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17 March 2021
On 1 March 2021 the new Act on Labour Inspection, Employment Services and Grants entered into force, replacing the old Act on Labour Inspection 1996. While the new act contains similar rules, there are some novelties. This article summarises what employers and employees need to know.
The act aims to broaden the enforcement powers of supervisory authorities, whose names will be changed to 'employment supervisory authorities'. The name change suggests that they will have the power to examine any employment and labour-related legal relationship.
These authorities will enhance the economy's transparency by combating undeclared work and ensuring the enforcement of basic labour law rules (minimum requirements) in employment relationships.
Under the new act, the authorities will primarily monitor employers' compliance with the minimum requirements. These are not defined by law, but presumably include:
The authorities will also have the power to monitor the use of employment-related subsidies and grants.
The employment supervisory authorities will have the general power to perform labour inspections and will retain their right to inspect without permission or initial notification. The detailed rules of their power are expected to be determined by further implementation decrees.
With certain exceptions, the authorities may not penalise infringements committed more than one year before the supervision (ie, the limitation period has been shortened from the previous three years). However, this has been the authorities' practice for some time.
Obligation to fine
In some cases specified by government decrees, the employment supervisory authorities must impose labour fines and will have no discretion to apply softer measures (ie, warnings or orders for payment to employees).
Establish existence and nature of legal relationship
If employers have not complied with the obligation to properly notify employees or set out appropriate contractual documentation, the authorities may establish the existence of the employment relationship based on the facts taking into account the general full-time working hours from the 30th day from the beginning of the infringement.
Broadened powers to establish factual background
During inspections, the authorities can:
Despite the innovations, the new act leaves some questions open as it is generic and contains no detailed rules in many aspects. It includes no reference to the inspection directive issued annually by the minister responsible for labour inspection, which was generally a good indicator of the focus points for investigations.
The absence of regulation on fines is also worthy of criticism. The mandatory cases where fines are imposed and the exact amount of the fine will now be regulated in a lower level regulation.
For further information on this topic please contact Dániel Gera or Ákos Kovács at Schoenherr Hungary by telephone (+36 1 8700 700) or email (firstname.lastname@example.org or email@example.com). The Schoenherr website can be accessed at www.schoenherr.eu.
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