On October 7, six leading labor lawyers in Hungary sat down for a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea. The conversation focused on the current state of affairs of labor regulations in Hungary and their evolution over the pandemic-marked last few months.
Round Table Participants:
- Daniel Gera, Counsel, Schoenherr
- Gyorgy Balint, Senior Counsel, CMS
- Marton Kertesz, Of Counsel and Head of Employment, Kinstellar
- Nora Ovary-Papp, Lead Attorney, Baker McKenzie
- Rita Parkanyi, Partner, KCG Partners
- Szilvia Fehervari, Partner, Szabo Kelemen & Partners Andersen Attorneys
You can also listen to the conversation as a podcast below.
CEELM: Let's start with a broad brush. The GCs we spoke with frequently described a state of scrambling to keep up with legislative changes. What have been the biggest legislative updates that related to labor law and where were they coming from – were they Governmental or Parliamentary in origin?
Fehervari: Overall, employers had a hard time during the first and the second waves of the pandemic, with the government introducing a lot of changes. Having the power to make decisions via decrees during the state of emergency, the government introduced some 250 decrees.
Some of these tackled teleworking, home office, working time cycle, and broad changes to the employment code, but it was the temporary measures that made it quite difficult for all of us to follow. Having changes enacted most suddenly was not a positive experience for most employers, the least of which because they introduced certain aspects that were not helpful for them.
Balint: The legislation could have been clearer, for sure. There are still problems with partial teleworking and home office. Even though we have court practice in place – we do not know if it will prove to be useful in the long run, with legislative plans for regulating partial teleworking still missing.
Another governmental decree – not being very clear – starts with provisions that definitely do not make way for teleworking, but then flips later on and starts regulating teleworking. There is a rush in legislation, for sure, uncertainty about definitions, and we cannot see any vision or concept for what the next step will be.
Parkanyi: I’d like to add that different waves of the pandemic require different answers from the legislative bodies.
During the first wave, the main objective was to make it easier for employers to adapt to the new situation, so it was crucial to allow for the home office to be an option. Subsequent waves, however, made it clear that this pandemic will last longer than first thought, which made the home office regime not that straightforward for all – imagine a situation of juggling work and a bustling household. For this reason, the government introduced a requirement for the parties to decide on home office work via an agreement.
Of course, other aspects differed wave to wave, such as tax benefits, subsidies, sectors targeted for the most support, and the like.
CEELM: Overall, do you find most updates have been more employer- or employee-friendly? How do they compare to past labor legislative updates?
Fehervari: The government tried to act in line with the economic protection action plan and keep jobs in existence – so they were mostly employee-friendly. Some of them extended the possible length of the working time cycle (via collective bargaining agreements) to 24 months, others had to do with remote work, subsidies, and the like.
CEELM: Which were the biggest issues contributing to the feeling of uncertainty, in terms of legislation?
Kertesz: It would appear that, in general, the regulatory system has been slow to react and still has not addressed all issues; it can be described as “a day late and a dollar short”.
The fact that there is no clear delineation between home working and teleworking has plagued employers for a long time. It was just in July 2021 that, finally, the more restrictive work safety regulations, which were making home working most problematic, were lifted. However, the situation in which the employer could forbid employees from coming into the office, to keep safety high and infection numbers low for instance, is yet to be tackled by the regulator.
Furthermore, work and safety regulations – up until the summer – required the employer to ensure the safety of all employees, even those working from home. This made the employer liable for any and all work accidents that would occur, even at home. A most difficult task!
This was only compounded by the fact that there is a very strict employer liability system in place. Checking the homes of numerous employees for compliance with work safety reasons is impossible – it is unlikely that there was even one company capable of completing this task. While legislative focus, obviously, was on urgent areas such as curbing the effects of COVID-19, dealing with teleworking and home office work came rather late.
Ovary-Papp: Practically speaking, there are difficulties caused by a lack of legislation. Our clients are trying to get the employees back to the office and have employment contracts amended to be applicable for hybrid working models – including allowing for the right of the employer to ask employees to stay home or come into the office, as needed. This flexibility of choice regarding the place of business must be allowed for. But without clear rules, we cannot prepare agreements beforehand.
Fehervari: The basic problem is that the legislation is still far from being complete. The current legislation is in effect until the end of the year – which leaves January as a question mark. Last summer, there was a promise of an overview of teleworking and home office legislation, but it has not come to fruition.
CEELM: Why is that distinction between teleworking and home office critical and how does it impact companies?
Parkanyi: It is very interesting, the dual concept of teleworking and home office, with the former being regulated and the latter not so much. I think that the legal definition of teleworking is quite outdated. For both employers and employees, it is quite different if it’s one or two days, as opposed to it being a regular way of work.
A better definition of remote work would outline and delineate the risks. While the employees, overall, would prefer working from home due to all the freedoms and flexibilities that go with it – it still poses a risk to the employers. The lack of regulation and experience is noticeable. As a response, some companies have had their compliance departments create policies and checklists of home office compliance – but often not even C-level executives could have their own homes pass the mark.
Once the pandemic is over, it would be great to have a clear, clean definition that would enable us all to predict what will happen if employees work from home. Not to mention how much easier this would make things, rather than have the employers overburdened by having to monitor every single employee’s home.
Gera: I’d largely agree that the definition is outdated, Rita is right. Still, the usual problem is the economic inequality in these relationships – one side has much more economic power, so consent might be twisted. Leaving everything to the parties to settle via agreements accentuates this economic difference.
The legislation itself is not clear, especially when compared to the other countries. The short-time work approach we had last year – Kurzarbeit, as it is called in German – coupled with wage subsidies came with a bit of a delay, after having already been in place in the region in Austria, Germany, and some other CEE countries. Then the regulation introducing it needed to be modified shortly after its acceptance.
Also, with the legislation changing daily, and us having to work overnight to prepare to advise clients in the morning, the whole situation was quite challenging. There were even certain provisions that were introduced and got abolished before ever entering into force!
Balint: Going back to the definition mix of teleworking and home office that Rita mentioned – I do not quite get why it is problematic. As I understand it, the home office allows for the employee to choose a place of work, whereas teleworking is an option to not work from the office on occasion.
Let’s not forget there are still companies that operate based on production lines – work that must be performed in person, without any option for remote engagement. Will these employees have to be provided with some additional facilitations because of this or extra compensation if they cannot work from home because of the job description?
Parkanyi: I’d prefer a single definition of remote work. For me, the main point is that the employee is not sitting in the office. It would be better if we simplified the definition.
On Gyorgy’s point of companies that simply cannot introduce a remote option – I was not talking about employees working in a factory, for example. I don’t think that they should be compensated any extra for this – it is quite plainly easy to see what these jobs are before one starts working at them. Also, extra compensation would indicate that the home office was the preferable method of working – if you had to pay those who work in person more.
Companies will be challenged over the coming years to find the right mode of remote working, one which fits their culture, their working requirements, and their employees.
CEELM: How was the concept of home office / teleworking addressed in legislation before the pandemic and how did it handle the outbreak's stress test?
Ovary-Papp: There was only a small rule regarding the reimbursement of the costs of the remote work relating to the personal income tax, and that is not sufficient to determine how much should be paid to employees. Not to mention the issue of taking commuting costs into account – which is a bit skewed with people working from home now.
Until now, in the case of Budapest for instance, employers had to cover the commute costs if the employee traveled beyond the administrative boundary. However, a lot of employees have moved away from the city during the pandemic, largely working from home and coming into the office only every so often. Naturally, a question arose if the employers still had to cover the commute when it did happen, occasional as it was.
Balint: I agree that the commute is occasional, but the general rule applies in my opinion. So this is something that ought to be covered, given that there is an ongoing working relationship and that employees would not have to commute anywhere if not for their employer.
Ovary-Papp: Agreed, but it is not clear how much should be covered, so there is a question of it being voluntary. And if the employer wishes to cover these costs, how high should these expenses go?
Balint: I understand Nora’s concerns. On those occasions when the employer is not in the place of work, there is no option for employees to enter. So, in these cases, employers wish to interpret the situation as being a home office, but not a voluntary one. But it’s actually teleworking, strictly speaking. Quite complicated to navigate all of this.
Gera: We too came across the difficulty of quantifying the extra costs of working from home. While it would be easier if there was a methodology in place to calculate how much it costs for employees to work from home – with the electricity bills and the like – there would still be numerous practical questions left. Still, I think that most of these costs should be compensated under the general rule.
Kertesz: I’d agree with all. Regarding the lump-sum compensation – and the entire legal framework – the issue is that it is, and was meant to be, temporary. We don’t know when this situation will be over and whether we will be going back to the same world we had pre-pandemic. The home office is something we had before the pandemic, for sure, but it is unclear how that will change in the future. There is no clear legal framework in place.
For instance, many employers are hesitant to introduce a lump sum compensation to employees for home office – because if they do decide to implement it, they will have to keep providing this compensation even after COVID-19 ends and they cannot be sure if the relevant tax perks will stay in place.
It would be nice if the legal framework was consistent and constant, if it was here to stay, and if we knew how it would impact the situation.
CEELM: With the increased demand for remote working and with all projections to have this trend stay and, ostensibly, grow – what leeway might employers have to limit and revoke the freedoms given?
Kertesz: It mostly depends on the wording of the employment contract. If it gives the employer the flexibility to revoke additional rights granted during the pandemic – it should work. From an HR perspective, it is much more complicated. I am seeing a much higher level of fluctuation at employers, with a lot of HR managers complaining that they’re losing employees and having to hire more.
Also, the younger generations are increasingly aware of their rights and have started asking about home offices more and more often. It happened to me as well, in an interview with a junior – being asked about the home office before salary even!
Fehervari: What we try to suggest to clients is to keep the contract flexible. However, until the Employment Code is updated to cover everything, we try to encourage employers to cover all possible eventualities in internal policies, in case there are some legislative grey areas.
If the parties share a basic principle of cooperation, all further negotiations will be smooth. Still, HR, legal, and compliance departments must come up with internal rules and regulations that could be used to fill in the gaps wherever the laws are quiet.
Parkanyi: There is a huge labor shortage nowadays and there is a clear need for the home office to be an option. So, if you wish to retain people, you must be flexible in your approach. I too cannot imagine an interview without the question of how the home office is regulated within an organization.
CEELM: Many companies have been forced into a hyper-accelerated digitalization effort resulting from the increase in home office set-ups. What are the main pitfalls from a legislative perspective?
Gera: It’s a very good question. It has happened, in this COVID world, that employees were hired and fired without being in personal contact with anyone in the organization, just via communication platforms.
One of the questions present even before the pandemic – which was only emphasized – is how employers can introduce a digital office, a paperless environment. Labor-related legislation is a bit more flexible when it comes to accepting electronic documents, but even here there are problems. For example, if you must terminate someone through Teams or Zoom – when is the termination served? Is the handover of an electronic document through such channels sufficient? What happens if the conversation breaks down halfway through due to a poor connection?
These are the kinds of questions that have been examined by the courts before the pandemic, but have now taken a whole new dimension.
Ovary-Papp: I agree, we were faced with these questions too – how to communicate a remote termination. It was quite surprising at first, but now we got used to it. If the case ends up in court, the burdens are all on the employer, so we try to get our clients to get it all in writing – paper-based documents still have more weight.
Kertesz: My feeling, in this context, is that the legislation may be a bit behind the times. The only way to serve a notice of termination is in writing, physically or posted. Of course, delivery by post is another issue.
There is a legal assumption regarding the time of delivery, but that’s a moving target, especially if the employee does not cooperate and does not take delivery of the notice. In any case, the HR manager needs to calculate what is owed to the employee, but they cannot do it precisely because of the uncertainty of delivery. The issue only escalates with the high frequencies of employee fluctuations.
Balint: According to my understanding, the regular notice will qualify as delivered on the fifth working day after the first day of attempted delivery. Court practice accommodates for such a solution. However, I do agree that calculating what is owed to the employee is very difficult with this time period being hard to predict.
CEELM: Are employers allowed to order testing?
Gera: Yes, under certain circumstances, but it depends on the exact factors. The data protection and privacy aspects of employee surveillance are very important here. Especially as personal data related to testing is viewed as health-related data, which may only be processed under strict circumstances.
On the other hand, a general obligation of the employer under health and safety rules is the protection of other employees and the community and providing for a safe working environment. So, for example, if an employee has traveled to a country in the red COVID-19 zone and returned to the office – testing could be imposed to protect other employees and the community.
CEELM: Can an employer ask an employee to disclose their vaccination status, if so to what extent?
Fehervari: This is tackling both privacy and healthcare concerns. You cannot ask what vaccine somebody has got and why they chose it. You can, however, have a card indicating vaccination status (immunity card), maybe with an indication of the immunity period. It really depends what the employer can ask for, if anything more than that. And as for this immunity card – you can simply ask for it to be presented, you cannot copy it, take it, save it, or build a database from it.
Vaccination applications give much more data than a simple immunity card nowadays, such as personal healthcare data, but I would never suggest to any employer to inquire into an employee’s vaccination status, without first obtaining their consent. So, in a nutshell: immunity cards – yes; vaccination status inquiries – no.
CEELM: So it would be acceptable to ask for an immunity card but not vaccination status? Can an employer ask an employee to present their immunity card?
Fehervari: The immunity card is like an ID, essentially, issued by a competent authority. It certifies the fact of immunity, without providing any details. A vaccination certificate or a doctor’s note includes much more data and could potentially disclose much more of the employee’s personal data.
Gera: The immunity card is also issued to those that have recovered from COVID-19, but need not necessarily be vaccinated. Thus, a person may have two immunity cards – one for recovery and one for the vaccine. If an employer asks for the immunity card, they may not yet know if the person had recovered or had gotten the vaccine.
Fehervari: Also, we do not know how long the vaccines are effective – so it remains to be seen whether this will still be a thing as of January 2022.
Parkanyi: This summer, while a rule was in place that you could only enter a restaurant if you had an immunity card, a fast-food restaurant introduced a rule by which a person with an immunity card could take a green tray and sit inside, while those without one could take a red tray and sit outside. Public outrage ensued, accusing the restaurant of discrimination.
Introducing measures like that – if an employee has no immunity card they’d have to work from home – this could become an issue between the employees themselves or lead to stigmatization, all based on an easily made assumption.