Tax News Hungary – Modification of short-time-work regulations

In Government decree No. 141/2020 which was published on 21 April 2020the Government has already made several important changes in the recently introduced requirements of the Hungarian salary aid program (Kurzarbeit) in order to make it more easily and quickly available to companies in distress.

The government decree contains the following amended rules:

• For the government aid at least 15 percent, at most 75 percent decrease in working time is required (thus a reduction to 25-85 percent of the original working time is supported), meaning that the salary aid can be requested for short time work amounting to at least 2 work hours per day;
• Due to the fact that even a work-time reduction of 75 percent can be supported, and the proportion of the aid remained 70 percent of the lost work-time, taking into account that the maximum amount of net income to be considered is still HUF 214,000, the maximum amount of aid per employee is HUF 112,000 per month (this was HUF 75,000 before).
• In the request there is no need to describe the reasons that lead to the economic distress, or the steps that were taken and are planned to be taken in order to minimize them. However, the employer still needs to prove in the application for aid that the economic reasons of the short-time work are strongly and directly connected to the State of Emergency (and that there are no other reasons behind), and that keeping its employees is a national economic interest linked to its continued economic activity;
• Employment contracts with supported employees will become amended by law, thus it is not required to modify each employment contract individually, and to agree with the employee about the conditions of short-time work and the ‘individual development time;
• Prohibition on downsizing is limited to employees who receive the aid, not the average statistical number of staff;
• Prohibition to order overtime is also limited to employees who receive the aid;
• Salary aid can be provided to employees employed in banking of working time scheme, remote work, home office and also to temporary agency workers;
• The formerly introduced ‘individual development time’ has to be agreed about only if the amount of short-time work is more than half of the original work time
• The amount of aid will be determined based on the base salary of the employee – and not the stoppage payment - applicable on the day the request for aid is submitted.
• Employers are required to promise that the employee’s income for the short-time work together with the aid will reach the employee’s original base salary, if the short-time work is more than half of the original work time;
• The ‘individual development time’ will not have to be utilized at once, trainings can be organized for this purpose by the employers anytime within 2 years following the awarding of the aid;
• It is a new requirement that with regards to the same premises the government aid can only be awarded for the same period in case of all employees for whom aid request had been filed at the same time;
• With respect to the employer it is no longer required that it is not considered as ‘a company in difficult situation’ based on the terminology of EU competition law.

Furthermore, the Hungarian Government is also planning to introduce an employment-protection loan for employers, which a loan can be requested for up to 9 months of employee salary with a 2 year maturity at a 0,1 % interest rate. Official details have not yet been published.