Munkáltatói blog


Összefoglaló az új Mt.-ről

Soós Andrea - 2012. február 23.

nagyon sok olyan kéréssel találkozom a gyakorlatomban, főleg a multinacionális munkáltatók részérpl, hogy fellelhetőam-e az új Mt. angolul. Nem találtam teljes fordítást sehol, csak kivonatokat, ezért készítettem egy összefoglalót angolul a főbb tartalmi újdonságokról:

In the course of year 2011 the Hungarian parliament adopted significant new acts and the entire legal system faced significant revisions. In particular the Parliament approved the so called Basic Law which is the new constitution of Hungary as from 1 January 2012.

Among other changes (e.g.: new Criminal Code, new Data Protection Act, draft new Civil Code) the parliament adopted a new Labour Code effective from 1 July 2012, namely: Act No I of 2012 (“NLC”). The NLC, in general, is more favorable for employers and provides a more flexible civil law relationship between employers and employees. We must note that some parts of the NLC are currently reviewed by the European Commission, by ILO and by the Hungarian Constitutional Court. The main concerns are whether the NLC restricts the fundamental rights of employees and of trade unions / works councils. It is however unlikely that the entire NLC might be cancelled by the Constitutional Court therefore employers must be prepared for the new requirements and also proper information must be provided to all employees in a clear and understandable was. On another note a new legislation is always a good business opportunity to revise the provisions of employment contract and to encourage the employees to sign a contractual amendment. In this respect we note that a general overview and legislative changes may serve as a basis for a general contractual review.

1. Territorial scope

Generally, if the workplace is “regularly” in Hungary Hungarian law shall apply to the employment relationship. The parties may stipulate another jurisdiction, however with stringent conditions. Provision of the European Decree, Rome II. Shall apply to such provision.

2. Type of Agreements

It is important that not only the employment relationship may be governed by the NLC. Free lance agreement or other atypical relationship ship also fall under the NLC (except for that of the public sphere which is also governed by a new act entering into force from 1 March 2012).

Separate rules apply for distance working, juvenals, executives or for “on call duty” employees. The latter is a new type of atypical employment relationship and may serve as a practical solution for those companies who do not have constant workload.

From 1 July 2012 it is also possible to employ employees jointly employers which will be a good opportunity for holding companies.

Simplified employment will still be a good opportunity for small and medium sized employers.

More clear rules apply for handicapped employees under the new legislation however there is no automatic tax deduction.

3. Recruitment

Although there are no specific provisions in the NLC regarding recruitment the changes of the data protection legislation significantly change the recruitment processes. In any kind of data processing of candidates shall be registered at the so called NADI (National Authority for Data Protection and Information Freedom). Also proper and voluntarily signed consents shall be kept from each candidates. Background check and collecting sensitive information are not allowed. Special rules apply for the filing of criminal records. No questions can be asked from candidates which may violate their human dignity (such as questions regarding family status, pregnancy or even smoking).

4. Entering into an employment relationship

The NLC contains the mandatory minimum provisions of employment contracts which is different than the previous requirements. It is therefore essential that all employees change their employment templates. It is also important that deviations are allowed from the mandatory provisions only in favor of the employees. The following shall be at least in the employment contract: data of the parties (including tax and social security number), base salary, position, term of employment, probation period up to the maximum of three months, consent for data processing. In addition to these the employer shall provide necessary information regarding the basic characteristics of employment (e.g. work time, date of payment, vacation days, notice period, collective bargaining agreements)

5. Rights and obligations of employees and employers

There is no significant change in the main principles, the parties shall always act in good faith and the employees shall comply with the basic provisions of the employment relationship. Novum in the NLC that the employees may not violate the interests of the employers beyond or after working hours which might result in lawful social media regulations or dress code regulations

Pursuant to an express provision of the NLC the employers may restricts the fundamental rights of employees provided that the restriction is regulated and is necessary for the employer. This may result in lawful drug/alcohol tests and monitoring of employees.

6. Vacation

The system of calculating vacation days will remain the same.

Vacation days consist of the following:

  • basic vacation days which is both under the old and the new legislation is 20 days.
  • additional days for example for executives, for parents, for juvenals and for those working under special health conditions. Further there is are additional vacation days depending on the age of the employee.

However, there is a significant change in the calculation of additional vacation days after children from 1 January 2012. Based on the provision of Act No. CXCI. of 2011 (entered into force on 29 December 2011 and amended the current Labour Code), both parents per capitam are entitled for the additional vacation days after children. For example, if a family has 2 children, each working parent gets 4+4 additional days for each calendar year from 1 January 2012.

As from 1 July 2012 the new labour code is applicable. Although and unfortunately there are no rules for the entry into force, it is very likely that the provisions regarding vacation days are relevant only for year 2013. As we noted before it is expected that there will be an act/decree on the interim period and it is expected that there might be special regulation on for example the calculation of the vacation days.

There will be no change in calculation the basic days and the additional days depending on the age of the employees. However, certain rules changed regarding other additional days:

days after children: remain the same (i.e. 2 days after 1 child, 4 days after 2, 7 days after more). This is calculated per capitam, i.e. each parent is entitle to 4-4 days if they have 2 children;
days after disabled children: each employee receives additional 2 days after a disabled child;
days after giving birth: fathers receive 5 days after the newborn, in case of twins: 7,
days for juvenals: 5 days
days for special work conditions: 5 days (underground work or ionisation)
days for rehabilitation: 5 days if the health injury is at least 50%

7. Working hours and overtime

The regular working hours in Hungary remain the same: 40 hours/week. This is the full time employment in case of part time agreement there is no minimum limit.

Under the NLC the criteria of shift work and the conditions of the entitlement for shift allowance have been changed. Pursuant to the NLC the employer shall be qualified as an employer employing employees in more shifts if the business operation of the employer exceeds the 80 hours/week. (We would like to note, that the current LC does not stipulate such provision). Regarding the entitlement for shift allowance 3 (three) conditions must be met:

(i) employment in shift work;
(ii) regularly change of the starting time of the employee’s scheduled daily working time;
(iii) performance of the work between 18:00 pm and 6:00 am.

In respect of the amount of shift allowance the NLC does not distinguish between night and afternoon shifts, but stipulates 30 per cent shift allowance for the work performed between 18:00 pm and 6:00 am.
In case of continuous work the shift allowance shall be also 30 per cent.

An employee may be required to work not more than 250 hours in any given calendar year in overtime. In case of collective agreement the hours of overtime may exceed 250 but shall not exceed 300 hours.

8. Liability

As under the old system the employees are liable for the gross negligence and for intentionally caused damages. The maximum of liability for gross negligence is: 4 months worth distance payment.

Separate rules apply for inventories please note however that in order to held the employees liable employers shall prepare detailed regulations for inventory.

Damages up to the 3 months worth mandatory minimum wage can be requested by the employer without turning to labor tribunals by the use of instant payment orders (issued by notaries).

9. Termination

There are some reasons which automatically terminate an employment relationship (without any action), such as death by the employee or cancellation of the employer. Please note that reaching the retirement age does not automatically terminate the employment relationship.

There are the following possibilities for the employer to terminate the employment agreement:

  • ordinary terminations (termination for convenience): it shall provide valid and clear reasoning and the employee is entitled for notice payment and severance payment;
  • immediate termination (termination for cause): no severance shall be paid but the employer must prove that the employee (i) conducted a material breach or (ii) it is impossible to maintain the employment relationship.
  • Free negotiated mutual termination agreements (compensation agreement).

The NLC (with a minor difference) contains the same amounts in case of termination as of the old. The main difference is that the New Labour contains a calculation with the absence fee.

The employee whose employment relationship is terminated with termination for cause after 1 July 2012 are entitled to the following amounts:

(i) base salary for half of the termination period (which is 15 days at least if the notice period is 30 days);
(ii) absence fee for the second half of the termination period (garden leave period);
(iii) severance payment in case the employee is entitled to such;
(iv) payment of the pro rata unused vacation days.

The length of the notice period under the New LC is the following:

0-3 years 30 days
after 3 years up to 5 years 35 days
after 5 years up to 8 years 45 days
after 8 years up to 10 years 50 days
After 10 years up to 15 years 55 days
after 15 years up to 18 years 60 days
After 18 years up to 20 years 70 days
After 20 years 90 days

The parties may agree in a longer notice period but the maximum of the length of the notice period is 6 months.

The amount of severance payment under the New LC is the following:

after 3 years up to 5 years 1 month
after 5 years up to 10 years 2 months
after 10 years up to 15 years 3 months
after 15 years up to 20 years 4 months
after 20 years up to 25 years 5 months
after 25 years 6 months

Please note that certain employees as protected employees are entitled to higher amount of severance. I.e. new parents until the 3rd anniversary of their child and those who have less than 5 years to the retirement age are entitled to additional 1-3 months worth severance (depending on the length of their employment relationship)

We note that the list of protected employees is shortened in the NLC, for example those under sick leave are no longer protected during the period of sick leave.

10. Employment Litigation

As under the old system separate employment tribunals are responsible for labour disputes at each county (including Budapest). At first instance procedures a judge and two civil person make the decision acting as a council. The employees may claim the following amounts in case of unlawful termination:

Loss salaries up to 12 times of the absence fee and for the damages proven by the employees suffered as a result of the unlawful action.

Despite to the old legislation reinstatement can be requested only in limited cases (for example if equal treatment was not respected).

11 Non-compete covenants

The rules regarding non-compete covenants changed significantly. The maximum period is 2 years and the minimum payment is one third of the base salary. Under the new regime it will be a question whether the employers may stipulate penalties in the non-compete agreements. Compare to the old legislation there is no expressed provision allowing penalties by the employers.

12 Binding Corporate rules – Data transfer

Data protection is still a key issue for employers in Hungary. Rules under the new data protection act are however still does not allow the possibility of binding corporate rules and any transfer to third countries, even for pay-roll purposes or to the respective group of companies may require special consent from each individual employee.




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