New Labor Code in Hungary

As part of the government efforts to launch economic growth, raise employment rates and reduce administration, the government introduced a bill relating to the Labor Code to the Parliament on 3 June 2011.

The amendments aim to reduce the employer’s burdens and to allow a more flexible workforce management. With the new rules, the employer is granted more room in decision making relating to some matters concerning the vacation time and overtime of its employees.

The most important changes included in the bill are summarized as follows:

1. The bill would raise the maximum trial period from 3 months to 6 months, provided that the possibility for a 6 months trial period is granted by the applicable collective agreement. Even if included in the collective agreement, the parties need to expressly agree on such extended trial period in the employment contract.
2. If the employment is suspended by reason of caring or nursing a child, only the first 6 month of such suspension period shall serve as a basis when calculating the holiday accrual period, instead of the currently effective one year period.
3. According to the currently effective rules, vacation time can only be broken up into more than two installments, if so requested by the employee. Based on the bill, the employer will be entitled to break up the vacation time into more than two installments, if such decision is based on the legitimate business interest of the employer. Notwithstanding the above, the employee will still be entitled to a one time continuous vacation time of 14 days within a calendar year.
4. Employees shall be entitled to 50% of their wage as wage supplement for work performed in excess of the daily working time or in excess of the relevant working time cycle. Currently, the possibility of compensating such overtime with time off is conditional on the agreement between employer and employee. According to the bill, the employer will be able to unilaterally prescribe that the employee will receive time off – instead of a wage supplement – in consideration for the overtime.