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Workforce Flexibility and Government Incentives in times of Covid-19 - Hungary

Short-Term Work State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Since 12th March 2020 the Hungarian Government has the right to change legal regulations due to the special order of laws (extraordinary state). With the aim of safeguarding jobs, the Government temporarily amended Act I of 2012 on the Hungarian Labor Code (the "Labor Code") by way of Government Decree 47/2020 (III.18.) (the “Government Decree”) effective from the 19th March 2020 until 30 days after the end of the extraordinary state. The Government Decree includes the below employment related terms:

(i) The employer unilaterally is allowed to:

  • order remote work or home office work,
  • modify the already announced working time schedule,
  • perform necessary and justified health checks to assess the employees' fitness for work.

(ii) The employer and the employee are allowed to deviate from the provisions of the Labor Code in their agreement (i.e. the parties may deviate from the mandatory provisions of the Labor Code with their mutual agreement.)

(iii) Suspension of contributions on wages: the employer is exempted from paying public dues on wages of employees working in the tourism, hospitality, entertainment, gambling, film, performer, event, and sports services sectors (the "Protected Sectors") in March, April, May and June 2020. While the employees who work in the Protected Sectors are only liable to pay health insurance contributions in kind, the amount of which may not exceed the monthly amount of the health care contribution, i.e. HUF 7,710 in March, April, May and June 2020 .

The Hungarian Government introduced new measures to mitigate the economic effect of the covid-19 pandemic by way of Government Decrees 57-61/2020 (III.23.) effective as of 24th March 2020. We hereby summarize the measures which have a direct effect on employment:

(iv) Extended child care benefit: according to Government Decree 58 and 59/2020 (III.23.) different types of child care benefits (the so-called “GYED”, “GYES” and “GYET”) will continue to be paid out for those whose eligibility would expire during the term of the extraordinary state and the referred child care benefits will be provided until the end of the extraordinary state (note: it is expected that employees who are on maternity / child care leave and can avail of the extended child care benefit might consider postponing their return to work).

(v) Suspension of contributions on wages extended for more sectors: Government Decree 61/2020 (III.23.) extended the Protected Sectors listed in point (iii) to cab drivers, conference and commercial presentation organisers, newspaper editors, magazine editors and broadcasting.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

The Government Decree overrides the potentially conflicting provisions of the Collective Bargaining Agreements which may be applied by the employers. However, in all other topics, employers must consult their works councils (if operating at the employer) concerning the initiatives / actions planned by them affecting a large group of employees.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

No, there is no governmental program which is specifically addressing the closure of the company. However, the Government Decree has introduced a payment moratorium as of 19 March 2020 until 31 December 2020 which extends to all debtors (private persons and legal entities) in Hungary to mitigate the impact of COVID-19 pandemic on the national economy. Further measures were introduced on 24th March 2020 to mitigate the economic effect of covid-19 pandemic, such as: the enforcement of tax debts will be suspended until the end of the extraorinary state and certain private entrepreneurs and small businesses (e.g. taxi drivers, hairdressers, dentists, etc.) will be exempted from paying the "KATA" flat tax and social security contributions for a fixed period of time.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

Please see response to question 1 (i.e. employees and employers in the Protected Sectors can avail of the suspension of contributions on wages).

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

Government Decree 61/2020 (III.23.) includes rules of suspension of contributions on wages.

Please note, however, that no specific direct state aid is introduced or planned yet.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 27 March 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.