Labor Law Regulation and Employment Supervision in Hungary

Labor Law Regulation and Employment Supervision in Hungary Presented by: Dr. Tóth Date: 21 June 2023 The Subject Of Regulation - Dependent Work - The main aspects of which are similar to those of Slovak labor law: • Subordination • Broad powers of instruction and control for the employer • Personal duty to work • Working with the employer's equipment • At a time and place of work determined by the employer. Employment Supervision Act - Act CXXXV of 2020 on Employment Promotion Services and Support and on Employment Supervision (entered into force on 1 March 2021) (FFTV.) - “Sanctioning, increasing penalties can be a strong incentive to reduce undeclared work. - However, the level of penalties should be set in such a way that it is not counterproductive, does not substantially restrict the economy or increase the competitiveness of honest employers.” - Primary sanctions under the Act • The supervisor shall establish the existence of an employment relationship, retroactive to 30 days from the date of the violation, • This means that the employee will have at least 30 days of full-time general employment and the corresponding social security status. • - Oblige the employer to notify the tax authorities Sanctions under the Sanctions Act • A special sanction is a labor fine, to which the provisions on administrative sanctions of Act CXXV of 2017 on Sanctions for Administrative Violations (Sanctions Act) apply • The minimum and maximum amount of the labor fine may range from EUR 75 to 25 000 - Secondary sanctions • If an employer employs without notifying the tax authorities or hires out workers without permission, he may not only be fined for labor (tax penalty) but also be excluded from receiving budget support. In fact, budget support can only be granted to organizations which meet the requirements of good industrial relations • The employment monitoring authority keeps a public record of the infringement and publishes it on its website. The publicly published company will be listed on the website for two years. • It is possible to be removed from the register before the expiry of the period for which the registration is required, on payment of a fee. An employer on the register may request the deletion of the published data once a year, provided that it pays three times the amount of the labor fine imposed Tertiary Sanction - Taxpayer classification institution: the National Tax and Customs Administration (hereinafter: NAV) examines on a quarterly basis whether a given taxpayer is classified as trustworthy or risky. - Two lists (black and grey) available on the NAV website, listing taxpayers with undeclared employees and taxpayers with unsettled employment relationships. - If a taxpayer is on the list of taxpayers with undeclared employees, it is considered a taxpayer at risk for one year from the date of qualification Methods Of Legal Regulation Of Labor Law - The Labor Code, which came into force in 2012, introduced a conceptual change, the intention being to increase the regulatory role of collective agreements. In the 10 years that have passed, this has not produced results. - The collective agreement can deviate from most of the collective agreement to the benefit and detriment of the employee - absolute dispositivity - Three exceptions: • Cogency: no derogation allowed – Labor Law Act states that no derogation from certain provisions • Unilateral, relative dispositively – can only be achieved in favor of the employee • Limited, bilateral dispositively – can be deviated from to the detriment of the worker up to a certain extent The Relationship Between The Labor Code And The Civil Code - The Labor Code expressly provides for the application of certain (contractual) provisions of the Civil Code to legal notices. - In addition, it also refers in a few places to the application of the rules of the Civil Code. - However, earlier case law allowed the applicability of the Civil Code on the basis of other principles, namely that in labor law the rules of civil law are generally applicable provided that they do not conflict with the rules or principles of labor law Employment Contract - The employer must inform the worker in writing of the minimum working conditions within 15 days in accordance with the Directive (91/533/EEC): • a) the daily working time; • b) wages above the base wage, and other benefits; • c) payroll accounting, the frequency of payment of wages, and the day of payment; • d) the functions of the job; • e) the number of days of leave and the procedures for allocating and determining such leave; and • f) the rules governing the periods of notice to be observed by the employer and the employee; furthermore • g) whether a collective agreement applies to the employer; and • h) the person exercising employer's rights. The Collective Agreement - In Hungary, a collective agreement can be concluded for a fixed or indefinite period of time, and can be terminated with three months' notice. - The collective agreement may be concluded by a trade union whose members in the employer's employment are at least 10% of the employees. Because of this rule, a trade union which has no employees in the employer cannot enter the collective bargaining process here. - - A collective agreement can be concluded • Local, covering one employer • Multi-employer • Sectoral collective agreements, covering one sector. Some data… • In Hungary, the sectoral collective agreements are not common - there are few sectoral collective agreements on record - and there are about 20 multi-employer agreements on record, according to the ministry official register • Collective agreements at local level are around 1,000 according to the official register, but in practice about a third of these are still in force. • In 2021, there will be 13 local - single employer - collective agreements at national level. The Relationship Between The Employment Contract And The Collective Agreement - A collective agreement traditionally consists of two parts the contractual and the normative part. • The normative part regulates the rights and obligations arising from or in connection with the employment relationship, i.e. matters relating to the individual employment relationship. • The contractual part regulates the conduct of the parties in relation to the conclusion, performance and termination of the collective agreement, the exercise of their rights and the performance of their obligations. - The provisions of Parts Two and Three of the Labor Code may, as a general rule, be derogated from to the advantage and disadvantage of the employee (relative dispositively). - In addition, at the end of each chapter of the Labor Code, under the subheading Divergent agreement, the law also lays down rules which are cumulative, i.e. from which the parties to a collective agreement cannot derogate by mutual consent, and which are considered to be relatively dispositive, i.e. from which derogation is only permitted to the benefit of the employee. - In this context, derogations in favor of the employee must be assessed by comparing the provisions in question. - Similar to Slovak law, the parties to an employment contract may derogate from the collective agreement in favor of the employee.