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Hungary: After the virus

What changes in labour law and the labour market should we prepare for?

The end of the coronavirus is not yet in sight, but we can be sure that this is a transitional period.

In Hungary, extraordinary labour law rules were introduced due to the state of emergency. The greater freedom and creative solutions temporarily allowed by these will cease to apply on the 30th day after the end of the state of emergency. The only exceptions to this are agreements concluded for a longer period by their nature (e.g. banking of working time, additional obligations due to recourse to certain state aids).

The “reorganization” after this may again have significant effects on the labour market and cause labour law issues. Employers gradually restarting production may experience a sudden increased demand for labour. In this fiercely competitive situation, the key question for them will be whether they have enough employees and whether these are “professionals” with years of experience or starters who need months of training. Employers who manage to keep their employees during the emergency through fair bridging agreements can gain a competitive advantage.

For employers who took advantage of this creative solution, it will be an interesting new challenge to recall employees in “suspended employment” (or terminate their employment permanently).

Marked fluctuation can begin for those employees who were forced to leave their profession and want to return from their temporary jobs. If still on probation at their new job, they can (via immediate termination) become available to employers in their original profession within days. However, their job choice preferences will of course be affected by how the company (be it their former employer or another) handled the current situation, in particular whether they applied fair labour law solutions.

In the long term, the role of the classic employment relationship may increase in the eyes of employees currently experiencing the disadvantages of the “grey zone” (unregistered or misclassified employment, salary “paid in the pocket”). It cannot be ruled out that these individuals may no longer be willing to return to the “grey zone”.

To sum up, today’s decisions by economic operators – especially involving labour law –will have an impact on the period after the emergency. When making these decisions, it may be worth considering expected future challenges by considering the above aspects.

Source: Government Decree No. 40/2020. (III.11.)
Government Decree No. 47/2020 (III.18.)