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Prospects for 2020: more key labour law changes in Hungary

Written by
CLV Partners, one of Hungary's best specialist firms.
Further labour law and social security changes entered into force in Hungary at the start of 2020, or are expected to become effective during the year, including changes to the treatment of posted workers, rules on social security contributions and the imminent abolition of the specialist administrative and labour courts.

Amendments to the Labour Code: posted workers

In addition to the Labour Code changes described in the previous alert, from 30 July 2020 Hungary will implement the Posted Workers Directive (EU Directive 2018/957 on amendment of the 96/71/EK Directive on placement of posted temporary workers in the frame of service provisions), by extending the mandatory provisions on allowances and costs reimbursement. This means that living costs and expenses actually incurred in connection with the posting will be reimbursed in line with Hungarian employment laws and practice. This will apply to all reimbursement.

Changes to social security contribution rules

From 1 July 2020, the new Social Security Act provides that for each full-time employed worker, the employer must pay social healthcare tax amounting to at least 30% of the minimum wage. The wages of working pensioners will be exempted from social security contributions.

The Hungarian administrative and labour courts cease to operate from 31 March 2020

The independent administrative and labour courts will be abolished, and in the future, employment legal actions will be brought before tribunals. Administrative legal actions will be judged by eight administrative chambers.

With this organisational restructuring, the government wants to shorten processing times, but it is widely assumed that the administrative court restructuring will result in reducing the freedom of the courts in administrative cases.

The rate of unemployment has decreased in the past year

According to the latest survey, the rate of unemployment has decreased over the last year from 3.6% to 3.5%.

At the end of 2019, approximately 163,000 people were unemployed: that is less than the number of unemployed people at the end of 2018.

According to the survey, published by the Central Statistical Office, in 2019 the average period of unemployment was 10.6 months, and at least 30.5% of the unemployed had been looking for a job for a minimum of one year so they are considered as ‘long-term unemployed’.