Hungary: Posted workers

  • Observatory: EurWORK
  • Topic:
  • Posted workers,
  • Working conditions,
  • Industrial relations,
  • Published on: 07 Deireadh Fómhair 2010



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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In Hungary, the current situation of posted workers, in terms of protection by law and collective agreements, reflects the case and concerns of a country that is an “exporter” of posted workers rather than an importer, as the important differences were laid out in the 1999 EIRO study. In addition, the most important target countries are those which have specific legislation for posted workers (immanently Germany and Austria). At the same time, since 1 May 2004 Hungary has been a Member of the European Union with the important obligation of fully applying the provisions of employment of workers posted to Hungary.

QUESTIONNAIRE

1. Posted workers: basic facts

1.1 Please provide basic data on the workers posted in your country:

a) number (by gender);

No data is available on workers posted to Hungary (consequently, no data by gender is available).

However, it does not necessarily mean that there are no posted workers but their entrance to the country is not registered at all. According to the regulations, posted workers are not obliged to register or acquire a work permit. The reason for this is that the regulation adapted to the Hungarian labour law does not consider posted workers as employees working in Hungary, as they are, in reality, employed in the sending country of the employer.

In theory, mirror statistics collected in the target countries on posted workers based on the E101 form could provide data, similarly to the data on immigrants. (Employers are obliged to apply for social security coverage on an E101 form for their employees in case their posting does not exceed 12 months.) Nevertheless, statistics have never compiled on this basis.

b) distribution across sectors

As a consequence of the absence of registrations, there is no data across sectors.

No alternative data sources exist and no research is available regarding posted workers in Hungary.

Since data on posted workers is not registered there is no official data provision. There is no monitoring authority that would collect data either. There is no relevant account in the monthly report of the labour inspectorates on revealed cases of anomalies connected to posted workers.

Based on the opinion of several experts in the labour services, regional labour centres, employers’ associations and trade unions, as well as respective experts in the government, the share of posted workers in Hungary is marginal and often resemble the employment of temporary agency workers. Recently a single case received media attention only, when allegedly the Budapest Airport used posted workers as strike breakers. (HU0903019I)

1.2 Are there any information on the number (by gender) and distribution across sectors of workers posted to other countries by domestic companies? If yes, please provide details.

More important for Hungary and more common and better documented is the practice of workers posted to other countries by Hungarian companies. The total estimated number of posted Hungarian workers is 17,000 -18,000. The main and traditional destination is Germany, followed by Austria, with considerably fewer Hungarian posted workers. According to Public Employment Service Austria (AMS Austria) the so-called “Entsendebewilligung”, that is posted worker permit, was issued in limited number: 146 in 2001, 133 in 2003, 73 in 2004 and only 21 in 2008, unreported data. Anecdotic evidence suggests that the main sectors in which Hungarian workers are posted, mainly in Germany include manufacturing (e.g. automotive industry) and meat industry (e.g. abattoirs) but also construction and connected activities.

Regulation has changed following the enlargement of the EU in 2004. In Germany the so-called ‘Werkvertrag’ form of posting workers had been important prior to May 2004 and had been regulated through quotas set by bilateral agreements. Following May 2004 some important branches like construction, cleaning buildings and other public facilities, interior design remained regulated by the Werkvertrag system while several other fields of activity have become freely regulated under the freedom of services principle. Existing ‘Werkvertrag’ quota for Hungarians fluctuates around 4.000 - 5.000 per year and only 20-25 per cent of the quota has recently been used. With the EU enlargement the previously popular form proved to be overregulated and over-controlled. However, other forms of free movement of services are still popular.

(Source: expert interview, preparatory data for bilateral negations, information of the Hungarian Embassy Berlin (http://www.itd.hu/resource.aspx?ResourceID=nemetmunka_20081) and German source of Bundesagentur (http://www.arbeitsagentur.de/zentraler-Content/A04-Vermittlung/A042-Vermittlung/Publikation/pdf/Beschaeftigung-auslaendischer-Werkvertrags-AN.pdf) )

1.3 Are there any information on trade union affiliation and collective bargaining coverage of workers posted to your countries, including affiliation to foreign unions and coverage by foreign collective agreements, in addition and beyond the minimum requirements set by legislation? If yes, please provide details.

No

1.4 Are there any information on trade union affiliation and collective bargaining coverage of workers posted to other countries by domestic firms? If yes, please provide details.

No.

1.5 Please refer the main content and results of major studies on posted workers (either in-coming or out-going), both quantitative and qualitative, which have been carried out in your country.

Not much research has been carried out in the field of posted workers recently. In the late 1990s a comprehensive study on the German ‘Werkvertrag’ practice was conducted, including a chapter on Hungarians in Germany, which was a rather frequently used and preferred channel of Hungarians to work in Germany. This publication focused on legal definitions and application of the law in the case of persons employed under the German regulations. (Die Ursachen und Folgen der Entsendung von Werkvertragsarbeitnehmern aus Ungarischer Sicht. In Faust T. et all (eds.): Ausland im Inland, Nomos, Baden-Baden, 1999, pp 269-289). More recent sources are only articles in the press. However, media reports are preoccupied with the stories of two main Hungarian cases of prosecutions in Germany (see. 3.1).

2. Regulation on posted workers

2.1 Please provide details on the current legislative framework for posted workers in your country:

Posting is, by definition, not subject to work permit or registration. That is due to the fact that, according to labour law, posting is not an employment relationship but service provision. The sending company is the employer that is from another country of the EU or EEA. According to the decree of 8/1999 of the former Ministry Social and Family Affairs ( Szociális és Családügyi Minisztérium, SZCSM) on the employment of foreigners in Hungary, posted workers were explicitly mentioned until recently among all other exemptions from obligation of acquiring work permit or registration. Later on this regulation was transferred to the more general government decree on free movement of labour. On 1 January 2009 transitional measures of restrictions were also lifted. Persons arriving from a country of the EU, or more precisely from the EEA, can undertake any work without restriction. According to 355/2007. (XII. 23.) Government Decree on the free movement of labour, persons posted by an employer registered in a country of the EEA providing service are not subject to any registration.

a) Reference to the law adopting the posted workers directive: number, date, and link to the text, if available, in English;

Hungary adopted the Posted Worker Directive through the Act XVI of 2001 on the amendment of Labour Code (Act XXII of 1992) with the purpose of harmonization of law before the EU enlargement. According to the justification to the amendment, Hungary was obliged to promulgate the 96/71/EC directive to ensure free provision of services among and across Member States in 2000, though it was to put into force until the time of joining the EU.

Section 105 of the Labour Code regulates the terms of posting. It does not differentiate between posting within the country or in a foreign country. According to the definition of the law, posting means that the employer obliges its employee to work temporarily at places other than the normal place of work for economic interests, on condition that the posted employee continues to work under the employer’s directions and instructions during this period. Thus the elements of posting are the following:

  • the employer’s economic interests,
  • work at another place than the usual workplace,
  • a temporary period,
  • the employee continues to perform his/her job under the employer’s directions, and
  • according to the instructions of the employer during this period.

Posting does not cover cases in which the employee usually performs work out of the branch of the employer due to the nature of the work (e.g. payment collectors or newsmen). Posting does not include cases where a person travels to another Member State on his/her own to work either.

Nonetheless, it is worth mentioning that the Hungarian law assumes that the ‘the employer obliges its employees to work temporarily at places other than the normal place of work’, in other words posting does not include cases where the employer and the employee agree on working temporarily at a place other than the normal place of work. Such definition has serious consequences for the possible maximum length of posting. (See below)

b) A brief account of any amendments or integrations introduced after the initial adoption;

Act XIX of 2002 modified the Labour Code. According to its new Section 106 par. 5 the stipulations of collective agreements valid at the actual place of work should be applied for all employees including posted workers with respect to working time, resting period and remuneration, provided that in case of posted workers the latter is more favourable for the employee than the valid regulations of the country of origin.

Act CXXV of 2003 Section 41 par 5 referring to the principle of equal treatment.

c) A description of the current legal framework regarding posted workers, especially:

- as regards the way employment conditions are enforced, as required by art. 3.1. of the Directive (see the briefing note for the text of the article):

i. by law, regulation or administrative provision, and/or

According to Section 106/A. § (1) of the Labour Code (Act XXII of 1992) if the employee of a foreign employer on the basis of the agreement with third party has to accomplish the task in the territory of Hungary, the regulations of the Hungarian labour law should be applied, except in case the relevant regulation (law or agreement) of the sending country is more favourable. The regulations concern the following: the maximum length of working time, the shortest possible rest period; the shortest paid holiday, the minimum compensation possible, occupational safety, conditions of temporary agency work, employment of pregnant women and those with children and youth and the demand of equal treatment for men and women and of non-discrimination regulations.

As regards employers engaged in the broadly defined construction work, the conditions of employment for posted workers are subject to collective agreements covering the entire industry or an entire sector in lieu of the above mentioned legal regulation, provided that the given collective agreement provides more favourable conditions for employees.

ii. by collective agreements or arbitration awards which have been declared universally applicable;

- whether the law requires the application to posted workers of:

The sectoral agreement for construction industry, which is extended to the whole industry by ministerial decree, includes specific regulations for posted workers.

i. the whole system of labour law or only minimum terms expressly identified with reference to the list in art. 3.1 (see the briefing note for the text of the article).

According to the Section 106/A. of the Labour Code only the above mentioned rules apply for posted workers. (See C/i.)

ii. the whole content of collective agreements or arbitration awards which have been declared universally applicable or only minimum terms expressly identified with reference to the list in art. 3.1 (see the briefing note for the text of the article).

- when the employment conditions are set by collective agreements or arbitration awards, please specify which is the legal instrument which make them universally applicable:

The extension procedure is regulated by the Labour Code.

i. according to the law. Please specify the law reference number and year and whether it includes certain requirements for universal application. In this latter case, please specify such requirements.

ii. according to a ministerial decree. Please specify which minister or political authority can issue the decree and whether certain requirements are needed. In this latter case, please specify such requirements.

The Minister of Social Affairs and Labour. Preconditions of extension of collective agreements are regulated by the Labour Code; it is basically upon the joint request of representative social partners of the given sector.

iii. according to rules on mandatory representation which make collective agreements (in practice) universally applicable.

- when the employment conditions are set by collective agreements, please specify which collective agreements are relevant:

i. intersectoral or sectoral. Please provide examples.

Only in the construction industry is the Hungarian sectoral collective agreement applied to workers posted to Hungary. In any other industries the relevant collective agreements of the sending country apply, provided that it contains more favourable provisions than the Hungarian law on specific issues. (See above)

d) whether the legal framework sets a maximum period for considering a worker a “posted worker” rather than a “resident worker”. If yes, please specify this maximum period.

The Hungarian Labour Code limits the duration of posting to 44 days, which can be extended by collective agreements only. Obviously this applies for Hungarian workers posted abroad only.

Moreover, there are other rules in the social security legislation. In case the employer sends the employee for a short period to another member state, in spite of foreign employment he/she will be insured in the sending country as if he/she was working there. The worker can not be posted for longer than 12 months, which can also be extended by 12 more months. In this case the employee should possess the E101 form (E102 in case of extension) to prove that there is no need to pay social security contribution in Hungary since contribution is paid in the sending country. The importance of form E101 is to prove it. Anyone with a valid E101 form has to be considered as a posted worker without any investigation of the legal situation. For incoming posted workers the social security rules (E101 and E102) may limit the duration of posting.

e) whether there are special rules for certain sectors (for instance, construction). If yes, please specify the sectors and briefly illustrate such special rules.

The construction sectoral agreement extends the possible duration of posting up to 120 days. Moreover, if the employer “exhausts” the 120 days until 31 August, it may agree with the employee in a further extension of 60 days.

2.2 Monitoring of implementation of regulation

a) whether a monitoring system for collected data and information on the number and employment conditions of posted workers was set up. If yes, please provide details on such system (bodies involved, structure, methods of collection and dissemination of information, etc.) and its effectiveness;

The Hungarian Labour Inspectorate (Országos Munkabiztonsági és Munkaügyi Felügyelet, OMMF) is responsible for inspection but not for monitoring. The inspectors check the presence of E101 form or the existence of a domestic social security registration on the spot. In the lack of such documents the employment relationship qualifies as undeclared. (In the statistics undeclared cases are not distinguished further by reasons.)

b) whether measures were introduced to make the information on the terms and conditions of employment generally available to foreign service providers and to the posted workers concerned.

No information

c) whether the law envisages the implementation of special labour inspections devoted to verify the number and employment conditions of posted workers. If yes, please provide details on how these are organised and on their effectiveness and outcomes.

OMMF exercises its tasks and measures based on Act LXXV on labour inspectorates and on the ‘inspection schedules’ established yearly. Furthermore, ad hoc reports may trigger inspections, too. Its entitlement covers particularly the control over establishing employment relationship, the elements of the labour contract, working and leisure time, wages and minimal wage payment, the employment of special groups, registration of employment, compliance with collective agreements, posting, using temporary agency work and legal employment of foreigners..

2.3 Please specify if particular rules have been devised to deal with specific situations of posted workers:

a) the current rules for the posting of temporary agency workers in your country, especially whether the law requires the application to temporary agency workers of:

i) the whole legislation on temporary agency work or only minimum terms expressly identified with reference to the list in art. 3.1 (see the briefing note for the text of the article).

Only minimum terms as identified above explicitly apply.

ii) the types and requirements for temporary agency work established by national legislation (compared to those envisaged by the legislation of the country of origin). For example, can temporary agency workers be posted under contractual arrangements – such as indefinite duration staff leasing - which would not be available for national temporary work agencies?

No such differences identified.

b) the current rules for employment conditions in public procurement, notably whether the law:

i) requires explicitly the application of specific terms and conditions of employment to be awarded public procurement contracts. If yes, please specify what kind of terms and conditions of employment must be applied (comprehensive terms or only minimum levels?).

There are complex requirements under the notion of “orderly labour relations”, including the correct application of employment regulation, e.g. on working time, pay, non-discrimination and collective redundancy procedures by employers.

Since January 2006, when the law came into force, a good labour practice record has meant that a given employer has not been fined by the authorities for irregularities regarding employment, or in the case of appeal that the claim has been rejected by a valid decision in force made by the supreme authority. In the case of bidding for public procurement tenders and applications for subsidies, the bidders have to attach certificates received from OMMF and the Equal Treatment Authority (Egyenlő Bánásmód Hatóság, EBH) confirming their ‘fine-free’ status. (HU0801079I).

It is worth noting that the rules have recently been changed due to the recession. The latest legal amendments have relaxed the previous strict rules as follows. If an employer commits a ‘minor’ offence, it can be excluded from receiving state subsidies only if it had been fined for such a violation twice within a period of two years. The following offences are considered as minor by law: employing people on bogus contracts; breaching working time rules and/or pay provisions; employing migrant workers without a work permit; and discrimination. (HU0907029I)

ii) requires explicitly the application of specific collective agreements to be awarded public procurement contracts. If yes, please specify what kind of agreements must be applied (national, sectoral, territorial) and to what extent (the whole agreement or only certain and minimum provisions?).

No

iii) allows awarding authorities to require the application of specific collective agreements to be awarded public procurement contracts. If yes, please specify to what extent this possibility is used (almost always, often, rarely, almost never) and what kind of agreements are more often considered for such clauses (national, sectoral, territorial).

iv) envisages specific clauses in the case of posted workers. If yes, please briefly illustrate the contents of such rules.

No.

3. Positions and actions of the social partners and government on posted workers

3.1 Please indicate the positions and main initiatives that the social partners and the government have taken with reference to posted workers, either in-coming or out-going, and especially indicate:

There is no evidence of the existence of definite positions of social partners on the issue, except for the employer association in the construction industry, which has always supported Hungarian firms providing services abroad and expressed its concerns about incoming posted workers.

As for the government, the legal defence of Hungarian posted workers in Germany was not fully supportive. In 2004 Hungarian firms suffered from two successive control campaigns of the German labour inspectorates. The so called SoKo Pannonia and the SoKo Bunda in 2005 were based on the supposed requirement that E101 forms and paid insurance in Hungary were not sufficient for lawful activity, according to some peculiarity of the German law. Several Hungarian firms, out of the 250-300 Hungarian firms active in Germany that time (48 mainly active in construction) were involved in the action and had to face prosecution. The Hungarian government did not provide the firms prosecuted with official support but cooperated with the German officials to serve the suggested German regulation that was in favour of overwriting the EU regulation of posted workers by national legislation of the receiving country in particular cases. The disputes ended with a series of court rulings stating that the firms in question were not acting unlawfully. Nevertheless, criminal procedures resulted in bankruptcy of several firms. The conflict raised also intense media attention.

a) the presence of a debate on the relevance and consequences for national labour law and industrial relations institutions of recourse to posted workers. If such debate is present, please refer its main contents and whether it refers to specific sectors.

Not identified.

b) any positions expressed or actions taken in view of the recent rulings by the European Court of Justice (cases Laval un Partneri - C-341/05, Rüffert - C-346/06, Commission v Luxembourg – C-319-06).

Not identified

3.2. The main campaigns or initiatives undertaken by the social partners specifically aimed at posted workers or firms posting workers. If such campaigns or initiatives are present, please indicate their main features and whether they refer to specific sectors. Please cover, in particular:

Not identified

a) Trade union initiatives with regard to:

Cross border activities and cooperation with foreign trade unions

On the Austrian – Hungarian border a unique cooperation of the Hungarian and Austrian trade union is active with the aim to provide posted and migrant workers with legal protection in Austria’s border region. The primary aim is the protection of employees active in the region, as well as to protect those involved in free movement of services. The focus of the trade union initiative is also aiming at avoiding fraud service activity (http://www.igr.at).

b) Employers initiatives with regard to:

Cross border activities and cooperation with foreign employer associations

In the Western region close to Austria, employers’ organisations are active to support the free movement of services and support Hungarian firms in the market facing strong competition from Austrian firms (e.g. interview with the Secretary of the Industrial Chamber in Vas county, Western Hungary)

c) Any kinds of joint action undertaken by the social partners with regard to the issue of posted workers

4. Collective disputes and case law on posted workers

No information

4.1 Please indicate whether collective disputes involving posted workers are frequent or increasing in recent times.

No information

4.2. Please provide information on any major collective disputes which concerned the utilisation of posted workers in your country. Please include for each case:

No information

a) the description of the activity involved;

No information

b) the contractual parties: a) the contracting firm or body; b) the foreign service provider;

No information

c) the reasons for the dispute;

No information

d) the parties to the dispute: i) employees; ii) trade unions; iii) employers;

No information

e) a brief account of the dispute: its origins, developments, and outcomes.

No information

f) whether it involved industrial conflict. If yes, please illustrate briefly the forms and results of conflict.

No information

g) whether it led to a case before a (labour) court. If yes, please illustrate briefly the contents and grounds of the (labour) court’s decision.

No information

4.3 Please provide information of existing case law in your country involving posted workers. Please include

No information

a) an indication of the frequency of cases involving posted workers;

No information

b) the main reasons leading to cases before courts;

No information

c) the kinds of parties which more often refer such cases to the courts;

No information

d) the kinds of parties which are more often called before the courts in such cases;

No information

e) the emerging jurisprudence on issues regarding posted workers, that is a brief account of the contents and grounds of the principal court’s decisions.

No information

Commentary

Hungary is basically an “exporter” of posted workers rather than an importer. Since 1 May 2004 Hungary has been a Member State of the European Union with the important obligation of fully complying with the provisions of employment of workers posted to Hungary. Therefore, neither authorisation and registration applies, nor data is available on workers posted to Hungary. As far as Hungarian posted workers are concerned, the most important target countries are those which have specific legislation for posted workers (immanently Germany and Austria).

Ágnes Hárs and László Neumann, MTA PTI

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