New collective agreement at MALÉV Hungarian Airlines

Following almost two months of negotiations, management at MALÉV Airlines and five trade unions concluded a new collective agreement at the end of March 2008. The new deal grants the company more flexibility in work schedules and offers employees an updated benefit system. Both parties to the agreement welcomed the compromise; some union representatives, however, believe that their main success was preserving the existence of a collective agreement at MALÉV.

The former collective agreement at MALÉV Hungarian Airlines, signed in 2000, was terminated by the management in early March 2008. The withdrawal of the former agreement was attributed to significant changes in the airline market and business conditions, namely the aftermath of 11 September 2001 and rising fuel prices. The Chief Executive Officer (CEO) of MALÉV, Péter Leonov, indicated that the company hoped to save an estimated HUF 1.2 billion to HUF 1.5 billion a year (€5–€6.37 million as at 20 August 2008) in concluding the new agreement. The aim was also to simplify the new collective agreement, as the previous one had been amended several times and included many supplements, making the structure unclear (HU0803039I).

Provisions of new agreement

The new agreement, in force since 1 June 2008, was signed by the social partners at MALÉV, including the CEO and five representative trade unions – the Hungarian Cabin Crew Association (Magyar Légiutaskísérők Egyesülete, Hunacca), the Hungarian Airlines Pilots’ Association (Magyar Közforgalmi Pilóták Egyesülete, Hunalpa), the Trade Union of Economic Experts (Gazdasági Szakemberek Szakszervezete, GSZSZ), MALÉV Trade Union Organisation (MALÉV Szakszervezeti Szervezet, MSZSZ) and the Independent Union of Airplane Technical Staff (Repülőgép Műszakiak Független Szakszervezete, RMFSZ).

Working and rest time

Leaving aside the agreement’s provisions covering all MALÉV employees, the new deal comprises two supplements regulating the working and rest time of flight attendants and pilots. It is worth noting that the previous agreement consisted of six such supplements, covering particular professional groups within the company.

Under the new agreement, working schedules for pilots and flight attendants are the most flexible ever, in line with the Labour Code. Annual flight time increases by more than 13% on short flights to 850 hours, remaining under the 900-hour limit prescribed by law. This move was made possible by a previous agreement concluded by the employer with Hunalpa, the trade union representing pilots, on increasing the annual flight time from the previously agreed 750 hours.

Employee benefits programme

In terms of benefits, the new agreement no longer provides any company recreational facilities, such as holiday and rest houses. This represents the most serious loss for MALÉV employees, as company management will be able to scrap these facilities. In exchange, employees are gaining a benefits package, also called the ‘cafeteria’ system, which entitles each employee to a flat-rate annual tax-free allowance of HUF 400,000 (about €1,700). Employees can choose to spend the allowance on a benefits package from a broad selection of services, including internet vouchers, life, and accident and health insurance cover. The cafeteria system also includes a company contribution to voluntary pension funds, but only up to the tax-free limit set by the current income tax law. This is a severe loss for highly paid employees, such as pilots, since the previous system allowed company payments amounting to 6.75% of each employee’s gross wage on top of the benefits package.

Other provisions

In addition to the new cafeteria system, a performance-related wage structure is due to be introduced for cabin staff; however, its implementation requires further talks with employee representatives.

In the event of restructuring, a joint committee consisting of company and trade union officials will decide on a redundancy plan.

Furthermore, the new collective agreement has reinstated an allowance of one free annual flight for each employee, which had been previously cancelled by the company management.

Commentary

The occupation-based trade union structure at MALÉV, similar to that at Budapest Airport, makes concluding a company-level agreement a difficult process. The supplements valid for specific occupational groups help to fulfil the Labour Code’s legal obligation – that is, ‘one company – one collective agreement’. As far as the joint committee on collective redundancies is concerned, the Labour Code authorises works councils to negotiate restructuring conditions. The new agreement, however, also welcomes the participation of trade unions in such processes.

After signing the agreement, Mr Leonov emphasised that the parties to the agreement had reached a rational compromise which, in the company’s present situation and under current market conditions, guaranteed the airline’s stable operation and development potential. The new agreement allows MALÉV to stay on track, with forecasts of a loss of HUF 700 million (€2.9 million) sharply reduced from last year’s loss of HUF 10 billion (€42 million). The trade unions also welcomed the compromise, although some union representatives consider that their major success was preserving the very existence of the company’s collective agreement.

Máté Komiljovics and László Neumann, Institute for Political Science, Hungarian Academy of Sciences