New wage subsidy scheme to maintain jobs

Aimed at easing the economic issues caused by the COVID-19 outbreak, the Hungarian Government has announced an economy protection plan to maintain jobs in companies facing difficulties due to the COVID-19 outbreak, if the company undertakes to keep its headcount, even if in reduced working time. The Government decree enters into force in mid-April, and the subsidy will be available afterwards.

Reduced-time employment subsidy is available at the joint request of the employee and the employer, at the competent government office where the employee is employed (in the case of several sites, the employer decides). Only one application per employee can be submitted on the standardized form published on the website of the Public Employment Service, electronically, during the so-called emergency situation or within 1 month after the emergency situation ended. The government office shall assess the application within 8 working days and takes a decision in the form of a resolution.

The basic criteria of the subsidy is that the employer and the employee agree on reduced working hours and individual development time beyond the reduced working hours, at least for the duration of the subsidy. The agreement must be attached to the application.

• Reduced working time: according to the employment contract to be amended after the declaration of the so-called emergency situation, part-time work reaching at least 50% of the working time but not exceeding 70% compared to the pre-amendment employment contract calculated in a three months average, corresponding to at least four hours per day.
• Individual development time: given the reduced working time, employees shall spend 30% of their working time with development activities related to their position or to the employer’s business.

The employer may submit an application together with the employee if

• The employee:
  - has been employed since the date of the declaration of the emergency situation,
  - is not under a notice period,
  - is not subject to repayment of a subsidy ordered by a final resolution of a public employment authority,

• The employer:
  - has been operating for at least 6 months,
  - demonstrates that the reason behind the employment in reduced working time is directly and closely linked to the emergency situation, and provides credible evidence that the maintenance of headcount is essential to its continuous economic activity and thus of national economic interest,
  - presents the measures taken and expected so far to overcome the economic difficulties,
  - demonstrates that, in respect of the above point, the employer has exhausted all the available opportunities to reschedule the working time, - fulfils the criteria of sound labor relations,
  - there are no ongoing liquidation proceedings against the employer (e.g. voluntary liquidation, liquidation, bankruptcy proceedings),
  - as of 31 December 2019, the employer was not classified as a company in difficulty.
  
  
• Allocated cumulative working hours have expired or been closed,
  
• Application is excluded for employment derogating from the employment contract (Section 53 of the Labor Code) and temporary agency work (Point 1 of Section 214 of the Labor Code).

The subsidy is paid to the employee on a monthly basis for 3 months after the application is submitted, however, the benefit cannot be paid for unpaid leave.

The monthly subsidy amounts to 70% of the so-called absentee payment, paid during the period of absence, and reduced by personal income tax advance and contributions. The working time can be reduced by 30% or 40%, or maximum 50%. The maximum base (monthly absentee pay reduced by personal income tax advance, contributions) that can be taken into account is twice the mandatory minimum wage reduced by taxes and contributions in force at the time of application. Thus, the maximum amount of the subsidy can be approximately HUF 75,000 per employee per month (HUF 107,065 * 2 * 0.5 * 0.7 = HUF 74,945.5).

In respect of the same employment relationship, the employee may not receive other part-time employment related incentive, nor may the employer receive job-creating, job-maintaining or R&D headcount employment incentives.

The employee shall undertake the following commitments:

• Perform work: working in reduced working time.
• Return to previous employment status: the creation of a new employment status while receiving the support shall not be an obstacle to return to the normal working hours.
• Provide availability: available to the employer during individual development time.

The employer undertakes the following commitments:

• Maintenance of headcount: the average statistical headcount of the day of the application must be maintained during the subsidy period and for 1 month afterwards (in case of more sites the headcount shall be maintained together).
  
• Prohibition of extraordinary working hours: no extraordinary working hours will be ordered during the subsidy period.
• Minimum wage: the amount of the wage reaches the amount of the employee's absentee pay and the subsidy together during the subsidy period.
• Wage payment: wage for individual development time must be paid.
• 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.