Amendment to the Hungarian Labor Code Extends Potential Working Hours and Reduces the Role of Unions on Working Hours Issues

Triggering intense emotions and protests, the Parliament approved a bill amending the Hungarian labor code on December 12, 2018. After the president of the Republic signed the bill, it went into effect on January 1, 2019.

Previously, the upper limit of so-called “extraordinary working time” (for full-time employees) was 250 hours per year, potentially increasing to 300 hours if approved by a union in a collective bargaining agreement (CBA).

Following the change, the maximum is now 400 hours per calendar year.

Employees as opposed to unions may agree to these further increases, known as “voluntarily undertaken extraordinary work,” at their discretion. Employees may terminate any such agreement, effective as of the end of the calendar year. This means that the employee — after the conclusion of such an agreement — decides if the employer can schedule such voluntarily undertaken extraordinary work for the given year.

The amendment also changes the way working time is calculated and paid through changes to the so-called working-time banking period (WTBP).

Under the amendment, a CBA can allow an employer to specify a 36-month WTBP calculation instead of the currently applicable 12 months. This can impact the “available” working time that can be scheduled for that 36-month period (pool) and effectively delay the date of payment to employees for extraordinary work.

Comment

Following these changes, employment contracts can be modified only by the mutual agreement of the parties. In theory, employees have the right to refuse an employer’s proposals regarding the application of the new regulations. However, many commentators feel that the reality of the labor market means that employees are often in a vulnerable position and unlikely to refuse an employer’s propositions without consequences.

Another aspect of the change is that available overtime hours can now be agreed upon individually between an employer and employee, while previously an increase in overtime hours required the consent of the trade unions or works council.

As the changes have only gone into effect recently, there hasn’t been much time to judge the impact of the reform. However, it is rather telling that some employers have already announced that they will not apply the extra hours.

Written by Barnabás Buzási and Eszter Bohati of Wolf Theiss and Roger James of Ogletree Deakins

© 2019 Wolf Theiss and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.