Spread of coronavirus significantly affected the everyday life of enterprises operating in Hungary. Many companies are at risk, which causes both employers and employees to look into future with fears. With regard to social distancing, the way of working is changing as home office becomes the main focus and consumer behaviours are also in transition as home delivery services are gaining more market shares. Please find below how legislation reacted to this economic situation.

Repayment moratorium

As long as the state of emergency is in place, all debtors will be subject to a repayment moratorium until 31 December 2020 for payments of capital, interest and fees originating from professional credit and loan agreements as well as from financial leasing.

Repayment moratorium applies to all debtors, natural persons and organisations as well. It applies to any credit, loan and financial leasing provided on a professional basis which were already granted on the basis of existing contracts at 12 PM on 18 March 2020. The moratorium does not apply to non-professional loans and credits such as loan agreements amongst natural persons on incidental basis.

It is important to highlight that the moratorium does not mean that due debts are being released. When the moratorium ends, payments are due according to original schedules and according to the existing debt on the day before the moratorium. Moratorium is only mandatory for creditors, therefore, debtors can decide to continue their payments as required by contract.

The moratorium does not apply to contracts terminated because of non-payment neither to the executions and any other procedures put in place based on such termination.

Consumer APR maximum

The regulations set a threshold for new consumer credits not guaranteed by lien: the APR of these contracts cannot exceed the basic interest rate plus five percent.

Tax reliefs

New regulations aim to help industries where the pandemic has had the biggest impact so far: tourism, catering, entertainment, gambling, movie industry, performance artists, event coordinators and sports services.

Companies from the abovementioned industries will be exempt from paying taxes on wages, employees will only be obliged to pay healthcare contribution after their wages, capped at HUF 7,710. The concerned taxpayers are free from paying tourism contribution until 30 June 2020.

Passenger transport enterprises will be exempt from paying KATA flat tax from March to June 2020.

These economic relief actions have been extended, you can read our update here.

Termination moratorium for renting premises

Non-residential lease agreements concluded with enterprises active in the industries specified above may not be terminated until 30 June 2020.

In these rents, current rental fees cannot be raised during the term of the state of danger even if the landlord has unilateral contractual rights do so.

Note that this provision does not mean payment moratorium regarding rental fees. Fees that become due during the state of danger must be paid by the lessee so these provisions do not restrict the landlord’s right to claim rental fees, and in case of failure of payment – amongst other conditions – even insolvency or liquidation procedures may take place.

More flexible Labour Law

The aim of measures taken in the field of labour law is to provide more space for employers in the difficulties caused by COVID-19.

During the state of danger – and 30 days thereafter – employers may modify previously communicated work schedules at any time, not only 96 hours before as the law says. As opposed to the standard provisions in the Labour Code, such short-term modification does not require any unforeseen conditions to occur.

Employees may be ordered for telework or home office any time during the state of danger. Employers can derogate from the employment contract according to Labour Code, however, this is limited to forty-four working days or three hundred and fifty-two hours per calendar year. It is not clear according to the new rules whether such restriction shall also apply to telework or home office ordered during the state of danger.

It is important to note that according to the Labour Code, employers must provide circumstances required for performing work even in case of telework or home office.

The new rules do not concern safety and health regulations. According to Labour Code, employers shall provide circumstances that do not harm health and safety. It is a question if there will be more specific regulation concerning the pandemic.

The most important provision of the government regulation is that during the state of danger, parties may derogate from any provision of the Labour Code with their mutual consent which gives them full freedom to regulate their own contractual relationship, so with mutual consent they even may turn off regulations that protect the employee.

Exceptional rules for delivery services and outside retail trade

Due to the spread of the coronavirus, residents are forced to stay at home, thus home delivery services are more needed now than ever before. The new government decree abolishes all administrative obligations to start such businesses.

More specifically, restaurants and other food service shops as well as shops selling daily consumer goods may engage in mail order and out-of-shop commercial activities on its own or via delivery service providers for the supply of the public with food or daily consumer products without prior notice or registration.