Coronavirus – Reduced working time and wage compensation in Hungary

Dear Clients! Dear Readers!

On 7 April, 2020 the Government announced another economic rescue package.

In our present Newsletter the rules of state funding to supplement wages and salaries that can be required for the employment in reduced working hours (Kurzarbeit) and the detailed rules of funding employees doing R&D are reviewed.

I. State funding that may be required in case of reduced working hours [Government Decree of 105/2020 (April 10.)]

General rules

By right of the government decree, which will come into force on 16 April, 2020, the government bureau of administration will grant the funding to the employee on the joint request of the employer and the employee.

The funding will be disbursed to the employee monthly ex-post. The disbursed amount is exempt from tax and contribution.

The funding may be requested if the employer employs the employee in reduced working hours in order to safeguard the job in the emergency situation, and besides they agree on individual development time.

Reduced working hours are: minimum 30 % and maximum 50 % reduction of working hours in relation to the labour contract prior to the amendment, but at least a part-time job equal to 4 hours per day. (Considering an 8 hours per day employment the working time of 4-5, 6 hours per day can be regarded as reduced working time).

Individual development time: in favour of the development relating to the job the employee can quit his/her employment obligation up to 30 % of the lost working time due to the reduced working hours. (The Decree does not provide for what the employee has to do during the development time).

The rate and conditions of funding

70 % of the proportional part of 30 %, 40 % or 50 % of the lost working time of the monthly absence compensation established as of 11 March, 2020 and reduced by the personal income tax advance and contributions.

In practice it means 70 % of the lost net wages and salary. The maximum net wages and salary that may be taken into account is HUF 214.130 per month, which means that the maximum amount of funding that may be requested is HUF 74.945 per capita per month.

To be granted the funding has several conditions about which our colleagues are happy to give information, and can help you with compiling the request as well as calculating the available funding.

Request for funding

The employer can submit the request electronically to the competent government office covering the employee’s place of work using the form, which can be found on the website of the National Employment Service.

Within 8 working days the government office will examine the existence of conditions set out in the Government Decree, and if these are met the funding will be granted.

II. A wage subsidy to be paid to R&D employees [Government Decree of 103/2020 (April 10)]

At the employer’s request the capital city or county government office can grant funding for a maximum of three months to employers employing R&D employees, provided the conditions set out in the Government Decree are met.

According to a separate legal act an R&D employee is a natural person who deals with new knowledge, intellectual work, products, services, procedures, methods, creation or development of systems or management of project implementation.

The target group available for funding consists of researchers, engineers, IT specialists, and the highly qualified employees of the research, development and innovation sector (R&D&I).

The monthly amount of funding

If the employee’s gross wages or salary valid on the day of the announcement of the emergency situation is

• HUF 670 000 or an amount in excess of this the funding will be HUF 318 920,
• if it does not reach HUF 670 000, the funding is the amount of HUF 318 920 calculated as the ratio of the employee’s gross salary to HUF 670 000.

The amount of the monthly funding together with other funding announced in the news bulletin No. ‘2020/C 91 I/01’ of the European Commission may not exceed 80 % of the monthly wages and salaries, including the employer’s contributions, of the employees concerned.

The funding constitutes state funding and can be allocated in the form of non-refundable grant.

When being granted the funding the employer undertakes:

• maintaining the number of staff prior to the submission of the request
• re-employing the employee for at least three months
• During the period of funding or re-employment the employer may not reduce the wages or salary of the employee prior to the day of the declaration of the emergency situation
• The employer shall inform the government office within two working days about the change in the conditions for funding within his/her obligation to cooperate and provide information

The funding does not relate to:

• doing the job in a different position, at a different workplace or for an employer different from being laid down in the labour contract,
• temporary employment,
• downtime
• time off

An employer in any sector of the industry (with the exception of any budgetary authority) may request for funding from 15 April 2020 during the period of emergency or within one month after its cessation, using the form that can be found on the website of the National Employment Service.

The employer will have to submit the request for funding to the competent government office covering the employer’s headquarters or premises which will examine the existence of conditions and will decide on the funding within 8 working days.

If you have any questions about the practical application of the above rules, please, feel free to contact us.

Best regards,

ABT Treuhand Group