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01 February 2013

Hungary: New Forms of Employment

Flexibility is one of the keywords of the new Hungarian Labour Code, which entered into force on 1 July 2012. The new legislation contains novel types of employment, enabling employers to hire employees in Hungary in a more flexible structure.

Employee sharing: employment relationships established with more than one employer

One such form is when two or more employers conclude one contract with the same employee to perform the same tasks. Earlier legislation did not allow this: employers had to sign separate part-time employment contracts with the employee. Since 1 July 2012 only one contract is sufficient.

Examples include if one receptionist works for all the tenants of an office building, or one IT specialist repairs the computers of a group of companies, which may or may not belong to the same owner. A more complex job (eg, financial controller or financial director of several companies belonging to the same group) could also be performed in such a structure to avoid having to conclude parallel employment contracts for part-time jobs with the different companies.

In this employee-sharing scenario, the parties must agree which employer pays the salary to the employee, who is then partially reimbursed by the other employers.

All employers are liable for the claims of the employee. Thus, the employee may claim the salary from any of the employers, even if it has been agreed that only one employer pays the salary.

If it is not stated in the contract otherwise, any party (eg, only one employer or the employee) may terminate the employment relationship with effect towards all (other) employers. This is important because, if an employee has several parallel employment relationships and gravely breaches his duties commits a big mistake at only one of the employers (which may well affect the trust vested in him also by the other employers), the breach will serve as a reason to terminate the employment only at the company affected by the breach. However, if the employee works in an employee-sharing structure, the breach will provide a cause for the termination of the employment with all employers who share the employee. In the case of employee sharing, one significant breach of duty will lead to termination with all employers. Furthermore, the contract is terminated automatically if the number of employers is reduced to one; for example, if one of the companies hiring the worker is wound up without a legal successor.

With this new special type of contract, companies can now save money and time.

Job sharing: shared scope of work

The reverse of the above employment form is also possible since the beginning of July 2012. Job sharing allows for one employer to contract with multiple employees. It is important, though, that the employees perform the same task for the employer. The work schedule of the individual employees who share one job is completely flexible.

This new type of contract also enables employees to determine their own working schedule. If one employee is absent from work (eg, sick), the others must fill in. This type of contract only works if employees can cooperate well with each other. It fits workers who do not want to commit to fixed working hours and are set to share work among themselves – like mothers who are good friends and have young children. This type of employment is likely to be used for less complex, routine and repetitive jobs, where employees are easily interchangeable, like a receptionist or a typist. Still, job sharing may be a successful tool to solve one of the most pressing social problems in Hungary: the return of young mothers to the job market.

If the parties do not agree otherwise, the employer must pay the salary to the employees in equal portions. The employer may terminate the employment of one of the employees without affecting the others’ employment relationship. However, the contract expires automatically once the number of the employees involved in one contract is reduced to one. In this case, the employer must pay the remaining employee payments (eg, the severance payment) that would be due if the employee was given notice.

Call on work

Another new type of contract that showcases the flexibility of the new Labour Code is call on work. Here, the employer may notify the worker about the working schedule at shorter notice. Instead of seven days, it is enough to inform the employees only three days in advance. This way the employer can adjust work to actual workload.

Should, for example, a car part manufacturer receive a last-minute order for an extra shipment, the manager can call workers to the factory with only three days’ notice. This flexibility helps the manager ship the order in time without violating the employees’ rights.

Job sharing may be a successful tool to solve one of the most pressing social problems in Hungary: the return of young mothers to the job market.

authors: Kinga Hetényi, Krisztina Gergely