The Hungarian Government has enacted the following measures in Governmental Decree No. 47/2020 of 18th March to ease the labour law related difficulties that have arisen in connection with the declaration of state of emergency.

1. Employers in the field of tourism, catering trade, entertainment, performing of arts, the movie industry, event management and sport services shall be exempt from payment of employment related taxes for the months of March, April, May and June in 2020 after their employees.

2. Employees engaged in these fields shall be also exempt from the payment of salary-based affixes, with the sole exception of health insurance in-kind affixes, which shall amount to no more than a monthly payment of 7,710 HUF, equivalent to the monthly health insurance services.

3. Those obliged to pay tourism development contribution shall be exempt from payment of the tourism development contribution for the period between 1st March 2020 and 30th June 2020 and are also exempt from the obligation of avowal and acknowledgement of tourism development contributions in the same period.

4. Minor taxpayer businesses that have chosen fixed-tax regime (KATA) and who are engaged in passenger transportation, such as cab drivers and shops, are exempt from all such tax payment obligations under the Act on minor taxpayer businesses fixed taxes and small business taxation (KATA Act) for the months of March, April, May and June 2020.

5. Labour law related changes affect the Hungarian Labour Code as follows:

• Employers are entitled to amend already notified work schedules prior to the usual 96hour period before the commencement of the daily start of work, provided that an unforeseen circumstance has arisen that affects its business and operations.

• Employers are entitled to unilaterally instruct employees to perform work from home office, or by remote work.

• Employers are entitled to take reasonable and necessary measures to check and control the employee’s health status.

It is important to note that the measures related to the Hungarian Labour Code shall be in effect for an additional 30 days following the elapse of the state of emergency and may be not superseded by any collective agreement. However, it is to be stressed that the employee and the employer may diverge from the regulations of the Hungarian Labour Code in an individually negotiated unique mutual agreement. This means that the parties, based on their mutual agreement may diverge from the amendments, however, such arrangement may not be unreasonably disadvantageous for the employee.

In the professional opinion of our Legal Partnership, the governmental decree is sure to be followed by further measures and more detailed regulations due to expected complications in health and economy conditions.

In the current circumstances it is important to stress that the employer may not unilaterally instruct its employees to take a period of unpaid leave. At this time, such may be only undertaken at the employee’s own request, and the parties may be required to mutually agree in such arrangement. Such arrangement is unfavourable to the employee in certain ways, as the employee’s social security will be suspended in the first 30 days of the unpaid leave, and furthermore the employee’s social security insurance will be terminated on the 31st day. However, such arrangement may also prove to be beneficial for the employee, as his/her employment will not be terminated at the same time.

In general, it can be noted that the employer shall be exempt from its obligation to pay salary only in the case that it cannot perform its employment obligations due to an unavertable external circumstance, provided that the employer acts accordingly and reasonably. As an example, such would be the case where the employer does not receive base materials required for work due to the fact that those are to be imported from a foreign country under quarantine measures, and as a result, the employees cannot perform work, provided that the employer has made reasonable, but ultimately failed attempts to secure an alternate supply of base materials from elsewhere.

It is to be noted that the economic situation resulting from the outbreak of the coronavirus pandemic may also constitute a situation that is related to operations of the employer, and this may provide reasonable legal grounds for the employer to exercise its right to terminate the employment relation with the employee.

If you have any questions related to the coronavirus outbreak’s effects on employment, or require legal counsel in a specific case, please do not hesitate to contact, our managing partner and attorney Dr. Balázs Tamás shall be available for legal counsel at the phone numbers (061)-302-5697; (06-1)-302-7938; (06-1)-312-1103, as well as at the e-mail address office@bakolegal.com and balazs@bakolegal.com. Our webpage is at www.bakolegal.com.

23rd March 2020 in Budapest

BALÁZS & KOVÁTSITS Legal Partnership