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Labor Code Changes in Hungary Are Yet to Come

Labor Code Changes in Hungary Are Yet to Come

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A number of changes to the Labor Code expected to come into force on July 1, 2017, will not do so. These amendments to the Code – which were submitted to the President of the Parliament by the head of the Economic Committee – would primarily have affected work-time scheduling provisions, making the Labor Code more sensitive to the needs of the improving economy and changing labor market. According to Parliament, the amendments would have significantly improved production for businesses over a period of six to seven years. 

Specifically, the amendments would have affected the legal definitions of the working day and working week. The changes would also have put work time scheduling into the focus of work organization instead of the operation of employers. Currently, if the employer organizes work within a time frame, only the start and the end dates of that time frame must be indicated and shared. According to the proposed (and now cancelled) changes, the employer would also have been required to share the work time to be fulfilled with employees. 

According to the current provisions of the Labor Code, a work time frame may be four months, which can be extended to twelve months on the basis of an agreement between the employer and a trade union. The planned changes to the Labor Code would have extended the length this time from 12 to a maximum of 36 months, and would have resulted in additional changes to the legal content of the work time frame. The planned amendments would have affected the provisions of general work time scheduling and its requirements, such as when work time scheduling must be shared with the employees. Additional changes would have been implemented concerning the questions of how and when the employer could modify already-announced work time scheduling.

According to available information, the above changes resulted from lobbying activity by the automotive industry and were submitted to Parliament without consulting employees’ representative bodies. As a result, the proposed changes triggered significant protest among trade unions and other organizations, which claimed that the proposed amendments – in particular the implementation of the 36-month work time frame – would substantially increase employee vulnerability and result in a significant increase in administration burdens. They also claimed that the proposed amendments were not in line with EU directives. They argued that the introduction of the 36-month work time frame would be acceptable if collective bargaining agreements could be sealed with entire business branches – which would guarantee employees’ interests – instead of the individual collective bargaining agreements which are fairly standard in Hungary. The employees’ representative bodies also insisted that the provisions in the proposed amendment allowing work time scheduling to be modified on the basis of employee consent be deleted, arguing that employees would be under great pressure from employers to provide that consent. 

Surprisingly, employers also criticized the proposed amendments on the ground that they would result in a significantly increased administrative burden.

Ultimately, the head of Parliament’s Economic Committee had a hearing with both employer and employee representatives and concluded that the proposed amendments, in their current form, inadequately fulfilled their economic purpose. Accordingly, he recommended the withdrawal of the plans. The Parliament’s Economic Committee agreed by an overwhelming majority. 

As a result, the changes to the Labor Code will not come into force on July 1, 2017, as expected. However, discussions on the matter have not ceased. According to employee representatives, the current negotiations should not only affect the cancelled amendments, but should also settle certain matters left unresolved when the new Labor Code came into force on July 1, 2012. 

By Gabriella Ormai, Managing Partner, and Gyorgy Balint, Senior Associate, CMS Hungary

This Article was originally published in Issue 4.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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