Proposed Labour Code changes to curtail Hungarian workers' rights again

One of the most violent waves of protests under the Fidesz government was triggered at the end of 2018 by the planned amendment to the Labour Code, which – in public discourse – became known as the Overtime Law or the Slave Law. In contrast to the events in 2018, there is no sign of social resistance today, even though the government is planning to change employment rules to the detriment of employees on several points.

The official purpose of the package, which was tabled in early November and is expected to go before Parliament in early December, was to harmonise Hungarian legislation with EU law, and it's already been delayed by several months. However, along with the harmonisation with EU directives, several amendments have also been sneaked in which will make Hungarian workers even more vulnerable to their employers.

They slipped in a few more things

The Labour Code needed to be amended because the current version does not comply with EU directives in some areas. Hungary was supposed to adapt to the guidelines on work-life balance and predictable working conditions by August 2022, but Zsolt Semjén only managed to submit the amendment in November, after a slight delay.

According to the Hungarian Trade Union Alliance, (Magyar Szakszervezeti Szövetség – HTUA)

the real problem is that the proposal further weakens workers' rights against employers on important points.

The direction is hardly surprising in light of the government's actions in recent years: the systematic weakening of workers' rights has been underway in Hungary since the adoption of the new Labour Code in 2012. The government and its allies have made no secret of the fact that they consider the relatively cheap and tightly regulated Hungarian workforce to be one of the country's main competitive advantages over other economies.

Some of the challenged paragraphs have nothing to do with the EU's expectations, and as usual in the case of omnibus laws, they are hidden among harmless textual corrections and rewordings for the purpose of legal harmonisation.

According to our information, the trade unions only received the draft a day and a half before the meeting of the Permanent Consultation Forum of the Private Sector and the Government, (VKF) and it became clear at the meeting that there was no room for negotiation, the package having been submitted without any changes.

The Trade Unions' Alliance expressed sharp criticism of the proposal on eight points. According to the organisation's legal analysis, everything from holiday entitlements through scheduling and transfers to the rights of workers who become medically unfit would be adversely affected, and even the amendments aimed at harmonising EU law were kept to a minimum (or even below).

It will be easier to fire those who become medically unfit for work

The draft introduces the concept of "incapacity to perform a job for medical reasons" and makes it easier for employers to dismiss the worker concerned in such cases. This could affect blue-collar workers the most, as they are more likely to become unfit to work in their previous position due to a permanent health condition.

If a person found themselves in such a situation (i.e. they did not pass the occupational health assessment), the employer has so far had the choice of finding another suitable position within the company or dismissing him or her, but in the latter case relatively strict conditions had to be met: the employee was entitled to severance pay, and to a partial exemption from notice.

By contrast, if the current amendment passes, a person who is unfit for the job for medical reasons could remain in the company without being offered another job, but they wouldn't be fired. Instead, they simply wouldn't work and thus wouldn't be paid. In this case, the employee will obviously prefer to quit of their own accord, which is to the company's advantage, as it does not have to dismiss them and saves on severance pay.

Paternity leave to be kept as short as possible

The EU directive sets a minimum of 10 days of paid leave for fathers, but since Hungary has only granted 5 days (7 after twins) so far, this had to be modified anyway. The EU intends this to be paid leave, with the employee entitled to at least 70 percent of the absence pay.

In a strange twist, the Orbán government would solve this by paying 100% for the leave that was already granted before (i.e. days 1-5), but only 40% for days 6-10. According to the HTUA, it is difficult to see any reason for this other than the government not wanting the majority of fathers to take the second half of paternity leave, as this solution would make them disinclined to do so.

A family usually needs more money when a child arrives, not less, so only the wealthy could afford to take advantage of the longer, 10-day option (although still the minimum by EU standards). The amendment also does not take into account twin births: whereas in the previous version twin fathers received 7 days instead of 5, they would no longer be entitled to more days.

The HTUA believes that paternity leave should be at least 15 working days, and 20 working days in the case of twins, and that 100% of the absence allowance should be paid for during the whole period.

Employees may not be able to choose time off dates any more

According to the current leave arrangements, a worker can take a total of 7 days' leave when they want to, the rest being at the employer's discretion according to law. However, a point has been hidden in the current amendment which allows the employer to refuse to grant even these 7 days at the time requested by the worker "for reasons of exceptional economic interest or for a reason directly and seriously affecting the employer's operation".

The text suggests that the legislator probably did not intend this to be applied in everyday life, but as the concept of "exceptionally important economic interest" is underdefined, it is easy to imagine abuses.

Parental leave to be 44 days instead of 4 months

The EU directive also stipulated that Hungary should introduce 4 months of parental leave per year for those with children up to the age of 8. This does not have to be paid leave, but both parents should be allowed to take advantage of this option. However, the proposal submitted to Parliament only provides for 44 days instead of 4 months (over 60 working days). According to the HTUA, therefore, this is a point on which harmonisation has not even been achieved.

Relaxing the rule about the place of work

The amendment also includes a change in the wording which, in the view of the HTUA, would allow employees to work off-site in a more informal way than at present. Although the Labour Code did not previously require a precise definition of the place of work in the employment contract, the phrase "usual place of work" was included in the law to cover such cases. Depending on this, it was then possible to talk about off-site work (= anything that is not the usual place).

In the amendment, "usual place of work" will now be replaced by "place of work customary for the job". At first glance, there is not much difference, but trade union lawyers say the slight change could open the way for a broader interpretation for those whose work includes some travel.

Up to now, there have been various restrictions on secondments (for example, a maximum of 44 working days a year) and postings, and in case of certain family situations (e.g. single parents, pregnant women and women with young children) an employee couldn't be obliged to work in a place other than the one they are used to. The HTUA believes that the new wording is too broad and introduces a new element of uncertainty into the workplace.

Too short a deadline for changing the roster

The work schedule and its variability have always been a sensitive issue in certain sectors, which is why deadlines for implementing changes had to be set in collective agreements. This is particularly important because, in addition to the normal, legally modified roster, there are also additional payments such as overtime pay or payment for downtime. In other words, the relevant clause of the collective agreement determines how expensive it is for the company to vary the working hours of its employees on short notice.

This has not been covered by any clause in the Labour Code so far, it has been up to the management and the workers to negotiate how the contract will be concluded. But the new amendment would maximize the time limit for making changes in 48 hours, which would be included in the collective agreement.

According to the HTUA, the original intention of the time limit in the law itself is most likely to limit employers' room for manoeuvre in this area, but if this is the direction they were heading in, it is difficult to understand why such a short deadline was set. In this form, it could even backfire by highlighting this option for firms that have previously not taken advantage of it or have not done so within such a tight timeframe, they say.

Treatment of Hungarian workers likened to “rigid cattle farming”

Zoltán László, vice-president of the Vasas Trade Union Alliance, commented on the proposed amendment to Telex. László said that, as has been the practice in recent years, no meaningful consultation with trade unions preceded the submission of the draft legislation. In his view, if it is adopted, the proposal could be summarized by saying that

employees will live their private lives when they are allowed to.

As for restricting when an employee takes time off, he said that one can always find business interests to justify the refusal of requested leave, which is why the amendment is opening a dangerous door. Another problem, he said, was that previously, a worker could decide when they wanted to take a third of their time off. Even reducing this to 7 days was a step backwards for older employees, but now, this could also be taken away.

According to László, for employees working in a "bank of hours" system, the situation with time-off requests was already lacking transparency and unfavourable – for example the rule that everyone should have 14 days of uninterrupted leave each year is hardly implemented.

The amendments on parental and paternity leave reflect a "cynical and anti-family" approach from the supposedly family-friendly government, according to the Vasas vice-president. "We talk about families, but in reality neither the father nor the mother has time to be a parent, because the employers' interests are rewriting family life," László said.

He said that anyone who thinks that this makes the Hungarian economy competitive is very much mistaken, because the poor working conditions have already led to such a high turnover in the manufacturing industry that it is already hampering efficient production:

employees come and go all the time, new people have to be trained, while old colleagues are worn out and unhappy about their jobs. This is not good for companies in the long run, but if people are dissatisfied with their jobs and feel exploited, it also affects every other part of society. According to Zoltán László,

"Hungarian workers should not be thought of as rigidly herded cattle".

The Minister of Technology and Industry, László Palkovics, who was named as the author of the draft, has since resigned and his ministry is being disassembled, with others taking over his responsibilities.

We contacted the successor ministries, the Prime Minister's Office and the Cabinet of the Prime Minister about the trade unions' concerns and will publish their response once it arrives.