Flexible employment in light of the new Labour Code - International Law Office

Fixed-term contracts
Position sharing
One position with multiple employers
Apprenticeship and student employment

The new Labour Code (effective from July 1 2012) introduces certain amendments and rules to the previous code. Some of these changes affect the available forms of flexible employment.

Fixed-term contracts

Fixed-term employment contracts were acknowledged in the previous code, but practical changes have been adopted by Parliament and implemented in the new code. Fixed-term employment is established for a specific period or until an exact date or event previously agreed by the parties; this term cannot be longer than five years. This means that at the expiry of the term, employment automatically ceases. Previously, the 'ordinary termination' of such employment by the employer was possible only if the employee's salary was paid up to the end of the fixed term. According to the new code, the employer may terminate the fixed-term employment for the following reasons:

• the employee's poor performance;
• if the employer cannot guarantee further employment due to external factors (eg, if the employer does not win the contract for the project in which the employee was engaged); or
• the employer's liquidation or bankruptcy.

The new code also allows the employee to terminate the fixed-term employment with good reason.

These new rules make it possible for employers to terminate fixed-term contracts without incurring significant pay-outs. Under the previous labour law regime, the code did not distinguish between reasons for termination of fixed-term employment; rather, it stated that an employer could make such a decision only if the employee received his or her salary for the remaining period of the fixed term. This rule was considered the most significant drawback of fixed-term employment. Therefore, it is likely that fixed-term employment will become more widespread under the new code.

Furthermore, the new code provides that if fixed-term employment is established for less than five years, it may be extended to five years if such an extension is in the employer's lawful interest and if it does not harm the interests of the employee.

Position sharing

According to the new code, an employer may establish a position that is filled by multiple employees – that is, the employees share in performing the position's tasks. This means that if one of the employees cannot perform work for any reason, the other employees will perform the work in his or her place. Employees in this form of employment have flexible working hours. Unless the parties agree otherwise, employees in a shared position receive equal remuneration. Under the new code, position sharing is considered a special type of part-time work. If the number of employees in a shared position decreases to one, the employment will automatically terminate and the last employee remaining in the position will receive an absence fee if the employer terminates the position. As this is a new provision of the code, its practical consequences are yet to be seen.

One position with multiple employers

The new code allows for more employers to hire one employee for the same activity (eg, two companies employing the same assistant). The employment agreement must expressly stipulate which employer will pay the employee's salary and report him or her to the authorities. However, companies may agree to divide employment costs among themselves. This option will be beneficial for small and medium-sized companies.

Apprenticeship and student employment

Companies may conclude agreements with school cooperatives for cooperative members to perform work at the company. In the context of this relationship, the cooperative member will not establish formal employment with the company; rather, the company will pay only the agreed service fee to the cooperative. The employer's rights are split between the cooperative and the company, but the company may instruct the employee. This type of agreement gives companies the advantages of cost efficiency (eg, no notice period or severance payment) and flexibility (employers may request workers from cooperatives on a day-by-day basis and according to the employer's needs).

For further information on this topic please contact Boglárka Kricskovics-Béli at CLV Partners Law Firm by telephone (+36 1 488 7008), fax (+36 1 488 7009) or email (boglarka.beli@clvpartners.com).