2020.06.01

Dear Clients!

With regard to the recent spread of COVID-19 coronavirus, which has already reached Hungary, several labor law questions have come up about the necessity, legitimacy and the expected financial consequences of certain employer measures. In the followings we try to provide a comprehensive summary of the main obligations and possibilities for employers in order to handle the given situation properly. Should you require further assistance regarding any of the points of this summary, please do not hesitate to contact our office, we are happy to assist.

This summary contains the most important information through the following topics: 

1. Obligations of the employer, providing conditions for safe and healthy working circumstances
2. Possibilities of the employer to handle (surplus) labor force in the given economic situation

Obligations of the employer, providing conditions for safe and healthy working circumstances:

1. Safe and Healthy Working Environment:

One of the fundamental obligations of the employer is to provide for the safe and healthy working environment.
Employers must take every possible measure that can reasonably be expected in a particular situation in order to prevent workers from being exposed to an occupational disease (i.e. not getting infected in connection with the employment), and in order to prevent employer’s liability for damages in the future, it is recommended to record such measures in a verifiable and provable way.

The most important measures of employer that are recommended to be taken jointly or separately in relation to the current pandemic situation are:

1. to assess the potential health risks at work and among employees;
2. to elaborate internal regulations and an action plan to provide for the healthy and safe working environment taking into consideration the law and other rules of the given profession; 
3. to take the necessary protective measures in accordance with employer's activities continuously at the workplace;
4. to continuously disinfect the workplace and work equipment, provide hand sanitizers and protective masks and prescribe/expect and control their constant usage;
5. to (temporary) abort business trips, personal meetings and company events – it is recommended to suspend them for a definite time and, in case, to extend them;
6. the constant health control of the employees – including having the employees report whether they have travelled abroad or they have been in contact with any person who may be infected in any way – if so, to isolate and release them from work and keep them away from the workplace;
7. if it is possible, to create, provide for the possibility of home office, remote work, working time banking; and to provide for the necessary IT and technical requirements and infrastructure; furthermore to specify a detailed  working schedule for the employee (i.e. to define the obligation to stand by, the core time, the precise and unambiguous definition of the work to be done) in order to ensure that the employee is aware of his rights and obligations.

2. Employer’s activity:

As long as governmental measures do not declare this mandatory, employers –  unless there are specific circumstances – are not obliged to close the workplace, nor to suspend their activity, their production or provision of services , nor to insure home office working for the employee. 

 

Possibilities of the employer to handle (surplus) labor force in the given economic situation:

 

1. Extraordinary possibilities for deviation from the Labor Code:

The recently declared Government Decree number 47/2020 (III.18.) regarding the state of danger (hereinafter „Decree”) provides authorisation for the exceptional deviation from the Act I of 2012 on the Labor Code. Under the Regulation, until 30 (thirty) days after the end of the state of danger:

1. the employer may modify the working time schedule deviating from the general rules on communication;
2. the employer may unilaterally order home office and remote work;
3. the employer may take the necessary and justified measures to control the health condition of the worker; and
4. the provisions of the Labor Code may be derogated from by mutual agreement between the employer and the employee. According to our interpretation, this section enables the parties to derogate even from the binding – thus those which cannot be derogated from generally – rules of the Labor Code (e.g. pay scale, working time schedule, vacation, remote work, etc.) even to the detriment of the employee.

Thus, in the current situation, parties by a mutual agreement can agree on almost any labor law issues without any limitation.

These possibilities for deviation from the Labor Code should be kept in mind when taking any labor law measure.

2. Stand by and work duty:

Employees are not entitled to refuse to stand by or to refuse work duty simply because of the state of danger of pandemic in the country. Employees who violate this obligation can be subject even to the most stringent measures, including termination by notice or termination by dismissal without notice. Employees can deny the appearance on legitimate grounds only if there is an increased and imminent danger of infection at the workplace.

3. Personal or family reasons, or unavoidable external reasons deserving special consideration:

In certain cases, the employee may be legitimately be exempted from his duty to stand by and to work under the Labor Code, thus for the duration of personal or family reasons, or unavoidable external reasons deserving special consideration. In practice, the closure of kindergartens and schools is expected to be such an unavoidable external reason if the parent cannot otherwise provide for the care of his child – unless different legislation will appear, or the court practice takes a different course. However, the employee must immediately inform the employer about the existence of such circumstance and the employer must, exceptionally and on a temporary basis, allow the absence of the employee. The employee is not remunerated in this case.

4. Home Office

Employers are entitled to temporarily reassign their employees to workplaces other than what is contained in the employment contracts. Although the Labor Code basically limits its duration, under the rules of the Decree, the employer may order home office unilaterally, and its duration – by a reasonable interpretation of the Decree – may exceed even the annual 44 days. During the period of home office, employers are fully entitled to their salary and other benefits contained in their employment contract.

5. To leave onto paid vacation by mutual agreement of the parties:

It applies to both the employer and the employee that the use/allocation of the vacation must be notified to the other party 15 (fifteen) days prior to the beginning date of the vacation, so that the vacation effective immediately can be granted only by mutual agreement of the parties. For the duration of the vacation, the employee is entitled to the absentee pay as declared in the general rules.

6. To allocate paid vacation by unilateral order of the employer:

The employer may allocate unilaterally that part of the annual vacation, which the employer is entitled to grant (note that 7 working days annually must be allocated according to the request of the employee). The vacation must be notified to the employee 15 (fifteen) days prior to the beginning date of the vacation. For the duration of the vacation, the employee is entitled to the absentee pay as declared in the general rules.

7. Agreement on voluntary unpaid vacation:

The employer may offer for the employee a voluntary unpaid vacation and agree on its duration. Voluntary unpaid vacation can only be agreed by mutual agreement. During the unpaid vacation social insurance rights and benefits are suspended. Employees must be notified about such fact making them aware of the necessity to take care of their own appropriate social security. The employer can offer paying the social security contribution instead of the employee for the duration of the unpaid vacation, as well. As a matter of principle, the duration of the unpaid vacation cannot be regarded as work time, so that it cannot be taken into consideration when calculating severance pay or pension.

8. Agreement on being excused from the duty of work:

The employee and the employer may also agree that the employee is exempted from work and that his remuneration for such time shall be paid based on the mutual agreement of employer and employee. Renumeration in this case may be lower than the personal base wage.

9. Introduction of working time banking, extension of working time banking:

The employer may define the working time of the employee in terms of ‘banking’ of the working time or the working hours as well. Based on working time banking working hours of the employees can be allocated in a way, that employees do not work at all during the first part of the working time banking and during the second part they may be obliged for working for even 12 hours daily (however the relevant provisions of the Labor Code shall also be taken into account when specifying the duration of the working time banking and allocating the working hours.)

10. To order obligatory downtime without reference to „vis maior” (force major):

According to Section 146 (1) of the Labor Code, in the event of employer’s inability to provide employment as contracted during the scheduled working time, employer may order unilaterally so-called downtime, for the duration of which the employee shall be entitled to his base wage.

11. To order obligatory downtime with reference to „vis maior” (force major):

In case of unavoidable external reasons, the employer may order downtime by unilateral order. In this case employees shall not be entitled to their base wage, i.e. employees do not receive any salary. It is expected that courts would consider as such a reason, for example, administrative measures, legislation that makes the operation of the employer impossible (i.e. ordering territorial quarantine or curfew). For now, such reasons do not stand generally due to the pandemic, however, in individual cases, reference to a vis maior situation might already be made. The occurrence of vis maior must be considered individually depending on the situation according to the prevailing circumstances. It is possible that vis maior situation will be applied widely due to new legislative acts.

12. Termination by notice or collective redundancy:

Based on the current situation, it might come to the situation that employers are forced to terminate the employment of some of their employees. For justifying this situation employers may refer to a reason in connection with their operation specified in Section 66 (2) of the Labor Code. However, termination must always be made according to the relevant provisions of the Labor Code, taking into consideration the rules governing the reasoning and the burden of proof.

In case it becomes necessary to terminate the employment of a larger number of employees,  it is important to keep in mind the necessity of applying the relevant labor law rules governing collective redundancy (depending on the number of the employees, such rules can be applied in the event of the termination of even 10 employees). 

13. Termination by dismissal without notice by the employer:

As it is a very strict and severe legal measure, dismissal without notice is only available to the employer in exceptional cases. Employers are not allowed to terminate the employment by dismissal without notice with reference to the pandemic situation under the provisions of the Labor Code.

Limitations:

Since the present pandemic situation has brought a  – so far – unprecedented and unforeseen situation for the whole society, legislation and application of law, please always be aware, that in several questions and cases there is no elaborated case law, so that it is unsure how courts will adjudicate the present situation. 

With regard to the pandemic situation, the government and the legislation react continuously, thus in order to make lawful decisions, it is essential to be up to date with and aware of the changes in the legislation.

As the present pandemic situation can be handled in the terms of labor law in several ways, therefore, in the event of each measure, the underlying circumstances of the individual employee or employer require thorough examination and consideration.

The above summary serves only information purposes and does not constitute legal advice in a particular case.