New legislation regulates telework

Successive governments in Hungary have promoted telework as part of their labour market policy, and in May 2004 regulations on telework in an employment relationship were added to the Labour Code. The new rules mainly follow the provisions of the July 2002 framework agreement on telework signed by the EU-level social partners.

The latest survey results from the Central Statistical Office (Központi Statisztikai Hivatal, KSH) show that the penetration of personal computers still stands ar only 10.8% of the population in Hungary, and only 16% of the population have regular access to the internet. Both figures are extremely low by European standards. Not surprisingly, the Labour Force Survey in 2003 revealed that only 0.6% of employed people are teleworkers on a regular basis, while 1.1% occasionally work from home using modern communication and computer technology. These data explain why successive governments have made a series of efforts to boost the widespread use of information and communication technologies (ICT), including job creation through telework. This kind of combined ICT development and labour market policy seems worth pursuing in a country where the employment rate is low (56.6%) as a long-term consequence of the transition to a market economy at the beginning of the 1990s, in the course of which roughly 1.5 million jobs were lost. Typically, women who have withdrawn from the labour market are the target group of telework projects, as 48% of active age women are at home, partly due to the generous three-year maternity leave and the shortage of childcare facilities.

Policy measures

As early as 1997, the then socialist-liberal government launched the first action to promote telework with a view to improving the labour market position of various disadvantaged groups. It established a 'public benefit company', a sort of public-private partnership, to facilitate the spread of telework by creating home-based jobs, especially for people with disabilities, women staying at home (either raising children or taking care of other family members) and those living in rural settlements lacking job opportunities in the vicinity. Between 1998 and 2002, under the right-wing government of the time, the Ministry of Social and Family Affairs (Szociális és Családügyi Minisztérium, SZCSM) subsidised employers to hire teleworkers from such disadvantaged groups. As far as technical support is concerned, in 2001, in a joint action with the Budapest Mayor’s Office (Főpolgármesteri Hivatal), the Ministry established a telework centre within the Budapest Labour Market Intervention Centre (Budapesti Munkaerőpiaci Intervenciós Központ, BMIK) to train potential teleworkers. In 2002, the Ministry of Employment and Labour (Foglalkoztatáspolitikai és Munkaügyi Minisztérium, FMM) and the Ministry of Informatics and Communications (Informatikai és Hírközlési Minisztérium, IHM) also launched an experimental programme to create 1,000 jobs through telework and subsidised it fairly generously, in terms of both wages and investment in up-to-date technology. Later on, the Labour Market Fund (Munkaerőpiaci Alap) supplemented this support by financing 370 more jobs and by providing training and wage subsidies. In the spirit of equal opportunities, these programmes gave preference to disabled people, single parents, members of the Roma minority, people over 45 and people taking care of a disabled or elderly family member at home. In August 2004, the Minister of Employment and Labour established the Telework Council (Távmunka Tanács) with the involvement of major businesses in the ICT sector.

According to a report by the FMM, by the end of 2003 these measures had resulted in 3,800 new jobs - or at least 345 employers (the winners of the tenders) promised to create this number of workplaces. However, the report - based on information from the county Labour Market Centres (Megyei Munkaerőpiaci Központok), which did the administrative work for the tenders - states that the number of jobs created was relatively low because many employers were put off by legal and market uncertainties.

Alongside these labour market policy measures, other government programmes have subsidised the purchase of computers and internet access in schools and other public institutions, most notably so-called telecottages ('teleházak') in rural areas. The issue of telework has been embraced by civil actors who publish many articles, maintain websites and provide services to match demand and supply in the labour market. The telecottages themselves are usually established and operated by NGOs. Working telecottages today provide nearly 60 different types of local services (educational, social, cultural, medical, economic, administrative and other). According to the IHM, through telecottages 2 million village dwellers have access to modern telecommunications and information technology, and it claims that approximately 1,600-2,000 jobs have been created.

In November 2003, the IHM published the Hungarian 'information society strategy'. A supplementary booklet, entitled 'eWork', deals with telework in detail. The main objective of the strategy is to create the legal, economic and technological conditions for 'virtual labour exchanges', which are a new type of service provider specialising in matching supply and demand in this segment of the labour market. The legal underpinning includes the recognition of work conducted outside the traditional employment relationship. A fundamental shift has taken place in the basic concept: it no longer expects telework to create new jobs but has its point of departure in the need for a new spatial distribution of work and, accordingly, in the reorganisation of the work process in general. Although the new 'virtual labour exchanges' would operate as for-profit business organisations, according to the proposal disadvantaged applicants for telework assignments would be subsidised within the framework of 'e-Shelters' (e-Ernyők).

New legislation

Act XXVIII of 2004 amending the Labour Code of Hungary and other employment related acts introduces detailed regulations on telework. The new rules came into force on 1 May 2004.

Although the phenomenon of telework is not new in Hungary, until recently there was no detailed regulation, which means that only general labour law rules applied. For a long time many have considered the lack of legal regulations a major obstacle to widespread use of telework. It should also be mentioned that telework is often associated with 'home-based work' (bedolgozás), a traditional form of working in Hungary, which is a legal relationship similar to but not qualifying as employment. A 'home-based worker' (bedolgozó) is usually a low-skilled manual worker producing items at home on a piece-rate basis. A teleworker, on the other hand, is by definition a worker using computer technology to do their work at home.

The new Act, which is inspired by the July 2002 EU-level social partners' framework agreement on telework (EU0207204F), provides specific rules on telework, while general labour law regulations also apply to telework. According to the new rules, a teleworker is a worker performing activities within the employer's business profile at a place of their choice away from the employer's own premises, using computer technology and delivering the product by electronic means. In order to qualify as a teleworker, employer and employee have to draw up a written agreement to that effect. The parties also need a written agreement concerning how they maintain contact with each other and on how they share the relevant ('necessary and reasonable') costs.

Unless otherwise agreed, the equipment used for work and for maintaining contact is supplied by the employer. Employers have the right to restrict the use of any equipment they provide for telework. The equipment may also be provided by the employee. The main responsibilities in connection with data confidentiality, however, always lie with the employer.

As a general rule, it is up to the teleworker to determine their working time schedule. The quantity of tasks assigned, however, must be defined by the employer with due consideration for statutory or stipulated working time and the physical and intellectual effort required for the work in identical or similar jobs with that employer.

In order to monitor the teleworker’s performance and to instal, uninstal or maintain the equipment used for telework, the employer has the right to enter the teleworker’s private property, upon prior notification. Such visits may not disturb the teleworker unreasonably or any other persons using the property. The employer may not have access to any data on the computer used for telework that is not connected to the telework or the employment relationship (in other words, private data). However, this rule does not apply to the extent that it conflicts with the employer’s right to check whether the teleworker is adhering to any restrictions on the use of any computer equipment supplied (see above).

The new law is intended to integrate teleworkers in the labour market. For example, the employer must provide teleworkers with all information given to other employees and access to their premises, subject to internal operational regulations. The employer must also provide the works council, local trade unions and the labour safety representative with the information they need to contact teleworkers.

The Act also introduces a 'soft law' rule, according to which the employee has the right to ask to continue - or cease - working as a teleworker. The employer is obliged to give due consideration to such requests and to inform the employee within 15 days of their decision.

The new Act also modified a number of other acts, for example: Act CXVII of 1995 on Personal Income Tax, providing tax allowances to teleworkers using telecom services and for the purchase of computer equipment for telework; and Act XCIII of 1993 on Labour Safety introducing certain special rules on teleworkers - the most important new labour safety rule is that the employer is obliged to inspect equipment used by teleworkers before they start to use it for teleworking. The Labour Inspectorate (Országos Munkabiztonsági és Munkaügyi Felügyelet, OMMF) may also enter the premises used by the teleworker, on three days' notice.

Debates on the bill

The new legislation was to a large extent inspired by the EU-level social partners' framework agreement on telework. As with EU Directives, the government chose the legislative path of transposition, instead of relying on agreement between the social partners. Interestingly, the social partners did not object to this procedure. In fact, they made no significant input to the draft bill, although it was on the consultative agenda of the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT).

While the new Act was welcomed by most, some criticisms were also voiced. Critics said that what was badly needed in Hungary was infrastructure and job opportunities rather than the legal regulation of telework, as legislation alone cannot create new jobs. Furthermore, the Act was said to contain a number of unnecessary regulations, such as the obligation of the employee to provide the employer with their 'electronic contact data' (in effect, their e-mail address). More importantly, according to the Act the employer is not obliged to make a record of teleworkers’ working hours if they determine their own working time schedule. According to critics, this is open to abuse.

Commentary

At first glance it seems odd that the government should subsidise employers to introduce telework: in many advanced industrialised countries with a high penetration of telework employers have opted to make such changes in work organisation of their own volition. However, in a country like Hungary with a low proportion of knowledge-intensive business and limited access to computers and the internet, a complex government policy facilitating change towards a 'knowledge based society' seems well advised. Both labour market policy measures for new telework jobs and the new labour legislation are in line with this broader policy objective. Also, these government aims are in line with the EU goals set at the Lisbon European Council in March 2000 (EU0004241F), not only with regard to competitiveness and the 'knowledge-based society', but also social inclusion, which was an important dimension of the job subsidies introduced by the Hungarian government.

The government made a deliberate choice to transpose the EU-level agreement on telework in order to meet the need - felt for a decade or so - for a clear-cut regulatory framework. Moreover, the social partners explicitly demanded 'European-style' legislation. Under these circumstances, it would be unfair to expect a point-by-point adoption of the agreement. Nonetheless, almost all the provisions of the Act can be derived from the agreement. It is interesting, however, to note which provisions of the agreement are missing from the new Act.

The point of departure for legislators was the employment contract, the establishment, amendment and termination of which are already well regulated in the Labour Code. While the text of the EU-level framework agreement emphasises the voluntary character of telework and distinguishes between telework as part of the employee's initial job description and telework as a subsequent voluntary arrangement, the Hungarian law stipulates only the abovementioned 'soft law rule' (see under 'New legislation' above). The words 'voluntary' and 'reversible' do not appear in the Hungarian legal text, but the framework agreement explicitly assumes that 'the decision to shift to telework is reversible by individual and/or collective agreement if telework is not part of the initial job description'. As the framework agreement calls on the social partners to establish the 'modalities of this reversibility' the Hungarian legislation assumes that this is covered by the general principles of the Labour Code concerning modification of employment contracts.

The health and safety regulations are also incomplete: while the EU-level agreement explicitly mentions computer monitors (VDUs) as a significant source of risk, the Act uses only very general language, which is odd given that Hungary has already adopted the relevant EU regulations. Finally, however, it is important to note that the Act does not limit the scope of sectoral and company agreements, and in Hungary's decentralised bargaining system the cited elements, among other more specific issues, may be introduced through local collective bargaining.

Another contradiction in the new regulations is that a large proportion of existing and potential teleworkers are or are willing to become self-employed, in which case their work is regulated by civil law contracts. While the Hungarian information society strategy embraces this aspect of telework, the Act surprisingly rejects the civil law option, presumably because it takes the approach of previous legislation aimed at curbing 'fake' civil law contracts, used to circumvent employment regulations (HU0310102F). While this obviously limits the scope of the new Act, it is clear that the government envisages growth in telework mainly in terms of an employment relationship. This is indeed a 'soft law rule', and only time will tell whether employers listen to the message. (László Neumann, Institute of Political Science, Hungarian Academy of Sciences)

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