1. Access to the R&D wage subsidy
The R&D wage subsidy is available for companies employing employees for ’research and development’ (R&D) activity as defined in the Hungarian Innovation Act. Access to the subsidy is subject to a number of conditions, the detailed rules are included in the Government Decree no. 103/2020. (IV.10.) (’Decree*’). Companies need to file a specific request to apply for the wage subsidy, the competent entity is the capital or county government office acting as state employment body in Hungary.
2. Conditions to apply for the R&D wage subsidy
The competent government office will approve the request for the R&D wage subsidy if all the below conditions concerning the employee and the employer jointly meet:
- does not receive any other wage subsidy in connection with the same employer,
- has been employed with the employer as R&D worker at least since the date of declaring the emergency, i.e. since 11 March 2020, and
- is not within the notice period to terminate his/her employment.
- in its request for the R&D wage subsidy, shall present the economic reasons to justify the need for the subsidy, the direct and close links of those reasons with the emergency, and the measures taken so far or proposed to overcome the economic difficulties,
- shall declare that the employee named in the request does not receive any other subsidy due to reduced working hours, job creation or job retention in connection with the same employment,
- has been operating for at least six months at the time of filing the request,
- is not subject to voluntary liquidation, winding-up or bankruptcy proceedings,
- certifies compliance with the regular labour conditions, and
- does not qualify as a ‘company in difficulty.
The request must be filed by the employer, in accordance with the procedural rules published on the website of the National Employment Service.
3. Amount and payment of the R&D wage subsidy
The R&D wage subsidy is granted for a definite period of time, up to a maximum of three months after having filed the request.
The total amount of the R&D wage subsidy is maximum HUF 318,920 per employee per month. This maximum amount is available regarding those employees whose gross salary reaches or exceeds HUF 670,000 as of the date of declaring the emergency. R&D wage subsidy is available also for lower gross salaries; however, the wage subsidy amount shall be reduced proportionately.
As a general rule, the R&D wage subsidy is available in relation to regular employment contracts only. Employment in the scope of activity or working place different from as stipulated in the regular employment contract, or employment with other employers as defined by the Hungarian Labour Code cannot qualify for R&D wage subsidy. Downtime, acquittance from employment or labour-hire do not entitle for R&D wage subsidy either.
The R&D wage subsidy is paid to the employer on a monthly basis, subsequent to the month of competence.
4. Undertakings of the employer in relation to the R&D wage subsidy
In order to receive the R&D wage subsidy, the employer should take several statutory commitments. Especially, the company shall undertake to:
- continue to employ the employee for a period equal to the duration of the R&D wage subsidy,
- not reduce the employee's salary compared to the salary at the date of declaring the emergency, during the period of receiving the wage subsidy and under the subsequent statutory employment period,
- notify the government office of any change in the conditions for the subsidy, within two working days.
**In accordance with the Government Decree no. 141/2020, as published on 21 April 2020, the employer is not required any more to maintain the average statistical headcount existing in the month preceding the date of the request filing, in order to meet the conditions for the R&D wage subsidy.
5. Procedural rules
Similar to the regular wage subsidy, companies could file the request for the R&D wage subsidy with the competent government office under the emergency period or within one month of its termination. The decision regarding the R&D wage subsidy shall be taken by 31 December 2020 at the latest. The government office delivers its decision within eight working days. An important procedural restriction is that a request can only be submitted once for the same location and employees, and in case of rejection, a repeated request can only be filed once. The request regarding employees at the same location shall be filed jointly.
If the request meets all the legal requirements, the government office pays the R&D wage subsidy to the employer after having entered into a contract. The wage subsidy constitutes state aid under the European Union rules.
6. Termination, audit and repayment of the R&D wage subsidy
The R&D wage subsidy shall be terminated upon the employers’ request, or if the conditions for granting the wage subsidy do not meet. The R&D wage subsidy should also be terminated if the employer does not comply with the undertakings regarding the subsidy, e.g. does not maintain the statutory statistical headcount, or does not employ the R&D workers after the period of receiving the subsidy.
The competent authorities will audit the compliance with the employment obligation ‘post-subsidy’ after the end of such period.
If in the absence of the conditions laid down in the regulation, the wage subsidy could not have been granted at all, the employer shall repay the subsidy amount in full. If the employer fails to employ the R&D worker during the statutory period after having received the subsidy, the employer should repay a proportionate part of the subsidy, except for a few limited cases. As an example, employers could escape from repayment in case of immediate termination of employment during the probation period, extraordinary termination of the employer, termination of the employer without legal succession, or termination from the part of the employee.
Please see our previous blogs related to the coronavirus pandemic: Hungarian economy protection package, April 2020 and Extraordinary steps to mitigate the economic damage.