News / Wage subsidy for reduced work time

Wage subsidy for reduced work time

In accordance with the previous statements the Government decided on the introduction of a wage subsidy program [Governmental Decree no. 105/2020 (IV.10.]. The Government provides the subsidy if the employer and the employee can agree on a reduced work time as a result of the state of emergency caused by the COVID-19 pandemic. The subsidy will be disbursed by the municipality and county government offices upon joint request of the employee and the employer. There are numerous formal and substantive conditions and requirements for the subsidy.

Conditions for the subsidy

The subsidy may be disbursed on condition that the employer

–     employs the employee in a reduced work time (and during individual development time beside the reduced work time) under an agreement entered into by and between them as a result of the state of emergency in order to avoid redundancy;

–     operates in an economic condition, as a direct result of the state of emergency, that results in the reduced work time;

–     has already taken measures to eliminate economic difficulties and plans further measures;

–     exhausted all the possibilities for rescheduling the work time;

–     has been in operation for at least six months and was not a beneficiary of any job creation or job retention subsidy or of a subsidy for employment of research and development workers.

The above referred ‘individual development time’ shall be understood as a training period. The ‘individual development time’ shall be at least 30% of the work time reduction, but in excess of the reduced work time, and such training shall be related to the employee’s position or the employer’s business activity.

Further to the above, the subsidy may be disbursed on condition that the employee

–     does not receive any other subsidies for his/her part time employment;

–     the employee’s employment relationship was established on the date when the state of emergency was proclaimed the latest;

–     the employee’s employment relationship is not subject to termination and he/she is not on an unpaid leave.

If the employer applies a work time frame it is a further condition that such work time frame has expired, or it has been closed.

Further to the above it is also a formal requirement that the employer shall properly justify that the company meets the conditions determined in a separate governmental decree regarding orderly labour relations, and it is not under liquidation, voluntary liquidation, or bankruptcy procedure and that it is not a non-financial undertakings in difficulty in accordance with governmental decree no. 37/2011 (III.22.) on European Union competition law and on state aid procedures.

Further to the above it is also a requirement that the employer shall credibly justify that the economic reason for the employment is in direct and close relation to the state of emergency and retaining of the employees and maintaining its continuous operation is a national economic interest.

If the above conditions are met – and if the employee has no payables under an unappealable decree of the employment authority regarding the repayment of a former state aid – the governmental office establishes the eligibility for the subsidy.

The amount of the subsidy

The term of the subsidy is three months; the amount is equal to 70% of the monthly net absentee pay that was due on the date on which the state of emergency was proclaimed, proportional to the missing 30%, 40%, or 50% work time.

The amount of the subsidy is limited to the double of the net minimum salary that was applicable at the time of submitting the application. The subsidy shall be disbursed monthly to the employee in arrears.

Undertakings by the employer and the employee with regard to the subsidy

When applying for the subsidy the employer and the employee shall undertake to agree in reduced work time and individual development time. The employee shall undertake not to enter into a new employment agreement that could prevent working again in full time at the employer and to be available for the employer during the individual development time.

The employer shall undertake (i) not to reduce the workforce for one month following the disbursement of the subsidy (in case of multiple sites the total number of the employees shall be taken into account), (ii) not to order overtime during the term of the subsidy, (iii) the employee’s salary, together with the subsidy will reach the employee’s absentee pay during the term of the subsidy, (iv) to pay salary for the individual development time and (v) to inform the governmental office within two work days in case of any changes in the conditions for the subsidy or for the reduced work time.

Application for the subsidy

Any application for the subsidy can be submitted between 16 April and one month after the cessation of the state of emergency. The application shall be submitted jointly by the employer and the employee, electronically to the competent governmental office based on the place of the employment, by filling a form that will be available on the website of the National Employment Service. If the employer intends to submit different applications for different employees working at the same site, then the applications shall be submitted at the same time.

The governmental office shall examine the applications and decide on the application within eight work days. In case of rejection another application can be submitted for the same employee only once more in. There is no right to appeal or to apply for a judicial review against the rejecting decision.

Cessation of the subsidy, reimbursement

In case any condition for the application for the subsidy is not met either by the employer or by the employee, then the defaulting party shall reimburse the amount of the subsidy to the National Employment Service. The employer may be exempted from this obligation in case its default to maintain the workforce is resulted by the termination of the employer without a legal succession or the employment relationship was terminated by the employee.