Employment contracts and COVID-19

Timeline of measures

COVID-19 has created completely new challenges in the employment sector. As there is significant uncertainty and a need for detailed information about the situation, this article provides a timeline of employment-related measures that have been introduced to combat COVID-19 in Hungary.

Timeline of measures

11 March 2020
The government officially declared a state of emergency which provided a legal basis to implement emergency measures in the employment field.

19 March 2020
The government introduced new rules which allowed employers and employees to adapt to the extraordinary situation. According to these new rules:

• employers can unilaterally (ie, without employees' consent) order remote working;
• employers can unilaterally modify or amend employees' work schedule without giving four or seven days' advance notice; and
• parties may derogate from the statutory rules of the Labour Code by agreement. This may typically include:
  • agreement on the allocation of annual leave without keeping the interim period of 15 days;
  • agreement on taking unpaid leave;
  • agreement for taking downtime (ie, stoppage time) without compensation; and
  • agreement on shortening working time or reducing salary.

The scope and extent of contractual derogations from the statutory rules of the Labour Code is heavily debated among practitioners. However, most practitioners agree that such derogations are admissible only if they are directly related to the COVID-19 pandemic.

11 April 2020
A new rule was introduced whereby during the state of emergency, employers may order a working time cycle of 24 months (normally this is for four or six months). Employers may extend the ordered working time cycle up to 24 months. As a work time cycle allows employers to allocate working time unevenly within the term of the cycle, this measure provides greater flexibility (ie, employers may order less work when the business is struck by the crisis and order more work when business resumes).

Collective bargaining agreements cannot diverge from the abovementioned provisions.

If the state of emergency ends, it does not affect the allocated work time cycle ordered during the state of emergency.

15 April 2020
An R&D wage subsidy was introduced. Employers employing researchers and developers may apply for a direct wage subsidy for a maximum of three months to help pay the wages of employees employed as 'researchers and developers' based on the definition provided by the Act on Research, Development and Innovation. This wage subsidy is paid to the employer by the relevant governmental office and aims to support employers in paying these employees' salaries. The R&D subsidy amount cannot exceed HUF318,920 (approximately €1,000) on a monthly basis per employee. Employers using this subsidy must undertake to employ the R&D employees who received the subsidy for a period equivalent to the period of the subsidy.

16 April 2020
A reduced working time subsidy was introduced with relatively strict conditions as to the amount of reduction and other criteria. The wage subsidy may be applied for and used if an employee's working time is reduced to between 50% and 70% of their original working time, but it must be for a minimum of four hours a day. The wage subsidy is subject to several further requirements, such as the agreement of an 'individual development timeframe' (ie, a period in which the employee must be at the employer's disposal and attend training or perform tasks relating to their individual development). The timeframe for such individual development must cover 30% of the work time reduction and the employer must pay the salary for that period.

25 April 2020
A new rule was introduced, under which parties and collective bargaining agreements cannot derogate from the daily working time and daily and weekly rest periods.

26 April 2020
A new rule was introduced whereby during the state of emergency, employees who are on an unpaid leave due to COVID-19 are entitled to healthcare services. As of 1 May 2020, employers must establish, declare and pay healthcare service contributions in respect of the concerned employees. Employers may request a moratorium until the 60th day after the end of the state of emergency.

29 April 2020
The conditions of reduced working time and the related wage subsidy were amended. If an employee and employer agree on the reduced working time due to the pandemic, the employer may request a subsidy for the employee for a three-month period from the respective government agency. The reduced working time means that part-time employment on a daily basis can reach up to 25% but cannot exceed 85% of the working time determined in the original employment contract (based on a three-month average). If the reduced working time exceeds 50% of the original working time, the parties must agree on a so-called 'individual development timeframe' for the duration of the subsidy. In that case, the employer must pay the employee's base salary for the individual development timeframe period.

The subsidy is based on an employee's monthly base salary, on the day of the application submission, reduced by the amount of the advance of the personal income tax and contributions. The subsidy is 70% of an employee's base salary for the period of time lost from work due to the reduced working time. The subsidy is free from any duties and levies. The subsidy is not paid during unpaid holiday. Employers using this subsidy must undertake to employ the workers who received the subsidy for the duration of the subsidy period and one month thereafter and they cannot order overtime work for the employees concerned.

For further information on this topic please contact Dániel Gera, Dorottya Gindl or Alexandra Bognár at Schoenherr Hungary by telephone (+36 1 8700 700) or email (d.gera@schoenherr.eu, d.gindl@schoenherr.eu or a.bognar@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.