment body would have the right to waive the need of the repayment fully or partially or the paying of transaction interest or default interest.

To promote employment, the employer assists the public employment body by notification including its need for labor and dismissing. These notifications are expected continuously, or at least at the time when a job position is taken.

With regard to the supervision of employment, the bill determines the subject regarding state supervision over the basic obligations established in the legislation on employment, the order of procedure and the legal consequences of the violation of these obligations. Minimum requirements of the legislation governing the employment relationship retention by the employer is monitored by the employment supervisory authority, which is to be appointed by the Government in a separate decree. In addition to the legal framework, detailed regulations will be contained in a government decree. If passed, the law would enter into force on 1 March 2021. In non-regulated matters, rules contained in Act IV of 1991 on the Promotion of Employment and Benefits for the Unemployed would be applicable.

By Levente Csengery, Partner, KCG Partners Law Firm

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. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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