Act XXII of 1992

on the Labor Code

                                          ChapterXI                                                                 

Hiring-out of Workers

Section 193/B

(1) For employment relationships with temporary employment companies or placement agencies the provisions of this Act shall apply subject to the exceptions set out in this Chapter.

(2) Workers may not enter into an employment relationship with a temporary employment book for the purpose of placement.

Section 193/C

For the purposes of this Act:

a) ‘hiring-out of workers’ shall mean when an employee is hired out by a temporary employment company or a placement agency to a user enterprise for work (hereinafter referred to as “placement”), provided there is an employment relationship between the worker and the temporary employment company or the placement agency;

b) ‘temporary employment company or placement agency’ shall mean any employer who places an employee, with whom it has an employment relationship, under contract to a user enterprise for work and exercises employer’s rights and obligations jointly with the user enterprise (hereinafter referred to as “placement agency”);

c) ‘user enterprise’ shall mean any employer who employs a worker hired out by a placement agency and exercises employer’s rights and obligations jointly with the placement agency.

Section 193/D

(1) A placement agency must be a business association established in Hungary whose members have limited liability, or a cooperative society in respect of employees other than its members; it must satisfy the requirements prescribed in this Act and in other legislation and must be registered by the government employment agency.

(2) It is forbidden to hire out employees:

a) for any work that is considered unlawful under statutory provisions;

b) at any place of business of the user enterprise where there is a strike in progress from the time when pre-strike negotiations are initiated until the strike is called-off; or

c) if the user enterprise has terminated the employment relationship of the employee in question within six months by way of ordinary dismissal or during the trial period with immediate effect for reasons in connection with the employer’s operations.

(3) The placement agency, the user enterprise and the employee are required to cooperate in terms of exercising rights and discharging obligations.

(4) The agreement between the placement agency and the user enterprise shall not contain any clause by which to restrict or exclude the rights to which the employee is entitled pursuant to this Act and other legislation.

(5) The user enterprise shall not have the right to order a hired-out employee to work at another employer.

(6) No deviation from the provisions of Subsections (1)-(5) shall be considered valid.

Section 193/E

(1) An agreement between the employee and the placement agency shall be null and void, if:

a) it contains a clause to ban or restrict any relationship with the user enterprise following termination of the employment relationship on any grounds;

b) it contains a clause to stipulate the payment of a fee by the employee to the placement agency (placement fee) if he/she wishes to enter into a relationship with the user enterprise.

(2) In the course of the employment of a hired-out worker, employer’s rights and obligations shall be exercised jointly by the placement agency and the user enterprise as agreed. Employment may only be terminated by the placement agency. The employee shall be required to communicate his/her intention to terminate the employment relationship to the placement agency.

(3) Hired-out employees shall be subject to the rules of the user enterprise in terms of working arrangements, working time and resting time.

(4) If an employment relationship is for an objective other than placement, it may not be amended so as to allow the employer to employ the worker in question under the context of placement.

Section 193/F

(1) Whether the user enterprise has paid any fees to the placement agency as due shall have no effect on the wage payment obligation of the placement agency.

(2) The responsibility to discharge all obligations of employees related to tax returns, data disclosure, deductions and payments in connection with an employment relationship shall lie with the placement agency. By way of derogation from the above, the obligations of employers relating to the benefits to be provided by the user enterprise as fixed in the agreement referred to in Subsection (1) of Section 193/G shall be discharged by the user enterprise.

(3) No deviations from the provisions of Subsections (1)-(2) shall be considered valid.

Relationship between the Placement Agency and User Enterprise

Section 193/G

(1) The agreement between the placement agency and the user enterprise shall be made in writing, and it must inter alia specify:

a) the duration of placement;

b) the place of employment;

c) the nature of work involved;

d) the compensation for wages and/or benefits in kind, if provided by the user enterprise.

The agreement between the placement agency and the user enterprise may contain a clause to stipulate that the wages provided in kind and the social benefits governed under Sections 165-165/A (hereinafter referred to as “direct social benefits”) shall be provided to the employee directly by the user enterprise.

(2) In addition to the contents of the agreement defined in Subsection (1) above, the user enterprise shall be required to inform the placement agency in writing:

a) of its normal course of work;

b) of the name of the person in charge of exercising employer’s rights [Subsection (2) of Section 193/E];

c) of the manner and the timeframe within which to supply the information necessary for the payment of wages;

d) of the employment conditions pertaining to the work in question; furthermore

e) of all aspects that are considered significant in terms of the employment of the worker in question.

(3) Unless otherwise agreed, the placement agency shall be required to cover all employment-related expenses specified by the relevant legislation, such as the employee’s costs of commute and the costs of medical examination if one is required for employment. When requested by the user enterprise, the placement agency shall, before the first day of employment, supply to the user enterprise:

a) a copy of the notification the placement agency has submitted to the state tax authority concerning the data of the person employed by the employer and the payer, containing the date of commencement of the insurance relationship, as prescribed in the Act on the Rules of Taxation, and

b) a copy of the document in proof of being admitted into the register of placement agencies in accordance with specific other legislation.

(4) Unless there is an agreement to the contrary, the user enterprise shall supply all information to the placement agency by the fifth day of the month following the month to which it pertains for the payment of wages up to the time specified in Subsection (3) of Section 155. If employment is terminated during the month, the user enterprise shall convey the above-specified information to the placement agency to the extent required for the payment of wages and to discharge its obligation specified in Subsection (2) of Section 193/F within three working days from the last day of employment. This information shall include - where Subsections (9)-(10) of Section 193/H apply - the payments made under Subsection (3) of Section 142/A to workers performing work to which equal value is attributed under Subsection (2) of Section 142/A relative to the work performed by the hired-out employee.

(5) For the duration of placement the user enterprise shall be treated as the employer in terms of the regulations concerning:

a) occupational safety,

b) the employment of women, young people and workers with any degree of incapacity,

c) the principle of equal treatment,

d) working conditions,

e) job transfer,

f) working time and resting time, and for the records of these,

g) wages provided in kind and direct social benefits in connection with an agreement concluded under Subsection (1).

(6) With a view to the application of the provisions of Subsections (9)-(10) of Section 193/H, the placement agency shall - upon the prior consent of the hired-out worker - inform the user enterprise concerning the qualifications and experience of the employee.

(7) An agreement between the placement agency and the user enterprise shall be null and void if the parties are affiliated by way of ownership as referred to in Subsection (1) of Section 106.

(8) If by the time of commencement of work at the user enterprise:

a) the placement agency fails to comply with the requirements set out in this Act and in other legislation; or

b) the placement agency fails to enter into an employment contract as specified in Subsection (1) of Section 193/H,

the employment relationship shall be considered concluded between the user enterprise and the employee effective as on the day of commencement of work, for the period determined under Paragraph a) of Subsection (1) of Section 193/G.

(9) The employment contract for an employment relationship created under Paragraph a) of Subsection (8) shall indicate:

a) the place of employment as required in Paragraph b) of Subsection (1);

b) the hired-out employee’s job description and personal base wage as required in Paragraphs b)-c) of Subsection (1) of Section 193/H.

(10) By way of derogation from Subsection (9), the employment contract for an employment relationship created under Paragraph b) of Subsection (8) shall specify:

a) the job description of the hired-out employee, defined as consistent with the nature of work involved according to Paragraph c) of Subsection (1);

b) the personal base wage of the hired-out worker - in due observation of Section 142/A - consistent with personal base wages of employees working in similar positions at the strategic business unit where the hired-out worker is employed, or if there are no employees in similar positions, consistent with the personal base wage prevailing for the job filled by the hired-out worker in the sector in which the user enterprise is active.

(11) If the conditions specified in Paragraphs a)-b) of Subsection (8) apply concurrently, the provisions contained in Subsections (9)-(10) shall be applied mutatis mutandis concerning the contents of the employment contract.

(12) Within the meaning of Subsections (9)-(10), if the duration of an employment relationship can not be determined according to Subsection (8), the employment shall be deemed to be established for an indefinite duration.

(13) No deviation from the provisions set out in Subsections (6)-(12) shall be considered valid.

Relationship between the Placement Agency and the Employee, Special Provisions Concerning Remuneration

Section 193/H

(1) In the employment contract the parties shall stipulate:

a) that the employment contract, whether for teleworking or otherwise, is entered into for the purpose of placement,

b) the employee’s personal base wage,

c) a brief specification or description of the work.

(2) The employment contract shall contain the names of the parties, the placement agency’s registration number, and relevant data of the employee and the placement agency.

(3) If the employment contract does not contain the information specified below, the employer shall provide such information in writing to the employee within two weeks from the date of signing the employment contract, furthermore, according to Paragraph c), in the application of Subsection (9) or (10), within two weeks following the date of determining eligibility under the rules contained therein:

a) the place of work;

b) the normal course of work at the user enterprise;

c) other components of the remuneration, including the conditions for the benefits provided under Subsection (9) or (10);

d) the date of payment of wages;

e) the date when employment is to commence;

f) the amount of paid leave and the procedures for allocating and determining such leave; and

g) the provisions on the termination of employment in accordance with this Chapter;

h) the rules by which to determine the period of notice to be observed by the placement agency and the employee;

i) the rules of communication of the statement for the termination of employment relationship; furthermore

j) whether the placement agency is subject to any collective agreement.

(4) The information referred to in Paragraphs c), d), f) and h) of Subsection (3) of this Section and in Paragraphs b)-c) of Subsection (1) of Section 76/A may also be given in the form of a reference to the laws or collective agreements - which applies to the placement agency - governing the points in question.

(5) Any change in the name or other aspects of the placement agency, or in the details referred to in Subsection (3) above shall be documented in writing and thus conveyed by the placement agency to the employee within one month of the effective date of the change in question. By way of derogation from the above, in the event of any amendment of the provisions pertaining to the employment relationship the provisions of Subsection (4) shall apply.

(6) Over and above the requirements defined in Subsection (3), the placement agency shall inform the employee in writing before the commencement of employment of the following:

a) the name, registered address, place of business and registered number of the user enterprise, or if any other form of registration is prescribed by law, this number;

b) the name of the department or person of the user enterprise designated to exercise employer’s rights;

c) aspects of commuting, accommodation and meals;

d) the rules concerning the normal course of work, working time and resting time;

e) the employment conditions pertaining to the work in question.

(7) If for the duration of employment the placement agency is unable to arrange continuous work for the employee, the employee - unless otherwise agreed - shall be informed of the following at least forty-eight hours prior to the commencement of the next work assignment:

a) the place of next employment;

b) the date of commencement and its projected duration; and

c) the employee’s obligations in terms of reporting to work.

(8) In respect of employment abroad all permits required by the law of the country of employment must be obtained before departure.

(9) Under the duration of placement the provisions of Section 142/A shall apply mutatis mutandis for workers employed by the user enterprise under contract and for hired-out workers as regards personal base wage, shift supplements, remuneration for special work, and payment for stand-by or on-call duty, if:

a) continuous employment at the user enterprise is in excess of one hundred and eighty-three days; or

b) the hired-out worker has worked under arrangement by a placement agency at the user enterprise a total of not less than one hundred eighty-three days within the two-year period before commencing work at the user enterprise. If the aggregate duration of employment at the user enterprise under arrangement by a placement agency reaches the one hundred eighty-three-day threshold during a subsequent placement, the above provision shall apply as of the one hundred eighty-fourth day.

(10) By way of derogation from what is contained in Subsection (9), the provisions of Section 142/A shall apply as regards the benefits referred to in Subsection (3) of Section 142/A for workers employed by the user enterprise under contract and for hired-out workers, if:

a) continuous employment at the user enterprise under a fixed-term placement arrangement is in excess of two years; or

b) continuous employment at the user enterprise under unfixed-term placement arrangement is in excess of one year.

(11) The provisions contained in Subsections (9)-(10) shall not apply to a hired-out worker if his employment relationship is subject to more favorable conditions at the user enterprise.

(12) In the application of Subsections (9)-(10), the duration of being relieved from work duty under Section 107 shall not be taken into consideration as regards continuous employment. On the other hand, leave of absence without pay shall not affect the continuity of employment - save where Subsection (5) of Section 138 and Section 139 apply - if it does not exceed thirty working days. Employment shall be considered continuous if the employee - after the time of being relieved from work duty - returns to work to the same user enterprise where the exemption has commenced.

(13) In the application of Subsection (9), the placement agency may require the employee to supply a written statement indicating the user enterprise or enterprises where he/she worked during the previous two years, including the duration of any such employment.

(14) No deviation from the provisions set out in Subsections (9)-(11) shall be considered valid.

Termination of Employment

Section 193/I

(1) Any employment relationship established for the purpose of placement can be terminated:

a) by mutual agreement;

b) by notice;

c) by immediate discharge;

d) with immediate effect during the trial period.

(2) Any statement for the termination of employment must be made in writing.

Section 193/J

(1) An employment relationship of an indefinite duration may be terminated by notice by both the placement agency and the employee.

(2) The placement agency shall attach an explanation with its notice of discharge with the reasons clearly stated.

In the event of dispute the placement agency is required to evidence the authenticity of and the justification for discharge.

(3) The placement agency may terminate the employment relationship by notice if:

a) the employee’s performance is unsatisfactory;

b) the employee is unable to perform the tasks required;

c) the placement agency was unable to arrange suitable employment for the employee within thirty days; or

d) justified by technical reasons in connection with the placement agency’s operation.

(4) The notice period shall be fifteen days. If the employment relationship exists for at least three hundred and sixty-five days, the notice period shall increase to thirty days.

(5) If a placement agency and an employee have had several employment relationships within two years preceding the date when notice of termination is communicated, the duration of such relationships shall be accounted on the aggregate.