Job Protection Action Plan: Options for Reducing Employer's Burdens

Below we provide a summary of the parts regulating the options available for the reduction of employer's burdens of the Act on the Amendment of Certain Acts for the Implementation of the Action Plan for the Protection of Jobs accepted by the Parliament. Most of these regulations will enter into force on 1 January 2013 all exceptions are nevertheless pointed out in our newsletter.

Social contribution tax allowances

The payer employing a natural person as defined in the accepted act in an employment relationship generating social contribution tax payment obligation may apply an allowance on the social contribution tax payable by it with respect to this employment relationship.

The payer shall assess the amount of the tax allowance on a monthly basis as the aggregate amount of the partial allowances calculated separately for each employment relationship generating tax payment obligation in the given month.

The basis of the partial allowance employers may apply on the social contribution tax is identical with the amount of the (gross) salary payable to the employee for the given period of tax assessment, considered for the assessment of the tax base, not reduced by the public burdens payable by the employer and other deductions but it is maximum HUF 100 000. If the amount of the salary paid to the employee for the given month is higher than HUF 100 000, the part of the gross salary exceeding HUF 100 000 shall be considered as the base of the social contribution tax in accordance with the general rules.

Another important requirement is that these allowances may not be applied in conjunction with "START PLUS", "START EXTRA" or "START BONUS" tax allowances.

Jobs not requiring a professional qualification

From 1st December 2012, 14.5 percent of the base of the partial allowance available in respect of employees employed in jobs classified under the professions included in main group 9 of the Communication of the Hungarian Central Statistical Office on the Standard Classification System of Professions effective as of 1 January 2012 may be applied without a time limit as partial allowance.

The partial allowance may not be applied if in any part of the tax assessment period the employer did not employ the employee in a position not requiring a professional qualification or did not employ him or her in such a position only.

Career starters

The rate of the partial allowance is 27 percent of the partial allowance base in the first two years of the employment of a career starter employee under the age of 25 with a maximum of 180 days of employment with insurance obligation.

In order to apply the allowance, the employee must at one time certify to the employer by way of a certificate issued by the state tax authority not more than 15 days earlier that he or she has not been in employment with insurance obligation for more than 180 days.

Provided that all conditions are fulfilled, the allowance may also be applied to employment relationships in place on 31 December 2012 but 1 January 2013 shall be deemed as the starting date of the employment relationship.

Employees under the age of 25 and above the age of 55

The rate of the partial allowance is 14.5 percent in respect of employees under the age of 25 not qualifying as career starters and employees above the age of 55. The partial allowance may be applied for the entire month in which the employee has his or her 25th or 55th birthday.

Long-term job seekers

Long-term job seeker means a person who has been registered as a job seeker by the state employment organization for a period of at least 6 month during the 9 months preceding his or her employment. In respect of long-term job seekers, the rate of the partial allowance is 27 percent of the partial allowance base in the first two years and 14.5 percent of the partial allowance base in the third year of employment.

The employer may apply the allowance on the basis of a certificate on the fulfilment of the relevant conditions issued by the state employment organization on the request of the job seeker.

Employees employed during or after the disbursement of maternity benefits

The payer shall be entitled to apply as partial allowance 27 percent of the partial allowance base in the first two years and 14.5 percent of the partial allowance base in the third year of employment in respect of a person during or after the period of disbursement to such person of child care aid or child raising support disbursed after the period of eligibility for child care fee.

The payer may apply the allowance until the end of the 45th month after the termination of the disbursement of maternity benefits but for maximum 3 years.

The employer may apply the allowance on the basis of a certificate on the fulfilment of the relevant conditions issued by the health insurance organization disbursing the maternity benefits, the place of social security payment, the treasury or the place of payment of family benefits on the request of the person receiving the benefits.

Training Fund contribution

Parallel with the social contribution tax allowance, the base of the Training Fund contribution may also be reduced in the first two years of the employment relationship in the case of the following employees

career starters under the age of 25,
long-term job seekers and
employees employed during or after the disbursement of maternity benefits.

The rate of reduction is identical with the reduction applicable for the assessment of the base of the social contribution tax, i.e. it is the amount of the gross salary of the employee but maximum HUF 100,000 per month for each employee concerned by the allowance.

Part-time employment

In the case of part-time employment, the employer may only apply the allowance on an amount of maximum HUF 100 000 reduced based on the proportion to the work time under the part-time employment to the work time in full-time employment.

Source: RSM DTM Hungary