practice area articles
By Zoltán Csernus and János Tamás Varga
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KEY DEVELOPMENTS FOR 2020
Amendments to the Labour Code effective as of 1 January 2020
A number of changes come into effect from 1 January 2020 as a result of amendments to the Hungarian Labour Code. Some of these changes can be summarised as follows:
- A person under the age of 16 may be employed in cultural, artistic, sporting or advertising activities without permission of the child protection authority. A prior notification of 15 days is required before the proposed start date.
- Employees with small children have more opportunities to demand part-time work from their employer. At the employee's request, the employer must modify the employment contract into a
part-timecontract for four hours per day (instead of eight hours per day) if the employee's child is younger than the age of four (or until the child reaches the age of six, if the employee has three or more children). The previous age limits were three and five years, respectively. In the case of adoption, employees may take unpaid leave for 3 years. If the adopted child is older than the age of three, then the adopting employee will be entitled to six months of unpaid leave. Employees who are grandparents may take unpaid leave until a child who is under their care reaches the age of two.
Increase of the statutory minimum wage
The Government's new decree increased the statutory minimum wage by 8%. As of 1 January 2020, the statutory minimum wage for unskilled employees is HUF 161,000 (approximately EUR 474), or HUF 210,000 (approximately EUR 621) for employees in a job requiring at least secondary school education.
Amendments to the Labour Protection Code
From 1 January 2020, as a result of changes to the Labour Protection Code, employers are obliged to report any employees' occupational exposure to carcinogenic or mutagenic substances. If an employer is found to be in breach of this obligation, the employer may receive a fine from the relevant authority.
KEY DEVELOPMENTS FOR 2019
Changes in the Hungarian fringe benefits system
The range of fringe benefits with low tax rates have been radically reduced from 1 January 2019. Employers are now required to pay higher taxes for most fringe benefits. As a result of such changes, employers will most likely offer limited fringe benefits to employees. The following changes apply:
- the 100,000 HUF allowance payable by the employer in cash is excluded from the fringe benefits;
- the lower tax category (which will be 34.5% in 2019) only includes the SZÉP Card (bank card with amounts to be spent for recreational and sport purposes) with an annual HUF 450,000 frame;
- the higher tax category (which will be 40.71% in 2019) only includes the SZÉP Card above the annual HUF 450,000 frame and a gift voucher once a year, up to 10% of the minimum wage; and
- all other fringe benefits (e.g. seasonal ticket for commuting employees, voluntary social security payments by the employer, hot meal vouchers at the work place etc.) are taxed at the higher tax rate, as well as wages, in accordance with the general rules.
Amendments to the Labour Code on working hours
The amendment to the Labour Code came into force on 1 January 2019 and provides that the working hours’ timeframe (a timeframe within which the daily working hours can be allocated unequally) can be increased from one year to three years by a collective bargaining agreement concluded with a trade union.
In addition, important changes have been made to the number of overtime working hours that can be imposed on the employee. The Labour Code previously provided that employers could request their employees work 250 hours of overtime each year. Where there is a collective bargaining agreement this can be increased to 300 hours. As of 1 January 2019, in addition to the current overtime working hours, the employer and employee can separately agree to a further 150 (or respectively 100) hours of overtime work (up to a total of 400 overtime working hours annually) known as the so called ’voluntarily undertaken overtime’. This voluntary agreement can be terminated by the employee only at the end of the calendar year.
Increase to the statutory minimum wage
As of 1 January 2019, the statutory minimum wage has increased to HUF 149.000 (approximately EUR 465) for unskilled workers and HUF 195.500 (approximately EUR 610) for employees who have attended secondary school.
KEY DEVELOPMENTS FOR 2018
New Definition of Disadvantaged Employee in Labour Code
From 1 January 2018, the Hungarian Labour Code regulates the definition of the disadvantaged employee.
Reduced Limitation Period for Challenging Delivery of Documents
From 1 January 2018, if a document (e.g. termination notice) was sent to a party (e.g. employee) and receipt is based on statutory presumption, such party may challenge the presumption of lawful delivery within 3 months (instead of 6) from the date of the presumption.
New Supreme Court Decision: Severance Pay
According to the Labour Code employees are not entitled to a severance payment if the cause of termination relates to his/her behaviour or non-health related ability. This was challenged in the Supreme Court which deviated from this rule and prescribed severance payment for every case of employment termination. However, in a new Supreme Court decision the Court held that when the employment is terminated due to the gross misconduct of the employee, the employer is not obliged to pay severance.
KEY DEVELOPMENTS FOR 2017
Regulation of working time weekly breaks for employees in the retail sector
The government intends to introduce two mandatory free weekends per month for employees in the retail sector.
Additional public holidays
The government intends to make Good Friday and 24th December new public holidays.
KEY DEVELOPMENTS FOR 2016
Sunday working ban for the retail sector has been lifted
In April 2016, the ban on the operation of the retail sector on Sundays which had been in effect from March 2015 was lifted. The ban was unpopular with consumers and it caused substantial job losses in the retail sector.
New rules to allow the withdrawal of termination notices if the employee is pregnant
The amendment of the Labour Code means that an employer can now withdraw the termination of employment within 15 days of the employee informing the employer of her pregnancy.
Change in laws applicable to employment agreements with school cooperatives
The rules on employment agreements between school cooperatives and its member (a student) became more flexible, as their agreements will now be governed partly by the Civil Code and partly by the Labour Code as from September 2016.