New protection measurements have been published to support those companies which are in a difficult situation due to the coronavirus. In order to preserve existing jobs, several new subsidies will be introduced, giving companies the opportunity not to terminate their employee’s contracts.
1. Decrease of employer and employee taxes in further sectors
The government has extended the release of employment taxes to further sectors.
The related new sectors are the followings:
- cultivation of plant propagating material (activity codes TEÁOR and TESZOR 01.30),
- cultivation of other, non – perennial plants (activity codes TEÁOR and TESZOR 01.19),
- cultivation of perennial plants (activity codes TEÁOR and TESZOR 01.29),
- wholesale of ornamentals (activity codes TEÁOR and TESZOR 46.22),
- retail trade of ornamentals, seeds, fertilizers and pet-foods (activity codes TEÁOR and TESZOR 47.76),
- wildlife management, hunting and related services (activity codes TEÁOR and TESZOR 01.70),
- production of distilled spirits (activity codes TEÁOR and TESZOR 11.01),
- production of grape wine (activity codes TEÁOR and TESZOR 11.02),
- production of beer (activity codes TEÁOR and TESZOR 11.05)
- grape production (activity codes TEÁOR and TESZOR 01.21).
This means that no social security contribution is payable in respect of the employment of a private person employed, self-employed and corporate entrepreneurs operating in these sectors. Employee contributions are to be performed in such a way that only the 4% in-kind health insurance contribution is payable, but maximum in the amount of HUF 7,710.
The above rules are applicable to tax and contribution obligations of March, April, May and June 2020.
2. Details of state subsidy for part-time employment
State subsidy may be claimed if a company’s working hours are reduced and it is closely and directly related to the emergency. The subsidy can be claimed only in the case of an employment relationship established on the basis of the Labor Code. No support can be claimed for non-standard employment or for temporary workers.
What are the conditions of applying for the subsidy?
Parties (employer and employee) must claim the subsidy together at the capital or county government offices.
You can download the need form here.
Employees must meet the following conditions:
- the employee may not receive any other part-time related allowance, subsidy in respect of the same employment,
- must have been employed by the employer at least from the start of the emergency and may not be under termination,
- the employee has no subsidy-related repayment obligation ordered by a final decision of the state employment agency.
There are also conditions applicable for the employers, which are the followings:
- in order to prevent decrease of the headcount, the employer applies reduced working hours for the employee who submits the application for the subsidy jointly with the employer. Reduced working hours means at least 50% but no more than 70% of the working hours of the average of 3 months preceding the modification of the contract. Employment contract modification for reducing the working hours must have been concluded after the announcement of the emergency.
- the claim for the subsidy must contain the economic circumstances justifying the reduction of the working hours, their close and direct connection to the emergency, and the measures taken and planned so far to overcome the economic difficulties. Moreover, the employer also undertakes to use all the possibilities available for rescheduling work until the application is submitted.
- the employer has been operating for at least 6 months, and no job creation, job retention, or research & developer support has been received for the employee who submits the application jointly with the employer. The working time frame has expired or been closed.
- the obligation of the employer also to demonstrate that the retention of employees is in the national economic interest related to its continuous economic activity.
- meets the conditions of an orderly employment relationship and this is proved.
- there is no liquidation, bankruptcy proceedings ordered by a final order, or other proceedings for its termination specified by law in progress.
- on 31 December 2019, the employer was not classified as a firm in difficulty under the European Union competition law.
What are the commitments to the employer and the employee when using the subsidy?
The parties must undertake to agree on reduced working hours, individual development time beyond reduced working hours, for at least the duration of the subsidy. Individual development time is development related to the employee’s job or the activity of the employer, for which the employee is exempted from fulfilling the obligation to work to the extent of thirty percent of the time lost due to reduced working hours.
In addition to this joint commitment, the employee and the employer are also subject to the following individual commitments:
Obligations of the employees:
- must undertake to work part-time with loss of salary when receiving the allowance,
- the creation of a new employment relationship in addition will not prevent the employee from returning to the previous working time after the termination of the subsidy and the employee is available for the employer during the individual development time.
On the employer’s side, the following commitment must be taken for the requested subsidy:
- maintain its statistical headcount at the date of submission of the application for the duration of the subsidy and for one additional month thereafter,
- does not order extraordinary work during the subsidy period,
- together with the subsidy, the salary during the period of the allowance reaches the employee’s absence pay and the employer pays salary for the individual development time,
- in accordance with its obligation to cooperate and provide information, the employer notifies the Government Office of any change in the conditions of the subsidy or the duration of the reduced working hours within two working days.
Duration and amount of the subsidy
The subsidy may be claimed for the months following the submission of the application, but maximum for three months. The tax-free allowance is paid retrospectively by the Government Office directly to the employee in monthly arrears.
The amount of the subsidy is seventy percent of the monthly absence fee determined according to the general rules decreased by the personal income tax advance and contributions, calculated on the thirty, forty or fifty percent lost working time. However, the maximum amount of the absence fee decreased by taxes and contributions that may be taken into account in determining the amount of the subsidy shall not exceed twice the prevailing mandatory minimum wage decreased by taxes and contributions at the time of application.
Process for applying for and assessing support
The application for the subsidy must be submitted by the employer electronically during the period of the emergency or within one month after the end of the emergency, on a standardized form published on the website of the National Employment Office. The agreement between the employee and the employer on reduced working hours and individual development time must be attached to the application.
The government office will examine the existence of the conditions within eight working days and decide whether to grant the subsidy or reject the application. If the application is rejected, the employer may re-submit it no more than once for the same employee. There is no possibility to submit an appeal against the decision, so special attention should be paid to filling in the application form.
Termination of the subsidy and repayment
The subsidy is terminated if the employee’s employment is terminated or if one of the employee’s or the employer’s obligations in connection with the allowance is not fulfilled. The subsidy is also terminated if the employer receives a job creation or job retention aid for the same employee, or receives aid for the employment of workers engaged in research and development, or if the reduced working hours are modified during the subsidy period.
If the subsidy is terminated due to a breach of obligations, the received amount must be paid to the National Employment Fund. The employer is released from the obligation to repayment due to non-compliance with the headcount requirement if he proves that the employment relationship has been terminated as a result of the termination of the employer without a legal successor or the termination is initiated by the employee.
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