Member Articles

In its notice published on May 18, 2020, the National Employment Service (Nemzeti Foglalkoztatási Szolgálat) laid down the fundamental criteria that must be met by an applicant to be eligible for the new EU-supported wage subsidy intended to help create new jobs in Hungary in the wake of the COVID-19 pandemic.

There is an enormous difference between the Kurzarbeitwage subsidy and this job-creating wage subsidy. While the former is inherently there to protect existing jobs, the latter state aid is there to create jobs (hire the unemployed) and thus is mainly designed to help those who lost their jobs due to the pandemic situation.

This job-creating wage subsidy means that an employer who is willing to hire a registered unemployed person to its workforce must submit an official request to the competent district governmental office, which will decide whether the employer is entitled to the wage subsidy.

The subsidy itself is a 6-month long support, which covers 100% of the gross wage of the newly employed worker and also the so-called social contribution tax (szocho) payable after the wage, amounting to no more than HUF 200,000 altogether each month. The employer must also commit to employ the worker for another 3 full months - on full wages - after the 6-month long supported period has passed.

Another important clause is that the employment of new workers must result in a net increase to the number of employees employed at the employer compared to the average statistical headcount for the 6 months period prior to submitting the request to the competent district governmental office.

There are numerous further criteria that the employer must meet in order to be eligible for the wage subsidy. Some of the more important ones are the following:

• the employer must not have registered public debt swith the national tax authority (NAV);
• the employer must meet the criteria set out in the “de minimis” Commission Regulation (EU) No 1407/2013;
• the employer must not be subject to any kind of liquidation or bankruptcy proceedings;
• there are rigorous reporting obligations throughout the support period which must be adhered to accordingly.