Unlike the previous wage subsidy, no new legislation has been enacted in the case of job-creating wage subsidies, based on the Announcement published on the website of the National Employment Service (NFSZ) there is possibility to apply for wage subsidy. According to the Announcement, employers may receive a non-refundable subsidy on the basis of an application submitted to the district / metropolitan district office if they continue to employ a registered jobseeker.
Duration and amount of job-creating wage subsidy
The job-creating wage subsidy is for 6 months, after which the regulation expects employers an additional 3-month unsubsidised employment. Thus, the employment of workers participating in the programme will be insured for 9 months.
During the subsidised period, the employer is entitled to a 100 % reimbursement of the worker's gross wage and the social contribution tax, up to a maximum of HUF 200,000. A further advantage is that, at the same time as the subsidy is granted, entitlements to tax allowances (e.g. social contribution tax allowance) may be enforced with regard to the employment of certain workers. However, as a result of cumulation, the gross aid intensity may not exceed 100 % of the labour costs at any time of the worker's employment.
The job-creating wage subsidy is considered to be a de minimis subsidy and is therefore eligible only for those who are not otherwise excluded from the de minimis scheme (e.g. agricultural sector). In addition, it must be noted that the amount of subsidy qualified as a de minimis subsidy may not exceed EUR 200 000 on a three-year average (EUR 100 000 in the case of commercial freight transport).
Headcount expansion obligation
An important clause is that the employment of a jobseeker must result in a net increase in the number of employees by the employer compared to the average statistical headcount of 6 months prior to the application. For this period, the reduction in the number of redundancies made between the announcement of the emergency (11 March, 2020) and the subsidy criteria (18 May, 2020) shall not be taken into account.
It is also possible to re-employ the same workers who have been forced to get laid off by the given company during the state of emergency, linked to the emergency, provided that they are registered jobseekers.
Additional conditions to be met relating to employers
Compared to the wage subsidy scheme introduced earlier, participation in the new programme entails a greater administrative burden, since employers have to meet a number of conditions in addition to further employment (job retention) and headcount expansion obligation mentioned above.
The most important of these are the followings:
- the application and the necessary additional documents must be sent electronically to the competent office;
- the application must be accompanied by an authentic instrument not older than 30 days certifying the exemption from public debt issued by the NAV (this is not necessary if the employer is included in the public debt-free taxpayer database,);
- the employer shall not be subject to a final order on winding-up, bankruptcy, liquidation, or any other proceedings for termination, as defined by law;
- the employer must undertake to conclude an official contract with the district (metropolitan district) office on which the subsidy is based within the specified deadline;
- a statement on the transparent organizational status;
- the employer must comply with the criteria of orderly industrial relations;
- a de minimis subsidy reporting obligation arises;
- the employer is obliged to keep records of labour fluctuation and the reasons for change;
- with regard to certain changes (e.g. bank account number, change of ownership),the employer has an obligation to provide information,
- a payment form on the monthly subsidy claim shall be sent by the 12th of the month following the given month, accompanied by supporting documents (e.g. salary sheet, salary list, pay-slips of wage and contribution payment, attendance sheet, etc.)
Restrictions on job-creating wage subsidies
There is an important clause provided that the subsidy is not available for temporary employment agencies and it is still not possible to employ a subsidized worker at a workplace, a job or an employer other than defined in the employment contract.
The subsidy is to be applied only for the person to whom it has been requested, i.e. in the event of a loss for any reason, there is no way to replace the absent person. The employment contract of the subsidized worker cannot be amended to the detriment of the employee.
The legislation does not allow employers to participate in multiple wage subsidy programmes in parallel! Accordingly, companies receiving subsidies for job retention or reduced working time employment are not eligible for job-creating wage subsidy.
Also, employers need to take into account that the government is expected to submit a bill to the Parliament on May 26 for the annulment of the extraordinary legal order. As a result, the subsidy for reduced working time will most likely be available for a limited period of time only: applications may be submitted for the last time within one month after the end of the emergency.
The wording of the Announcement is unclear at some points (e.g. calculation of net increase in headcount, aid intensity) and needs further interpretation, so in our opinion future clarification of the rules to be expected. Nevertheless, emerging companies already planning to recruit should make use of the newly opened wage subsidy possibility at the earliest convenience, since the application for subsidy will be available from 18 May, 2020 until the Announcement is revoked.