Employment scheme for reduced working time
4/23/2020
As part of the economy recovery plan easing the economic issues caused by the COVID-19 outbreak, the Hungarian Government has announced an economy plan to maintain jobs in companies facing difficulties due to the COVID-19 outbreak. The subsidy is available from the 16th of April. The original regulation was amended making it significantly easier to apply for and administer the job retention subsidy.
According to the modified regulation the reduced-time employment subsidy is available at the joint request of the employee and the employer, at the competent government office where the employee is employed.
Only one application per employee can be submitted on the standardized form during the so-called emergency situation or within 1 month after the emergency situation ended.
The form is available at the following link: https://nfsz.munka.hu/Allaskeresoknek/Lapok/ak_tamogatasok.aspx
The government office shall assess the application within 8 working days and should take a decision in the form of a resolution. From the date of the resolution, the employment contract is automatically amended for the duration of the subsidy regarding the reduced working hours and the individual development time, unless the parties have already amended the employment contract before the application was submitted.
The basic criteria of the subsidy is that the employer and the employee agree on reduced working hours and – if the reduced working time exceeds half of the working time under the employment contract prior the amendment – on individual development time beyond the reduced working hours.
Subsidy can be requested if the part-time work reaches at least 25% of the working time but does not exceeds 85% compared to the prior employment contract calculated in a three months average.
The employer may submit an application together with the employee if
The employee:
- has been employed since the date of the declaration of the emergency situation;
- is not under a notice period;
- is not subject to repayment of a subsidy ordered by a final resolution of a public employment authority.
The employer:
- has been operating for at least 6 months;
- demonstrates that the reason behind the employment in reduced working time is directly and closely linked to the emergency situation, and provides credible evidence that the maintenance of headcount is essential to its continuous economic activity and thus of national economic interest;
- undertakes that together with the subsidy, the wage of the employee reaches the employee's previous basic wage during the period of the subsidy and that he or she pays wages for the individual development time; unless the reduced working hours do not exceed half of the working hours under the employment contract prior to the amendment;
- there are no ongoing liquidation proceedings against the employer (e.g. voluntary liquidation, liquidation, bankruptcy proceedings).
The subsidy is available for employment, including distant-working, and home-office, employees working in allocated cumulative working hours and for hired labour force as well. The benefit cannot be paid for unpaid leave.
If the reduced working time does not exceed half of the working time under the employment contract prior to the amendment, the employee and the employer may agree on individual development time. If it exceeds, an individual development time must be agreed. In practice, this may mean that if an employee was originally employed for 8 hours and further employed for 6 hours, it is mandatory to agree on an individual development time of 3 months. If, on the other hand, a worker was originally employed for 8 hours and further employed for 2 hours, then individual development time is not mandatory, but an option. Training for the individual development time can be organized within two years of receiving the subsidy.
In respect of the same employment relationship, the employee may not receive other state or EU funded part-time employment related incentive, nor may the employer receive job-creating, job-maintaining or R&D headcount employment incentives.
The monthly subsidy amounts to 70% of the base salary and reduced by personal income tax advance and contributions. The maximum base that can be taken into account is twice the mandatory minimum wage reduced by taxes and contributions in force at the time of application. Thus, the maximum amount of the subsidy can be HUF 112,418 per employee per month (HUF 214,130 * 75% * 70% = HUF 112,418).
The scope of the regulation has been extended until the end of the emergency situation defined in Decree 40/2020 On the declaration of a state of emergency. (III. 11.), and the changes must be applied to the ongoing subsidies.