The first governmental decree on the details and conditions of the previously announced support for short-time work was published on 10 April. However, the regulations were too complicated and therefore the Government made several modifications based on the incoming feedbacks. The new scheme provides higher financial support that is more easily available. The main elements of the program effective from 29 April – as amended – are summarized below.
Submitting an application
The metropolitan or county government office provides aid to the employee for economic reasons related to COVID-19, at the joint request of the employee and the employer. An application for aid may be submitted during the period of the announced state of danger or within one month thereafter.
The application may be submitted electronically via the official company gate (in Hungarian: “Cégkapu”), using the standard form published on the website of the National Employment Service. The application may be submitted to any government agency in whose area of competence the employee is employed.
The government office rules on the application in 8 days from reception and there is no appeal against the decision. In the event of rejection, the application may be resubmitted for the same worker one last time.
In the application, the employer must demonstrate that the economic rationale for short-time work is directly and closely related to COVID-19 and must also provide credible evidence that the retention of employees is a national economic interest in the context of the continuing economic activity of the employer. With regard to these criteria, the legislation does not specify further aspects, but the standardized form contains possible answers.
The new rules do not require to amend the employment agreement in order to apply for aid. On the date of the decision, the employment agreement will be automatically amended for the duration of the aid as regards reduced working hours according to the application. If the parties intend to amend other terms and conditions of the employment agreement or to reduce working hours beyond the duration of the aid, they may do this only by mutual agreement, however, this does not preclude entitlement to the aid.
It is an important rule is that the application must be submitted at the same time for all affected workers at the same site and only one application (including all affected workers) may be submitted per site (except if the application is rejected or the aid expires), and the term of the aid shall be the same for all employees on the same site.
Extent of shortened working time; amount of aid; individual development time
Working hours may now be reduced by a minimum of 25 and a maximum of 85 percent instead of the previous 50-70 percent, so the total working hours can be reduced even for a part-time job of 2 hours but the aid can be also claimed for reducing working hours from 8 to 6 hours.
The aid may be requested only for the period following the submission of the application. The duration of the support is three months.
The amount of the aid is seventy percent of the monthly base wage as effective on 11 March 2020 that would be payable for the lost working time, excluding the personal income tax advance and contributions determined according to the general rules. When determining the monthly amount of the aid, a maximum of twice the net amount of mandatory minimum salary valid at the time of submitting the application may be taken into account. Thus, the maximum monthly amount of aid (in case of the maximum reduction of 75% of working hours) is HUF 112,000, even in the case of a net salary of several hundred thousand forints. As the regulation stipulates that the reduced basic wage of the employee must reach the original base wage together with the aid, companies will presumably only apply for the aid in the case of workers with lower salary.
According to the first plans, parties would have been required to agree on a period called individual development time that covers 30 per cent of the lost working hours in order to apply for the aid. Individual development time can be spent on development related to the employee’s job or the employer’s activity, and for which the employer is obliged to pay wages. However, under the amended regulation, the parties are only obliged to agree on individual development time if the reduction of working time does not reach 50 percent. If the original working time is reduced by at least half, agreeing on individual development time is only an option. However, in this single case (i.e. if the employee’s working hours are reduced by at least half and individual development time is also agreed), the employer is not obliged to ensure that the employee’s basic salary and the support together reach the previous base salary.
Persons eligible for aid
Although the original legislation did allow it either, the amendment explicitly states that the aid can also be claimed for telework or home office employment. The novelty is that the amendment extends support to temporary agency workers.
The aid can only be granted if the employee
- has been employed by the employer at least since 11 March 2020,
- is not serving their notice period,
- does not receive any other part-time allowance for the same employment, and
if the employer
- has been functioning for at least six months,
- does not receive EU-funded job creation or job retention benefits in respect of the employee at the time of application,
- is not under liquidation, bankruptcy proceedings, and other proceedings for its termination may not be in progress and
- was not ordered to repay support by a final and binding decision of the national employment authority.
Furthermore, the employer must meet the conditions of orderly employment relationships. An employer meets these criteria if he has properly registered all their employees (including those employed in the framework of simplified employment), has complied with the legal restrictions on the minimum age of employees, has not violated the deadlines for payments stipulated in the collective agreement, fulfilled the principle of equal treatment and has not employed a third-country (non-EEA) worker without a permit. The status of an employer with orderly employment relationships will be withdrawn in case the authority imposes fine on the employer for violations of the above obligations repeatedly within two years. Certificates are issued by the labour authority (in some cases the mining authority), the Equal Treatment Authority and the tax authority.
Commitment of the employer
By submitting the application, the employer undertakes to maintain staff numbers, i.e. to maintain the employment relationship of the supported employees for the duration of the aid and for one month thereafter. The staffing obligation shall be deemed as a single obligation even in case the employer has multiple sites.
The employer also undertakes not to order overtime work during the term of the aid for the supported employees.
Termination of the aid
The state aid is terminated at the request of the parties and by virtue of the termination of employment or if the short-time work is amended. The aid is withdrawn if it is established that its criteria were not met; also, if the employer or the employee does not fulfil any of the obligations related to the aid. Thus, for instance, the aid will be withdrawn if the employer orders overtime work for the supported employee or if the employee fails to fulfil his obligation to work or to be available.