Introduction of paternity leave 

As of 1 December 2022, the Czech Labour Code has been amended to add paternity leave as a new obstacle to work on the part of the employee. According to the new provision of Czech labour law, the employer is obliged to grant the employee paternity leave in connection with the birth and care for a child. The employee is entitled to paternity leave for the duration of the paternal care benefit under the Czech Sickness Insurance Act. A male employee on paternity leave is afforded the same protection as a female employee on maternity leave (e.g. the prohibition of termination with certain exceptions and prohibition of immediate termination of the employment relationship by the employer during paternity leave, the right to be assigned to the original job and workplace, right for leave immediately following the paternity leave, etc.).

Quarantine rules

From 1 December 2022, the Czech labour law has also introduced some new quarantine rules. Consequently, the employer is (with exceptions) prohibited from terminating the employment relationship during the period when the employee is quarantined. At the same time, it has also been added to the Czech Labour Code that in the event that a quarantine is ordered for an employee during their leave, the leave is interrupted unless the employee requests to continue taking leave during the quarantine.

Furthermore, the communication in the area of ordered quarantine has been simplified in connection with the implementation of the “quarantine computerisation” plan. The ordered quarantine and the processes associated with it (notifications), as well as temporary incapacity for work, are now carried out electronically (in electronic form).

Changes to occupational health services

As of 1 January 2023, changes in the area of occupational health services, in particular occupational health examinations of employees, shall apply. One of the main changes is that the obligation of periodic occupational health examinations in categories 1 and 2 of “risk-free occupations” (risk-free work categories, work without occupational risk) for employees in an employment relationship is abolished and these are now only carried out if required by the employer or employee. The changes have not affected the obligation to carry out entry examinations on employees. Periodic examinations shall also be carried out, inter alia, in the case of work of the same type carried out on the basis of agreements on work performed outside the employment relationship, in respect of work at occupational risk or carried out pursuant to other legislation, or if the employee or employer requires such examinations. Due to the latest modifications, the area of workplace supervision has also undergone major changes.

Travel allowances for 2023

As of 1 January 2023, the extent of data for the purposes of travel allowances granted to employees has been updated in the Czech Republic on the basis of Decree No. 467/2022 Coll., on the change of the basic compensation rate for the use of road motor vehicles and meal allowances and on the determination of the average price of fuel for the purposes of granting travel allowances for 2023.

Minimum wage in the Czech Republic

Similarly to other countries (see Hungary and Slovenia), as of 1 January 2023, the minimum wage has been increased also in the Czech Republic. The monthly minimum wage for fixed weekly working hours of 40 hours per week has been increased to CZK 17,300 and the minimum wage per hour to CZK 103.80. For other lengths of fixed weekly working hours, according to the recalculation, the minimum wage per hour is CZK 107,10 for the fixed weekly working hours of 38.75 hours and CZK 110,70 for the fixed weekly working hours of 37.5 hours. There has also been an increase in the lowest level of guaranteed wages, but only in work categories 1 and 8.

New premium discount in Czech labour law

As of 1 February 2023, an employer in the Czech Republic can claim a discount on social security premium for the selected groups of employees for the first time for the month of February 2023 provided that the statutory conditions are met. This option applies to employees in an employment relationship (or service relationship) with agreed shorter working hours. To qualify for the discount, all other conditions set out in the Czech labour law must be met (including, for example, shorter working hours of not less than 8 hours and not more than 30 hours per week), and at the same time there must not be any of the reasons for which the discount on the premium for an employee is not applicable. A statutory condition for claiming the discount on the premium is the prior notification of the intention to apply such premium discount for a particular employee to the Czech Social Security Administration (CSSZ). Only one employer may be entitled to a premium discount for the same employee. Therefore, there applies a rule that if more than one employer intends to claim a premium discount for the same employee, the employer who has first notified the Czech Social Security Administration of this intention is entitled to the premium discount for that employee.

Furthermore, a major change of the Czech labour law (Czech Labour Code) is highly expected in 2023.

If you have any queries about the Czech labour law or need to adapt to the new rules, the experts and advisors of WTS Alfery, the exclusive representative of WTS Global for the Czech Republic will be happy to provide you with professional support.

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Minimum wage

Just like the end of each year, a new wage agreement was reached between the Hungarian government and employers last December. Accordingly, from 1 January 2023, the amount of the lowest wage, i.e. the minimum wage, has been increased from HUF 200,000 gross to HUF 232,000, while the amount of the guaranteed minimum wage has been increased to HUF 296,400. At the same time, the basis for the personal allowance, which is one third of the current minimum wage rounded to one hundred forints, has been increased to HUF 77,300, which means a monthly tax allowance of HUF 11,595.

SZÉP card with only one account

For SZÉP cards, the annual limit is still HUF 450,000, up to which employers must pay 28% tax (15% personal income tax and 13% social contribution tax); the excess is taxed as an other benefit (at a tax rate of 33.04%). However, the three sub-accounts (hospitality, leisure and accommodation) have been merged: from 9 January 2023 there is only one SZÉP card account for each employee. The individual sub-accounts and their respective allowances have been terminated. The amounts previously paid into each sub-account have been merged and can be used on a combined basis this year. Employees who already have a SZÉP card will not be given a new bank account number, but will retain their accommodation account number with each distributor.

Increasing tax allowances

Depending on the number of dependent beneficiaries, the family tax allowance for one dependent beneficiary enforceable from the tax base remains at HUF 66,670 per entitlement month, rising to HUF 133,330 for two dependent beneficiaries and HUF 220,000 for more than two dependent beneficiaries. However, from 2023, the family tax allowance for a dependent beneficiary who is permanently ill or a severely disabled person is HUF 66,670 higher per month, so the amount of the allowance for these children increases by HUF 10,000 in tax terms. Employees will be able to request the validation of this allowance on the tax advance declaration.

Looking at the tax allowances, the benefit for young people under 25 also increases: in 2023 the amount of the allowance for young people under 25 is HUF 499,952 per month of entitlement, which means a tax saving of HUF 74,993.

Newest element of tax allowances

A new allowance for mothers under 30 has been introduced in Hungary from this year. A young mother is entitled to the allowance if she became entitled to the family tax allowance after 31 December 2022 with regard to her unborn child, biological child or an adopted child. This allowance is therefore available to young mothers who have reached the age of 25, are under 30 at the start of their entitlement, and became eligible for the family tax allowance after 31 December 2022, for example she reached her 91^st day of pregnancy after 31 December 2022 or her child is/was born after 31 December 2022. The maximum monthly allowance for mothers under 30 is the amount of the average gross earnings of full-time employees at the level of the national economy for the month of July of the year preceding the year in question, as officially announced by the Hungarian Central Statistical Office (KSH). This means that in 2023, the allowance is HUF 499,952 per month of entitlement, which means a tax saving of HUF 74,993.

Leave

In addition to the changes in tax allowances, a new type of leave has been added to the Hungarian Labour Code. Employees are entitled to 44 working days of parental leave up until their child reaches the age of three, subject to at least one year of employment. This leave must be granted at the time requested by the employee. For the duration of the parental leave the employee is entitled to 10% of the absence pay, reduced by the amount of child care benefit or child care allowance paid for this period. To do this, a decision awarding benefits has to be requested.

The regulation on paternity leave  is also changing. Upon the birth of a child, in 2023 the father shall be entitled to ten working days’ leave – instead of the five granted previously – no later than by the end of the second month following the birth of the child or, in the case of adoption, no later than the end of the second month following the finalisation of the decision authorising the adoption, granted when requested, in no more than two parts. The employee is also entitled to paternity leave if the child is stillborn or dies. The employee is entitled to absence pay for five working days of paternity leave, while from the sixth working day onwards he is entitled to 40% of the absence pay.

Restrictions on execution

Fewer people will be affected, but it is worth noting that the restrictions on execution have increased. From 1 January 2023 an exemption is granted from enforcement for the part of the salary not exceeding HUF 60,000 (this amount used to be set at HUF 28,500). By contrast, the part of the monthly wages that exceeds HUF 200,000 can be enforced without limitation (this limit used to be set at HUF 142,500).

In this article, we only highlighted the most important changes affecting labour law and payroll in the 2023 law amendments. Both the elements of the Hungarian Labour Code and the tax allowances are among the many other new developments that may affect your business. Our payroll experts are happy to provide our clients with more information about these or even the changes detailed in this article. Feel free to contact us.

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Paternity leave 

Following the birth of their child, fathers are entitled to five days of paid leave, which they may take in one or in several parts until the end of the second month after the child is born. Any income and taxes related to this period of supplementary leave are reimbursed to the employer by the Hungarian State Treasury.

Supplementary leave for children

In Hungary, both parents have the right to claim extra paid leave based on the number of children they have, which amounts to two days for one child, four days for two children, and six days for three or more children. This supplementary leave may first be claimed by parents in the year the child is born, and for the last time in the year the child turns 16.

Family tax allowance

Individually or on a shared basis, parents can reduce their consolidated personal income tax base based on the number of children they have. This means the personal income tax base may be reduced by as much as HUF 66,670 (roughly EUR 184) per month with one child, by HUF 133,333 (roughly EUR 368) per child per month with two children, and by HUF 220,000 (roughly EUR 608) per child per month with three or more children. With regard to the amount of tax this translates to a reduction of HUF 10,000, HUF 20,000 and HUF 33,000 (roughly EUR 28, 55 and 91) per eligible dependant. Parents can also claim the family tax allowance from the 91^st day of the pregnancy.

If the personal income tax base is not enough to claim the entire family tax relief, parents may use this allowance (family contribution allowance) for their social security contribution. From 1 July 2020, the previous 1,5% labour market contribution became part of the social security contribution, increasing the basis of the allowance.

Here we need to mention the newlywed allowance too, which can be claimed by couples for 24 months after the wedding where this is the first marriage for at least one of the spouses. Individually, or together, the couple can claim a monthly total tax base allowance of HUF 33,000 (roughly EUR 92), which in practice reduces tax by HUF 5,000 (roughly EUR 14) – regardless whether the couple claims the family tax relief or not.

Extraordinary tax refund 

Until 15 February 2022, families with children can receive an extraordinary tax refund. This tax refund is available for all parents with children eligible for the family tax allowance, and relates to tax paid in 2021 for the following activities: independent and non-independent activity, tax on other income, two-thirds of the simplified contribution to public revenues (EKHO), and one-quarter of the 2021 itemised tax of KATA business-owners raising children. However, personal income tax can be refunded at most up to the tax on the average annual wage calculated based on data from December 2020. The state refunds up to HUF 809,000 (roughly EUR 2,237) as a maximum each to parents paying personal income tax and those under the EKHO scheme.

Personal income tax allowance for the under 25s 

Another new element to the family support benefits affects those under 25. From 1 January 2022, people under 25 do not have to pay personal income tax on their income forming part of the consolidated tax base, i.e. on their wage income, and on income from other non-independent activity and certain independent activities (e.g. fees for services, entrepreneurial income, etc.). There is a ceiling here too. This means that personal income tax does not have to be paid up to an amount corresponding to the average national gross wage published by the Hungarian Central Statistical Office for full-time employees in July of the previous year multiplied by the number of entitlement months; the exemption from personal income tax does not apply to any wage in excess of this amount. 

Crèche and nursery 

Crèche and nursery services for employees’ children may be reimbursed as tax-free benefits based on an invoice, up to the amount of the cost incurred.

Back-to-school vouchers 

In previous years, back-to-school vouchers for primary or secondary school children were a popular element of the fringe benefit system. However, this type of benefit is now subject to the same tax rate as wages. 

Family allowance

Family allowance is the most traditional of family support benefits. The Hungarian state provides a family allowance for parents from the birth of their child until the child finishes his or her education, but no later than the school year in which the child turns 20. The amount of the family allowance has not changed for several years, and payments will continue in 2022 as well. It amounts to HUF 12,200 (roughly EUR 34) for one child, HUF 13,300 (roughly EUR 37) per child in the case of two children, and HUF 16,000 (roughly EUR 44) per child if there are three or more children. Parents raising children on their own – or if the child is terminally ill or seriously disabled – are eligible for a higher family allowance.

Maternity benefit 

Women who attended prenatal care at least four times during their pregnancy are eligible for a state-granted maternity benefit amounting to HUF 64,125 (roughly EUR 177) in 2021 and 2022, or HUF 85,500 (roughly EUR 236) in the case of twins.

Family support benefits for childcare

Infant care benefit (csed) is provided for women who had social security for at least 365 days within the two years prior to their child’s birth. Infant care benefit is provided for the duration of maternity leave, i.e. for 168 calendar days.

Child care benefit (gyed) is provided until the child turns two, and is paid to women who had social security for at least 365 days within the two years prior to the child’s birth. In 2021 the ceiling for the child care benefit was set at HUF 234,360 (roughly EUR 648) per month. If the minimum wage for 2022 is accepted at a gross sum of HUF 200,000 (roughly EUR 553), then the child care benefit in 2022 will be capped at HUF 280,000 (roughly EUR 774). With child care benefit the mother is entitled to work regular hours after her child turns six months old.

Child care allowance (gyes) amounts to HUF 28,500 (roughly EUR 79) per child per month in 2021, and this is unlikely to change in 2022 either. With the child care allowance, similarly to the child care benefit, the mother is entitled to work regular hours after the child turns six months old. Parents or grandparents are eligible to receive the child care allowance until the child turns three.

In 2021 and 2022, parents and grandparents raising three or more children may claim child raising support (gyet) of HUF 28,500 (roughly EUR 79) per month while the youngest child is aged between three and eight. With child raising support, however, the parent or grandparent can only work 30 hours a week, or work from home without any working-hour restrictions.

The types of family benefit listed above, applicable in Hungary in 2021 and 2022, are just the most general and typical cases. There are special cases and provisions not elaborated on here, but our payroll specialists are happy to give you more information for your company about any of the family support benefits available in 2021 and 2022.

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Paternity leave 

Following the birth of their child, fathers are entitled to five days of paid leave, which they may take in one or in several parts until the end of the second month after the child is born. Any income and taxes related to this period of supplementary leave are reimbursed to the employer by the Hungarian State Treasury.

Supplementary leave for children 

In Hungary, both parents have the right to claim extra paid leave based on the number of children they have, which amounts to two days for one child, four days for two children, and six days for three or more children. This supplementary leave may first be claimed by parents in the year the child is born, and for the last time in the year the child turns 16.

Family tax allowance

Individually or on a shared basis, parents can reduce their consolidated personal income tax base based on the number of children they have. This means the personal income tax base may be reduced by as much as HUF 66,670 (roughly EUR 210) per month with one child, by HUF 133,333 (roughly EUR 420) per child per month with two children, and by HUF 220,000 (roughly EUR 690) per child per month with three or more children. With regard to the amount of tax this translates to a reduction of HUF 10,000, HUF 20,000 and HUF 33,000 (roughly EUR 31, 63 and 104) per child. Parents can also claim the family tax allowance from the 91^st day of the pregnancy.

If the personal income tax base is not enough to claim the entire family tax relief, parents may use this allowance for their healthcare contribution or pension contribution (family contribution allowance).

Here we need to mention the newlywed allowance too, which can be claimed by couples for 24 months after the wedding where this is the first marriage for at least one of the spouses. Individually, or together, the couple can claim a monthly total tax base allowance of HUF 33,000 (roughly EUR 105), which in practice reduces tax by HUF 5,000 (roughly EUR 16) – regardless whether the couple claims the family tax relief or not.

Crèche and nursery 

Crèche and nursery services for employees’ children may be reimbursed as tax-free benefits based on an invoice, up to the amount of the cost incurred.

Back-to-school vouchers 

In previous years, back-to-school vouchers for primary or secondary school children were a popular element of the fringe benefit system. From 2019, however, this type of benefit is subject to the same tax rate as wages.

Family allowance 

The Hungarian state provides a family allowance for parents from the birth of their child until the child finishes his or her education, but no later than the school year in which the child turns 20. It amounts to HUF 12,200 (roughly EUR 38) for one child, HUF 13,300 (roughly EUR 42) per child in the case of two children, and HUF 16,000 (roughly EUR 50) per child if there are three or more children. Parents raising children on their own – or if the child is terminally ill or seriously disabled – are eligible for a higher family allowance.

Maternity benefit 

Women who attended prenatal care at least four times during their pregnancy are eligible for a state-granted maternity benefit amounting to HUF 64,125 (roughly EUR 200) in 2019.

Family benefits for childcare

Infant care benefit (csed) is provided for women who had social security for at least 365 days within the two years prior to their child’s birth. Infant care benefit is provided for the duration of maternity leave, i.e. for 168 calendar days.

Child care benefit (gyed) is provided until the child turns two, and is paid to women who had social security for at least 365 days within the two years prior to the child’s birth. In 2019 the ceiling for the child care benefit is set at HUF 208,600 (roughly EUR 656) per month. With child care benefit the mother is entitled to work regular hours after her child turns six months old.

Child care allowance (gyes) amounts to HUF 28,500 (ca. 90 EUR) per child per month in 2019. With the child care allowance, similarly to the child care benefit, the mother is entitled to work regular hours after the child turns six months old. Parents or grandparents are eligible to receive the child care allowance until the child turns three.

In 2019, parents and grandparents raising three or more children may claim child raising support (gyet) of HUF 28,500 (ca. 90 EUR) per month while the youngest child is aged between three and eight. With child raising support, however, the parent or grandparent can only work 30 hours a week, or work from home without any working-hour restrictions.

Other family benefits

The family benefits listed above, applicable in Hungary in 2019, are just the most general and typical cases. Naturally there are special cases and provisions not elaborated here, but our specialists are happy to give you more information for your company about any of the family benefits available in 2019.

If you want to learn more about what compulsory or optional forms of benefits you can offer to your employees with children, and possibly with preferential tax rates, do not hesitate to contact our payroll team!

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