As of 1 January 2024, the Hungarian Parliament is expected to introduce a new framework for the conditions of residence and employment of third-country nationals in Hungary, significantly rewriting the existing rules.
Based on the currently effective Act II of 2007, employees – on general basis – can secure their longer-term employment with a residence permit for employment purpose on general basis. This system of rules will fundamentally change through the newly adopted law, which is yet to be promulgated. The following are the most prominent changes:
- The law divides workers into two groups according to their education, Guest Workers and Highly Qualified Workers. Third-country nationals with higher education are considered to be Highly Qualified Workers, those without such a degree are classified as Guest Workers.
- Highly Qualified Employees will be entitled to a Hungarian Card, which (i) is valid for 3 years, (ii) can be extended as many times as needed, (iii) enables family reunification, and (iv) must be taken into account during settlement on the legal ground of National Card. The Hungarian Card will therefore be available to persons holding a BA/MA degree and working in a position with a FEOR 2 classification if their professional qualifications are listed in the announcement of the relevant minister.
- Compared to the residence permit for the purpose of employment available until 31 December 2023, the rights of Guest Workers have been significantly narrowed by the new law, (i) they will not be eligible for family reunification; (ii) also, to switch from this legal ground to another, these workers are required to leave Hungary and apply through a Hungarian consulate from abroad. Accordingly, even if these citizens obtain a higher education degree in the meantime, they cannot initiate the administration from within Hungary.
- If an employed third-country national has a secondary education, they can submit their application as a Guest Worker in the future. SSCs has previously hired employees with secondary education in entry-level positions (typically analyst, associate), so these companies should count on a group of employees who can only extend their stay as guest workers with a residence permit for employment purposes. As this title excludes the change of legal ground, there definitely will be cases when they cannot continue the career path offered by SSCs without interruption.
- There is a common misconception that Guest Workers must leave Hungary after 3 years and will not eligible for permanent residency. However, they remain entitled to (i) initiate the process from within Hungary on Guest Worker title after 3 years; and (ii) EU permanent residency after 5 years. Accordingly, the new legislation excludes them only from the eligible group for a National Card which is normally available to others after 3 years.
- Since neither official resolutions nor the applicable ministerial announcements are available in relation to the new law, those who based on the current rules in force can submit their application still this year, should do so.
- Business should continue as usual, however, the new law suspends the evaluation of ongoing procedures between 1 January 2024 and 29 February 2024, and no new applications can be submitted during this time. This carries the risk that if the authorization procedure of a newly joining employee is not completed by the end of this year, they may join to their employer with a delay of at least 2 months.
It is also worth mentioning that the new law only provides for the automatic extension of residence permits expiring between 1 January 2024 and 29 February 2024. This means that while measures to extend a residence permit expiring in March, for the purpose of employment, would normally begin in January, based on the new rules, the application can only be submitted on 1 March 2024 at the earliest. This is particularly risky for employees who are changing jobs, as they cannot be employed after the expiry of their residence permit until their new application is assessed. Based on the mandatory official shutdown, this can be up to 60 days, which can greatly affect business operations.
By Barnabas Buzasi, Counsel, Nora Bogdany and Helga Szkok, Associates, Wolf Theiss
