The rules of wage subsidies related to the reduced working hours introduced in connection with the coronavirus pandemic have become simpler as a result of the recent amendments; however, in comparison with some foreign examples, the Hungarian regulations are still extremely complex. In the following, we will discuss the most important elements of the current provisions, and will present the system through some examples using concrete numbers, with special attention to the fact that the application for the subsidy can be submitted continuously, until up to one month after the end of the state of alarm. We would like to emphasize that the deadline for the application did not expire on 1 May, and the subsidy can still be requested for the whole period of 3 months.
The aim of the system of subsidy is to ensure that the net income of the employee should not decrease, or at least not at the same extent corresponding to the reduction of the working hours. The subsidy is paid directly to the employee for a maximum period of 3 months. Employees working in the framework of remote working and in home office arrangements are also eligible to the support, and it can be applied for even for a single employee also.
The subsidy can only be used if the working time of an employee has been or will be reduced after 11 March in such a way that the reduced working hours equal to at least 25%, but is not more than 85% of the working time before the modification. It is an important rule that the subsidy is only available for the period after the submission of the application, not retroactively. Therefore, the working time reduction must be in place during the period of the subsidy. Nevertheless, the application can also be submitted in case the parties have not yet agreed on the reduction of the working time, and this is only their intention. In such a case, the modifications will be effective in accordance with the application on the date of the decision on the subsidy, for the duration of the same (both with respect to the reduced working time and the individual development time).
The employer and the employee must submit a joint application electronically, using the form published on the website of the National Employment Service. The forms and the information documents needed to apply for the subsidy are available on the following website of the National Employment Service: https://nfsz.munka.hu/cikk/601/.
The extent of the subsidy is 70% of the proportionate part of the base salary for the lost working time, capped at twice the amount of the net minimum wage, i.e. HUF 214,130. An important rule is that in case the working time reduction is less than 50%, the parties must also define a so-called individual development time. (In other cases, this is only an option.) The development time is 30% of the lost working time. During this time, which is additional to the reduced working hours, the employee must be engaged in development related to the employer’s activities (e.g. training, further development of the company’s other business, which generates added value). The development time must only be determined for the duration of the subsidy, and it does not have to be “used up” right away, but can be carried forward to the next two years. The employer pays wages for the development time, which must be determined in such a way that the combined amount eventually received by the employee (net wage + subsidy) should be at least the net amount of the employee’s original base wage.
The question arises, however, whether it is really worth it for the company. The table below shows the amount of the subsidy, the total wage costs of the employer, as well as the amount of the net wage received by the employee. The figures show that the subsidy is more efficient where the extent of the working time reduction is 50% or more, as well as in case the original wage does not exceed twice the amount of the minimum wage.
| Original gross wage (HUF) | 300,000 | 300,000 | 600,000 | 600,000 |
| Working time reduction | 60% | 25% | 60% | 25% |
| Net base wage (at the time of the application) (HUF) | 199,500 | 199,500 | 399,000 | 399,000 |
| Maximum net wage that can be taken into consideration (twice the net minimum wage) (HUF) | 214,130 | 214,130 | 214,130 | 214,130 |
| Gross wage for the part-time work (HUF) | 120,000 | 225,000 | 240,000 | 450,000 |
| Net wage for the part-time work (HUF) | 79,800 | 149,625 | 159,600 | 299,250 |
| Development time (hours/day) (assuming 8-hour employment) |
0 | 0.6 | 0 | 0.6 |
| Gross wage for the development time (HUF) | 0 | 22,500 | 0 | 93,650 |
| Subsidy (HUF) | 83,790 | 34,913 | 89,935 | 37,473 |
| Gross wage to be paid by employer (HUF) (for part-time work + development time) | 120,000 | 247,500 | 240,000 | 543,650 |
| Employer’s total wage cost (HUF) (15.5% social contribution from 1 July) |
142,800 | 294,525 | 285,600 | 646,944 |
| Net wage of employee (HUF) including the subsidy | 163,590 | 199,500 | 249,535 | 399,000 |
| Change in the amount received by the employee (relative to original net wage) (HUF) | -35,910 | 0 | -149,465 | 0 |
| Decrease of employer’s total wage cost (relative to original gross wage) (HUF) | -214,200 | -62,475 | -428,400 | -67,056 |
| Gross wage payable by employer without the subsidy (HUF) | 120,000 | 225,000 | 240,000 | 450,000 |
| Employer’s total wage cost without the subsidy (HUF) | 142,800 | 267,750 | 285,600 | 535,500 |
| Employee’s net wage without the subsidy (HUF) | 79,800 | 149,625 | 159,600 | 299,250 |
We call attention to the fact that, in addition to the above, the decree also prescribes some additional conditions both for the employer and the employee. The purpose of the present newsletter was to provide an overview of the Hungarian wage subsidy system. If the above raised your interest, we suggest that you contact our experts, who have provided assistance to several companies over the past few weeks in the preparation and the submission of the applications.
We do hope that we could be at your service with this information. Should you have any further queries, please feel free, to contact us!