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More red tape for postings in the EU

Rules on postings across the EU have changed, bringing an increase in the regulatory burden for employment abroad and potentially severe financial consequences for failure to observe.

Dr. Márta Zsédely, Dr. László Szűcs

Firms that send employees to another EU country on temporary assignments, or that employ foreigners at their own headquarters in the EU on an interim basis, had better prepare for harsher times. For the rules on postings across the union have become more stringent.

“There had been a regulation in place before that ensured the protection of the fundamental rights of workers temporarily working in another member state of the European Union,” says Dr. László Szűcs, legal specialist at Réti, Antall and Partners PwC Legal. “However, in the first half of 2016 a new set of rules entered into force in 16 member states, among them Hungary. Obligations range from administrative tasks to the duty of reporting for employers, whether on the sending or receiving end. Authorities are further required to conduct regular checks of compliance.”

Expats living in Hungary are very much concerned by these changes. “The rules somewhat differ for companies from the European Economic Area (EEA) and those having their origin outside of it. Non-EEA firms have less in the way of obligations,” notes Dr. Márta Zsédely, attorney at law at Réti, Antall and Partners PwC Legal. The bottom line is that the Hungarian Labor Inspectorate, OMMF, must be notified of the employment before its commencement and a contact person must be appointed who must be available at all times for the authorities. The OMMF website contains an online form for the purposes of declaring such postings. The receiving Hungarian party is further obliged to inform the sending foreign entity about all domestic employment-related legal provisions.

Same rights

The general idea is to ensure that if a worker ends up working in an EU country, he or she should enjoy at least the same rights as their counterparts in the receiving country. However, their position must not be any worse than that they had in their sending country, either. “If, say, a Hungarian firm sends its workers to Germany or Austria, for instance, it must observe the local employment rules including minimum wage and other sector-specific benefits,” Szűcs says. “By contrast, if an Asian person comes to Hungary, probably not minimum wage, but rather the amount of annual leave may be an issue, since they might have more of that in Hungary than in their country of origin. The rule of thumb is that for every aspect of the employment, the more favorable rule to the worker must be applied in the end.” An additional burden is the obligation to file the employment-related documentation with the authority in the local language, which is then expected to be archived for several years.

An important aspect is a stricter sanction scheme. Authorities have the power to check the rules on minimum wage, working time and equal treatment, and they may also look into whether all taxes and social security contributions have been paid by the employers. Failure to pay them results in joint and several liability of the sending and receiving employers in many European countries. So far, workers have had the right to demand such payments, but there was no joint and several liability in place helping enforcement. Fines vary from country to country. Hungary is particularly generous by imposing a symbolic HUF 30,000 (approximately EUR 100), but others like Germany have draconian amounts of up to EUR 500,000, so it is more than recommended for firms to consult the relevant legislation or to turn to a specialist dealing with the paperwork for them.