Changes to Hungarian Labour Code in 2010

Important changes have been made to the Hungarian Labour Code in 2010. The outgoing liberal left government changed the rules on subcontracting workers, childcare provisions and penalties for illegal work. The casual employment booklet was also abolished. The new centre-right government, elected in May, amended the employment rules for casual and seasonal workers which took effect in August. It has also been announced that a new Labour Code will be brought in later this year.

The Hungarian Labour Code was introduced on 1 June 1992. Since then it has had about 50 amendments. However, there have been no fundamental, structural changes to mirror the economic, political and social reforms of the last decades.

Stricter regulations proposed in 2007 and 2008 were rejected by the social partners because they would have been unfavourable to employees (HU0802079I). The recent changes brought in by the new government have resulted in some contradictory decisions.

Measures introduced in 2010 by the left-liberal coalition

In 2009, the old liberal left coalition government decided to explore the shortcomings of the existing Labour Code to:

  • achieve competitiveness;
  • support enterprise and innovation;
  • introduce clearer regulations and reduce red tape;
  • improve labour market flexibility while equally spreading the burden of adjustment on employers and employees.

The following changes were introduced.

Changes implemented on 1 January 2010

  • The general monthly minimum wage was increased from HUF 71,500 to HUF 73,500 (about €255 to €263 as at 1 October 2010) and the guaranteed specialised minimum wage (for jobs which require a worker to have completed secondary education) was increased from HUF 87,500 to HUF 89,500 (€315 to €323).
  • Companies that face liquidation, and employing more than 250 workers, are obliged to give written notice to employees 30 days before the closure, and also to inform the employment authority and the representative trade union.
  • The government sets the level of reimbursement of costs associated with transport to work arrangements.
  • Workers employed through temporary agencies cannot be dismissed without notice. The agency has to inform and consult with employee organisations on workforce-related issues at least twice a year. Employers are exempted from fines related to undeclared work if they give full terms of employment to the Hungarian State Treasury before the beginning of a labour inspection.
  • Employees planning to adopt a child are protected from dismissal. The period preceding adoption is termed to be of primary importance for development of the bond between the adoptive parent and the child, and the employee cannot be dismissed in the six months from the start of this period.

Changes implemented on 1 May 2010

  • The duration of maternity pay has been reduced from three to two years. However, protection against dismissal remains until the child is three years old, regardless of whether or not the employee takes unpaid leave for the third year (for more information, see Vilaggazdasag news article (in Hungarian)).
  • The Casual Employment Booklet (CEB), which acted as a contract for casual employees, was abolished. Employers can now take on casual workers by signing a blank contract or the attendance register, and notifying labour authorities before the start of employment.

New regulations introduced by the centre-right government

On 1 May 2010, the new government of the centre-right Hungarian Civic Union (FIDESZ) began a comprehensive review of the Labour Code, including a revision of strike-related regulations, reform of public sector wages, and greater decentralisation of enforcement. A new Labour Code will be introduced in the second half of 2010 (see news article (in Hungarian)). The new government promises a broader social dialogue, but has not specified who the partners will be. The new Labour Code aims for more flexibility in the labour market.

The following changes were introduced in August 2010.

  • Rules governing the employment of seasonal and casual workers were simplified further. Employers now pay a registration fee to the labour authority of HUF 500 (€1.80) a day for seasonal work and HUF 1,000 (€3.60) a day for casual work. Casual employees are not obliged to pay taxes but are given allowances for pensions and health insurance, in case of accidents, and unemployment benefits.
  • The law on domestic workers has been changed and now stipulates that they need only to pay a fee of HUF 1,000 (€3.60) to the authorities once a month, without further taxes and social security obligations, such as pensions, health or unemployment insurance. The law does not specify a minimum or maximum wage for this category of workers.

Reactions of the social partners

The change of government in the midst of the financial crisis has made the future of labour regulations uncertain. The Democratic League of Independent Trade Unions (LIGA) believes recent changes are politically motivated to improve employment statistics, and that the income from the registration fees of casual and domestic workers cannot replace the taxes necessary to improve the situation and make the system sustainable. Moreover, LIGA warned that the new procedures do not provide any guarantee of security or decent working conditions for domestic and seasonal workers.

Zsuzsanna Rindt and Ildikó Krén,

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