The government is about to reform the Hungarian employment rules for foreign workers

The government relaxed Paks II. and on the regulation of workers on the Budapest-Belgrade project

182/2023 was published in the Hungarian Gazette. (V. 17.) government decree, which is 320/2022 on special rules for the employment of third-country nationals in Hungary during the state of emergency. (VIII. 18.) amends the Government Decree and the gist of it is the following:

• Paks II. investment, and in the case of those working on specific projects by the main contractors and subcontractors of the Budapest-Belgrade project, the relevant Government Office will no longer “operate as a competent authority in the combined application procedure”. Simply put, you no longer need to authorize employment as a professional authority, and this is also true in the case of temporary employment.
• It is also important that from now on, the main contractors and subcontractors of the two projects must be considered “priority employers” in the case of these specific projects.
• It is also included in the decree that from now on, “permission is not required” in the case of employment in Hungary by the main contractor or subcontractors of the two projects, if the person in question is a citizen of a third country. From now on, this relief also exists if the employment takes place through temporary employment. As hvg.hu notes, this discount was previously only available to citizens of neighboring countries.
• It is also important that, although it is not necessary to obtain a worker’s permit for the two projects above, the third-country nationals concerned must “certify in a creditable manner” the “professional qualifications and education necessary to perform the activity”.
• The decree is effective from today, after its publication.

A separate law will apply to guest workers

In relation to the above, it is also important that the government submitted a new bill to the parliament on Tuesday, number T/4026, on the rules for the employment of guest workers in Hungary, which will it is planned to enter into force on November 1.

In general, the government justified the law by stating that “In order to ensure that the employment of guest workers in Hungary takes place within a transparent regulatory framework, taking into account the current employment rules and benefits, it is necessary to create a legislative environment that is also favorable for employers in terms of employment authorization it clarifies the conditions under which guest workers can be employed for a longer period of time in Hungary, taking into account procedural aspects.”

The proposal, among other things

• It defines the general conditions under which the guest worker can be permitted to stay in Hungary for more than ninety days.
• It states that the guest worker can only obtain a residence permit for the purpose of employment.
• It defines the system of licensing criteria for the guest worker’s employment. Based on this, a guest worker can only work in Hungary from a specified third country, with a specified number of employees and in an occupation that is not excluded by the detailed employment regulations.
• It records, taking into account the applicable employment rules, the procedural discounts that are applicable when the guest worker is employed by a discounted employer or a qualified lender.
• It also lays down the rules for issuing and extending the consolidated permit. Pursuant to this, “the so-called guest worker residence permit gives the right to stay in Hungary for a fixed period of more than ninety days within one hundred and eighty days, but not more than two years, and can be extended by a maximum of one year, solely for the purpose of employment as proposed”.
• The general justification emphasizes that “during the validity of the guest worker’s residence permit and after its expiration, the issuance of a residence permit under another legal title cannot be applied for domestically, and the guest worker cannot receive a national settlement permit either.
• It states that in the case of extending the guest worker’s residence permit, the decision of the government office as a specialist authority must be obtained in all cases.
• It defines the cases of extending and revoking the guest worker’s residence permit.
• The reasoning of the proposal states that the “guest worker may stay in Hungary only until the employment relationship established with the employer exists, for the period specified in the guest worker’s residence permit. With this in mind, the proposal stipulates that the employer must do everything possible to ensure that the guest worker can leave the territory of the member states of the European Union no later than the last day of validity of his residence permit. In this context, the proposal also lays down the rules for the reimbursement of costs”.

Regarding the bill, State Secretary for Employment Policy Sándor Czomba made a statement to vg.hu, in which he pointed out that the Parliament will vote on the draft law on the employment of guest workers in Hungary during the spring session.

The professional politician explained:

the purpose of the proposal is to keep Hungarian labor market processes within a manageable and regulated framework, which is important because many investments have already arrived and will continue to arrive in the country, which together require the employment of hundreds of thousands of people.

In this regard, he stated:

• As long as there are Hungarian employees, let’s fill these positions with Hungarians, this is the philosophy of the draft law.
• If, on the other hand, there is no available Hungarian workforce, then the people from neighboring countries are taken into account first, and then, if additional human resources are justified, the employment of people from third countries can then come next, he added.
• According to the interview, the idea is that the new law will differentiate between guest workers – it will be easier for them to get a job, since they automatically receive an employment permit with their residence permit – and third-country employees who arrive in the normal course of business. Therefore, Hungarian workers will continue to be protected by a defined quota: only the number of workers from third countries permitted by the predetermined quota will be allowed. He indicated that, for this, they also identified the shortage professions according to which jobs cannot be filled from internal human resources.
• The article reminds us that in most cases a labor market investigation is carried out, because in those positions for which Hungarian labor is available, the regulations will expressly prohibit the employment of foreign employees. The list of countries from which third-country workers can come through qualified temporary staffing companies will also remain.
• How the quota is calculated is still an open question. The article reminds us that, according to previous practice, the monthly breakdown of vacant positions from the previous year was used as a basis, so for years it was possible to talk about 50-60 thousand people, but this was almost never filled. Currently, people from Brazil, Mongolia, the Philippines and Vietnam also come to work in Hungary, the total number is about 80 thousand people, of which almost sixty thousand are Serbian and Ukrainian citizens.
• The state secretary also told the paper that the government would like to get a clearer picture of workers coming from abroad, who comes to the country and how, because the previous regulations were too flexible and allowed for many loopholes. Among them, he mentioned that the group of quasi-guest workers was not included in the quotas at all, but with the new regulation they will also become visible: there will be a quota for them and another quota for third-country nationals. The new, planned rules will not allow family reunification or settlement of guest workers, and as we wrote above: they will also maximize the duration of possible residence permits for guest workers by 2 plus 1 year, i.e. 3 years in total.

The results of labor inspections so far

After the above, the Ministry of Economic Development issued a statement on Thursday, in which Sándor Czomba highlighted that the employment supervision rules are effective and efficient. He recalled that since the amendment of the law in March 2021, the legal relationship of more than 14,000 undeclared employees has been settled with the effective cooperation of the employment supervisory authority.

The announcement also recalled that the Parliament, at the initiative of the Government, had previously revised and renewed the rules of the labor inspection. Pursuant to this, after discovering the violation, the authority obliges the employer to notify the employee affected by the irregularity for at least one month, up to the current minimum wage. “The measure regulates the legal relationship of those who live from work, so they become entitled to more social security benefits, and their service time, which is the basis for pension calculation, is also extended. At the same time, the provision eliminates the competitive disadvantage of legally employing enterprises, as those who work at the expense of their employees will lose the unfair benefits from unannounced employment. In addition, it also significantly reduces the vulnerability of employees,” the announcement highlights.

The announcement also highlights that “Thanks to the new legislative environment, employers caught in the breach are obliged to retroactively report their illegally employed employees to the National Tax and Customs Office for more than two years.

As a result of the measure, the employers have already reported about 420,000 additional working days to the authority, which equates to the number of employees of a company with more than 500 employees.

It is noted that “The purpose of the authority is not primarily to impose fines, but to strengthen the vision that promotes legal employment. Thanks to the measure, the number of labor fines has decreased to a large extent, while the volume of official notifications has increased substantially in the system of the National Tax and Customs Office”.

Cover image source: MTI/Csaba Krizsán. Sándor Czomba, the State Secretary responsible for employment policy at the Ministry of Economic Development, will give a speech at the ceremony welcoming the city’s twenty largest taxpayers in the Csillagerőd in Komárom on May 4, 2023.