By Marianna Csabai and Henrietta Hanyu, Firm: CLV Partners
The end of the year is coming up fast, meaning that there are plenty of things for HR departments to arrange. This article provides a brief checklist about what employers need to do at the end of 2019, and gives the latest news about anticipated HR-relevant changes in the next year in Hungary.
1. Unused holiday
The question of unused holiday at the end of the year is always a key issue from an HR perspective. Therefore, it is advisable to check how the current year’s leave stands. Unused leave cannot be redeemed in cash, unless the employment relationship is terminated. Leave must therefore be scheduled even if the employee does not wish to take it.
The general rule is that leave due for 2019 cannot be transferred to 2020. It means any remaining holiday shall basically be scheduled in the remainder of 2019. However in some exceptional cases it may be transferred to the next year, as set out below:
- If the employment relationship began on or after 1 October 2019, holiday can be scheduled until 31 March 2020.
- If, for a reason related to the employee, (e.g. illness, maternity leave, work incapacity, etc.) holiday could not be scheduled in 2019, it can be scheduled within sixty days of this reason ceasing to exist.
- Leave starts during the year in which it should be taken and does not exceed five working days in the following year is deemed to have been taken in the due year.
- Any additional leave entitlement due because of the employee’s age may be scheduled until 31 December 2020, if the parties concluded an agreement on it in 2019.
- If there are economic reasons of particular importance or any direct and consequential reason arising in connection with its operations to do so, the employer may allocate a quarter of the employee’s holiday by 31 March of the following year if this is stipulated in the applicable collective agreement.
2. Extraordinary work (overtime)
Given that extraordinary work has an annual limit, it is highly advisable to check how the organisation stands in this regard as we approach the end of the year.
For full-time work, up to 250 hours of overtime per calendar year can be ordered.
Collective agreement allows 300 hours per year. The employer and the employee can also conclude an agreement on additional working hours that must not exceed 400 hours overtime per calendar year. This agreement can be terminated by the employee by the end of the calendar year.
However, this annual limit applies proportionately if the employment relationship began during the year, for fixed period or for part-time work. It is important to ensure the limits are complied with, because if the organisation exceeds the annual extraordinary working time limit, it may face serious fines as a result of any labour inspections.
3. Minimum wage and guaranteed wage minimum
As of January, the minimum wage and the guaranteed minimum wage (which applies to full-time employees with secondary school or secondary vocational qualification) is expected to be increased again. In 2018, a two-year agreement was concluded at the meeting of the Competitive Sector and Government Permanent Consultation Forum to increase the minimum wage and the guaranteed wage minimum with 8-8 % in 2019 and 2020 which will result in that minimum wage could rise to HUF 161,000 and the guaranteed wage minimum to HUF 210,600 in 2020.
The minimum wage and guaranteed wage minimum shall be published by a government decree which has not been issued yet, but it is expected to be published by the end of the year.
After the decree has been published, salaries must be reviewed and employment contracts amended accordingly.
4. Social contributions in 2020
In terms of changes to social contributions, there is nothing to do before the year-end, however from a payroll perspective it is good to know that according to the draft bill No. T/8021 from 1st July 2020 the social tax will be replaced by so called ‘social security contribution’ while the rate thereof remains the same, so in total 18.5%. The unified social security contribution’ will include the currently separated pension, the labour market, the financial and in-kind healthcare benefits payments and the tax authority will allocate the collected contributions between the pension fund and the healthcare fund.
5. Working time schedule for 2020
The Minister of Finance has the right to reschedule working and rest days around the public holidays. These changes apply to employees working under a fixed, general, working time schedule.
According to a decree from the Minister of Finance, in 2020, 21 August (Friday) and 24 December 2020 (Thursday) will be rest days, and 29 August and 12 December (Saturdays) 2020 are considered as working days.
6. Retirement age in 2020
According to Act LXXXI of 1997, employees born in 1956 may be entitled to an old-age pension when they reach the age of 64 plus 183 days. This means these employees may be entitled to an old-age pension in the next year.
It should be noted that employment relationships are not automatically terminated because of retirement and the employment of retired employees will remain very beneficial from a tax point of view in the next year.