A tough new world emerging for employees

A proposal on the new Labor Code was made available to the public on July 22, and is to be presented to Parliament in September. The planned changes have many opponents, with experts saying that the proposed law is full of vague and intangible regulations. National trade union associations called the draft “unacceptable” because its regulations make employees utterly vulnerable.

One such issue revolves around the possible legal consequences of employees failing to fulfill their duties. For such cases, the draft would allow employers to impose sanctions. Among others, this could be executed in the form of withholding wages – up to an employee’s six-month base salary.

The new code would require employees to “behave in an expected way” even outside of working hours. It would also weaken employees’ ability to represent their own interests by “attacking and reducing” the system of collective contracts.

Fewer days off

The new rules also include a reduction in mandatory severance pay, holiday pay and overtime pay. The bill would cut severance pay from the present three months’ salary to just one month after more than five years of employment, two months after 15 years of work, and three months for more than 25 years. There would no longer be severance payment for retirees who are working.

In line with the proposed changes, employers would be able to lay off mothers more easily after their three-year subsidized child benefit period has ended. The proposed changes would also apply to those on prolonged sick leave and those approaching retirement age.

Extra vacation days would increase with age at a more gradual rate. The bill also cuts the compulsory overtime premium for night shifts by 15%. Under the bill, an extra 50% of wages would be paid for Sunday work and there would be double pay for those who work on national holidays.

Those who like it

Employers’ associations have welcomed the proposal. Ferenc Rolek, vice president of the Confederation of Hungarian Employers and Industrialists, noted that the new legislation would be more flexible than that existing. He emphasized that it allows contracts between employers and employees to be written according to local circumstances.

Ferenc Dávid, head of employers association VOSz, said the draft Labor Code helps to make labor more flexible, as it includes fewer regulations and gives more opportunities for agreement between employers and employees for their mutual benefit.

Péter Szijjártó, spokesman to the prime minister, said in response to opposition criticism that the draft does not include existing protection against dismissal for employees above the age of 55, insisted that that the code would maintain this protection. He cited a questionnaire sent out to households earlier, in which 91.2% of respondents said the protection of those in the years before retirement is necessary. Szijjártó also claimed that the new code would help increase employment in Hungary.

Voices of objection

Minority government party KDNP has also raised worries about the planned changes. Caucus leader Péter Harrach said that it is contradictory with the proposal the party has drafted on family protection rights, citing the parts referring to mothers on maternity leave and their return to the labor market.

The association of Hungarian labor unions MSzOSz has found faults in sections which reduce wages and holidays and increase working hours. The association of independent labor unions is also protesting the proposal, saying that it leaves employees unprotected and rules are one-sided and represent only the interest of employers.

Referring to the parts imposing sanctions on employees for failing to fulfill their obligations, Hungarian business weekly HVG compared the draft bill to legislations applied to labor-related issues during Hungary’s socialist era, calling the new rules even more ruthless, as they “leave too much elbow room for employers in sanctioning issues.”

Already passed

While the fully modified Labor Code will be discussed by Parliament this fall, several labor-related pieces of legislation have already been passed. These include a rule on extended working hours, changes in the wage system for extra hours, extending the time of probation, and reducing the period during which one can receive unemployment allowance to 90 days from the previous 180.

The current proposal will be discussed in Parliament at the fall session. The government expects to save HUF 312 billion during the next three years with the changes to be implemented in Hungary’s labor market.  N