Hungary: Latest working life developments – Q2 2016

Ongoing unrest in the education sector, the repeal of Sunday closure legislation and changes in the employee-benefits 'Cafeteria' system are among the main topics of interest in this article. This country update reports on the latest developments in working life in Hungary in the second quarter of 2016.

Teachers demand better working conditions

After two strikes in April and inconclusive negotiations with representatives of the education sector, including some of the relevant trade unions (Teacher’s Trade Union, Education Leaders’ Trade Union, Hungarian Public Education and Training Union), the government and the Hungarian Parliament introduced changes to the Public Education Act. Nevertheless, street demonstrations continued as some of the crucial issues (such as mandatory textbooks, the large number of lessons and the lack of financial resources for school operations) were not addressed at all, while other key demands (such as the abolition of the state-run, central schools administrator’s office and the re-delegation of rights to school directors) were tackled only partially. As the essential institutional setting and operating principles have remained unchanged, there is likely to be continued unrest in the new school year. In addition, local authorities have had to hand over responsibility of all school facilities to the state and several of them joined the teachers’ protests.

Repeal of Sunday closure law 

At the government’s initiative, Parliament revoked the unpopular and controversial ban on Sunday opening in mid-April. The law, on the basis of which larger retail shops were not allowed to open on Sundays, had been in force for a year.

While most Hungarians welcomed the return of Sunday shopping, the new regulation on weekend work contains two unexpected provisions, which have adverse effects on the workers concerned. In the retail sector, the wage supplement for Sunday work, which was increased just a year ago to 100% for those not affected by the ban, was restored to 50%. The rules on weekend work for workers in temporary jobs were also revised down, leading to a considerable loss in benefits for them. Trade unions have made their voice heard on both issues.

Ban on Uber

For a long time Budapest taxi drivers have considered it unacceptable that Uber operates in the same market as them but under different conditions. Although the national taxi regulation has been modified with the aim of extending its scope to Uber drivers, not much has changed on the streets. The new legislation makes it possible to ban Uber for a year where there is any unlawful operation. Taxi drivers were satisfied with the content of the regulation, but as their trade union pointed out, what is really important is its full enforcement.

Response to infringement procedures

In order to comply with Directive 89/391/EEC and in response to infringement procedures, as of July 2016 workers’ health and safety representatives have to be elected in all workplaces with more than 20 employees. The amendments to the Occupational Health and Safety Act also include provisions on defining responsibility for healthy and safe working conditions at workplaces where workers of several employers work together, such as in the public transport sector.

ECJ ruling on Cafeteria system

In its ruling, the European Court of Justice (ECJ) has found that some elements of Hungary's Cafeteria system (a form of flexible non-cash benefits for employees, some of which are subject to a preferential tax treatment) were incompatible with EU law, especially those concerned with settlement and freedom of services. Legal changes introduced in Hungary as a response seem to go beyond what would have been necessary to meet EU requirements and partly in a different direction. The new system of fringe benefits to be introduced from January 2017 will have a cash component, while some popular forms of benefits will terminate (for example, meal vouchers, travel passes and health funds) and workers’ choice of benefits will be limited. In terms of the total amount with a preferential tax rate, there will be a marked differentiation between public and private sector workers.

Trade unions are strongly opposed to the changes and critical of the unilateral decision-making by the government. Employer organisations were also not consulted beforehand and are opposed to the curtailment of the range of preferential benefits.

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