New wage subsidy scheme for research and development employees

To ease the economic issues caused by the COVID-19 outbreak, the Hungarian Government has announced an economy protection plan, with a focus on maintaining research and development jobs. The Government decree enters into force in mid-April, and the subsidy will be available afterwards.

If an employer (except for a budgetary body) employs R&D employees, one subsidy application per corporate site (location) may be submitted to the government office (defined by the geographical location of the employer’s headquarter/registered site) during the so-called emergency situation or within 1 month after the emergency situation ended. The application shall be evaluated by the government office within 8 working days and if the decision is positive, a contract will be concluded with the employer.

The subsidy may be used for an employee who is a research-developer according to the provision of Act LXXVI on Scientific Research, Development and Innovation (a natural person who deals with the creation and development of a new knowledge, intellectual property, product, service, procedure, method or system; or the management of any such projects), already has an R&D status at the time of declaring the emergency situation, is currently not spending a period of notice and has not received any other employment-related incentive in respect of the same employment.

The employer may apply for the subsidy if

• the company has been operating for at least 6 months,
• the company presents its economic circumstances, their direct and close connection with the emergency situation, the measures taken and expected so far to overcome the economic difficulties,
• the company complies with sound labor relations,
• there are no ongoing liquidation proceedings against the company (e.g. voluntary liquidation, liquidation, bankruptcy proceedings),
• the company was not classified as a company in difficulty on 31 December 2019.

The subsidy may be used for a period of max. 3 months after the submission of the application, for max. HUF 318,920 per month per R&D employee, which will be paid monthly posteriorly. If the employee's monthly gross salary is less than HUF 670,000 on the date of the declaration of the emergency situation, the maximum subsidy amount may be applied according to the ratio of the employee's monthly gross salary and HUF 670,000.

An important provision is that no other job-creating, job-maintaining or reduced-time employment support can be claimed for the same employee in addition to the wage subsidy for R&D employees. No support may be granted for employment derogating from the employment contract (Section 53 of the Labor Code), downtime (Point 1 of Section 146 of the Labor Code), exemption from work (Point 2 of Section 146 of the Labor Code) and temporary agency work (Point 1 of Section 214 of the Labor Code).

The employer must undertake the following commitments:

• Maintenance of headcount: the average statistical headcount of the month preceding the application must be maintained (in case of more sites, it shall be applied to all sites).
• Continuation of employment: the R&D employee must be employed for a period equal to the duration of the subsidy (up to 3 months).
• Wage maintenance: the wage of the R&D employee cannot be reduced during the period of support and employment.
• Mandatory reporting: changes in the conditions of the subsidy must be notified to the government office within two working days.

Should you have any further questions regarding the above subsidy, please contact us.