In the transnational economic area, it is increasingly common for foreign parent companies to send their employees, particularly expert professionals, middle-level and senior executives, to work at their Hungarian subsidiaries. Their tasks primarily include the planning of market strategies, optimising production processes, human resource development, elaborating frameworks for intercultural cooperation, and the transfer of certain local projects or technology and expertise.
Typical labour law models for an intercompany posting
1.In the case of short postings, the parties often modify the employment contract between the posting employer and the posted employee by mutual consent for a set period, without the posted employee becoming subject to Hungarian labour law. The main conditions of the posting are defined in the posting agreement. These conditions have to be in line with the minimum working conditions contained in Section 295 (1) of the Hungarian Labour Code, which include the level of the longest working hours or the shortest rest period, the lowest salary amount and the conditions for employing those belonging to the various categories of vulnerable people.
2.If an intercompany posting is for a longer period, the parties generally set out the legal framework for the posting based on the multiple-contract model. The multiple-contract model is primarily seen with secondments where the posted employee comes to Hungary for several years (usually appointed as a senior executive at the subsidiary and performing tasks as a senior employee). In these cases, the posting employer and the employee mutually agree to “suspend” their employment relationship (so the main responsibilities derived from the original employment contract, i.e. the availability obligation and the salary payment obligation are suspended) and the employee continues working at the Hungarian employer which is part of the group. Then an employment contract usually subject to Hungarian labour law is concluded between the host country employer and the posted employee for a set period.
Main obligations of host country employer
The host country employer shall inform the posting employer in writing of the minimum working conditions included in Section 295 (1) of the Hungarian Labour Code. The host country employer shall make sure that the employment contract or equivalent other document, the working hour records, and a hard or electronic copy of the salary slips of the posted employees are available at the place of work during whole term of the posting, and that these are accessible and available for checking at the employer’s registered office or permanent establishment for 3 years following the completion of the posting. Additionally, in certain cases the host country employer will have a reporting obligation towards the National Tax and Customs Administration.
Main obligations of the posting employer
Apart from the main working conditions, the posting employer shall inform the posted employee of any material information on their posting under the rules of the relevant national labour law. The foreign employer shall appoint a person who will be responsible for keeping contact with the Hungarian labour authorities and, as a general rule, with the social partners, as well as for sending out and receiving documents. Additionally, the posting employer must make statements and report data to the Hungarian labour authority.
Obligation of the posted employee
Within one hundred and eighty days – if their stay exceeds ninety days – but no later than the ninety-third day after their arrival, EEA citizens must report their residence to the competent regional directorate based on their future address for the purposes of receiving a registration certificate, disclosing their personal data.
To develop the legal framework that is in line with the needs of the parties and the regulatory environment, it is recommended considering and planning the legal framework of intragroup secondments before the posting starts.
