Hungary: State Aid for employment in reduced working time – Summary of the modified rules
The Hungarian Government has established a so-called Economy Protection Action Plan in order to respond to the economic situation caused by coronavirus. One of the main pillars of this Action Plan is a state aid for employees for the purpose of retaining workforce set out in Government Decree No. 105/2020 (“State Aid”). As a response to the criticism made by several employers addressed to the criteria for application and granting the state aid, the legal regulations have been recently modified by the Government Decree No. 141/2020.
About state aid in general
State aid may be provided to those employees agreeing to be employed in reduced working time, provided that the criteria set forth in the (modified) Government Decree No. 105/2020 have been fulfilled (see below). The reduced working time shall reach 25% of the recent working time (i.e. working time applicable at the time of the application for state aid) but shall not exceed 85% thereof.
State aid may be claimed based on the modified rules as of 29 April 2020, for a maximum period of 3 months.
The employer and the employee shall apply for state aid together. In case state aid is applied for more employees employed at the same site of the employer, the applications shall be submitted at the same time and state aid may only be claimed for the same duration regarding all affected employees.
Amount of state aid
Lost working time may be 15-75% of the initial working time. The amount of state aid shall be 70% of the employee’s net base wage due to the period of the lost working time. Base wage shall mean the base wage of the employee effective on the day of the application for state aid.
The Government Decree No. 105/2020 maximizes the eligible sum of net base wage in HUF 214,130 (twice the net monthly minimum wage).
Criteria for State Aid
The criteria defined by the Government Decree No. 105/2020 shall be met regarding each and every employee concerned by the application. The main criteria are the following:
- Employing the employee in reduced working time for the duration of state aid;
- In case the part-time work exceeds 50% of the recent working time, the monthly wage to be paid to the employees shall reach together with the amount of state aid the employee’s base wage effective on the day of the application for state aid;
- In case the part-time work exceeds 50% of the recent working time, the parties may agree on a so-called individual development period and payment of wage for the individual development period;
- The employer undertakes to retain the employment of the employee applying for state aid for the period of the state aid and for one more month, i.e. altogether for a maximum period of 4 months;
- No overtime can be ordered during the granting of state aid;
- Justification that retaining workforce of the employer is the interest of national economy;
- Justification that the employer satisfies the legal requirements of distinguished labour relations;
- Justification that the employer is not involved by any final resolution under dissolution proceeding, liquidation proceeding, bankruptcy proceeding or other proceedings specified in legal provisions tended to its wind up;
- The employer does not have any payment obligation related to the state aid recovered by the final resolution of public employment service.
Further amendments by Government Decree No. 141/2020
Furthermore, Government Decree No. 141/2020 has introduced following changes:
- the employer shall not be obliged to prove that he has exhausted all available possibilities of working time schedule;
- state aid may also be applied in case there is a working time banking in progress;
- state aid can also be applied for temporary agency workers and for employees working from home office;
- the employer is neither obliged to present its economic conditions justifying the employment in reduced working time, nor to prove that is not deemed to be an undertaking in difficulty in accordance with European competition law on 31 December 2019.