Changes in the labour market on the horizon
The social partners’ negotiations regarding the amendment to the Employment Relationship Act came to an unsuccessful conclusion (the main reason was disagreement surrounding the institute of mutual termination of an employment agreement with compensation). Consequently, the Government has only sent forward to the legislative procedure the texts of the Act Amending the Labour Inspection Act (»ZID-1B«) and the Act Amending the Labour Market Regulation Act (»ZUTD-D«), which enjoy the full support of the social partners.
According to the opinion of the Ministry of Labour, Family, Social Affairs and Equal Opportunities (»MDDSZ«), the proposed amendments introduce new measures to reduce “precarity” on the labour market and promote “decent” work, and the speedier return of unemployed persons to employment.
The problem of disguised employment relationships is being addressed through stringent inspections of atypical forms of work. An inspector who finds that the work, which entails all elements of employment relationship, has been performed on the basis of a civil law contract, is not only entitled to issue a decision prohibiting such work but could also order the employer to conclude a written employment contract with the worker in question. In such case the employer would – within three working days of service of the inspector’s decisions – be obliged to make the employee an offer of an appropriate employment contract. The contract should be concluded within three working days of the offer being made and shall correspond to the situation as established by the inspector, taking into account the underlying legal rules and pay for work comparable in type, scope and quality. Employers who fail to offer employees employment contracts or offer inadequate contracts, risk fines of between EUR 500 to EUR 20,000 (depending on the size of the employer), whereas it’s responsible company officer may be fined EUR 350 to EUR 2,000. Furthermore, the employee would be entitled to file a lawsuit with the competent court within 30 days of such offer being made or failure to do so.
Furthermore, the amendments to the ZID-1 provide for more rigorous regulation of violations of payment obligations (these are also the most common violations and which to date were only punishable by monetary fines). Inspectors now have the power to prohibit employers, who have failed to pay salary to their employees, the performance of working process or work of certain employees or the usage of working means. A ban on these grounds will be lifted once such irregularities have been addressed and only extend to the part of the business where such irregularities were identified. A ban may be imposed only where the inspector has identified the same infringement at least twice in the previous year.
The second set of measures encourages the speedier return of unemployed persons to the labour market. According to the MDDSZ, the changes to the ZUTD are necessary especially due to employment growth, employers’ employability forecasts over the next two years and the relatively high unemployment rate. The new measures impose additional obligations on jobseekers such as mandatory registration in the jobseeker database within three working days’ of termination due to business reasons or reasons of incapability, otherwise he/she risks a reduction of the unemployment benefits; and stimulate the employment of low and medium educated recipients of the unemployment benefits.
