On 13 June 2023, the Hungarian Parliament adopted a new law regulating the employment of foreign workers. The law introduces the concept of guest workers (third-country nationals from countries outside the EEA and from non-neighbouring countries) and establishes guidelines for their employment in Hungary.
Previously, Hungarian employers could hire third-country nationals who successfully applied for a combined work and residence permit (Single Permit). The new law introduces a guest worker residence permit, which can be obtained by citizens of countries that do not neighbour Hungary and countries outside the European Economic Area, as determined by a separate ministerial decree (yet to be adopted). Additionally, the decree will specify the total number of guest workers allowed each year, and the maximum number of guest workers per country. The legislation also restricts the employment of guest workers to specific jobs, with the details to be regulated by the ministerial decree.
The law defines a limited group of employers who can hire guest workers. These include employers implementing investments of national economic importance, employers with partnership agreements within the Key Exporter Partnership Program, and qualified temporary-work agencies.
An advantage of the guest worker residence permit is that no expert opinion needs to be obtained from the labour authority. This streamlines the decision-making process, enabling guest workers to start working in Hungary sooner.
Initially, the guest worker residence permit can be requested for two years, similarly to the combined permit. However, the permit can only be extended for up to three years from its first issuance, while the "classic" combined permit allows for periodic two-year extensions. Another downside is that guest workers' relatives may not apply for a residence permit for family reunification if they accompany the guest worker to Hungary.
It is important to note that the law places increased responsibility on employers regarding guest workers. If a guest worker fails to leave the European Union when their residence permit expires, the employer is obliged to cover the costs associated with their expulsion, deportation and possible detention by immigration authorities if the guest worker cannot bear these expenses.
Overall, the new law on the employment of foreign workers introduces the concept of guest workers and provides regulations for their employment in Hungary. While it simplifies certain aspects of the process, it also poses limitations and responsibilities for both the workers and their employers. Experts argue that the new legislation was necessary to tackle labour shortages, particularly in the context of significant national investments. While it remains to be seen whether the legislation will sufficiently ease workforce shortages, it appears to be a necessary step in that direction. The new law will enter into force on 1 November 2023.
By Daniel Gera, Office Managing Partner, and Dora Halmosi, Associate, Schoenherr
