Definitive Report - REPORT_NO395, June 2021

1. 204. The complaint is contained in two communications dated 7 May and 29 June 2020 submitted by the Democratic League of Independent Trade Unions (LIGA), the Hungarian Trade Union Confederation (MASZSZ) and the National Federation of Workers’ Councils (MOSZ).
2. 205. The Government of Hungary transmitted its observations on the allegations in a communication dated 15 July 2020.
3. 206. Hungary has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainants’ allegations

1. 207. In their first communication dated 7 May 2020, the LIGA, the MASZSZ and the MOSZ allege that, due to the COVID-19 pandemic, the Government has introduced several measures affecting employees within the framework of the event of emergency introduced in Hungary on the basis of section 53 of the Fundamental Law of Hungary (hereinafter: Fundamental Law) and the special legal order applicable during this period, stressing that the aim of these measures was to maintain jobs.
2. 208. The complainants indicate that the several pieces of legislation introduced under the special order have significantly affected the right to collective bargaining and the already concluded collective agreements. According to the complainants, the Government’s Decrees provide that in the event of emergency, collective agreements contrary to the Decrees’ provisions concerning employment relations may not be applied.
3. 209. The complainants state that, while they are aware that in the event of emergency, the possibility of collective bargaining or the application of already concluded collective agreements may be restricted to a justified and proportionate extent necessary to overcome the emergency situation and to deal with its harmful consequences, they believe that some of the emergency provisions in practice make voluntary collective bargaining impossible for significantly longer than justified in essentially all employment matters, despite the fact that it is not expressly prohibited by the Decrees.
4. 210. The complainants point out that, according to section 6(4) of Government Decree No. 47/2020 on the immediate measures necessary to mitigate the impact of the COVID 19 pandemic on the national economy, the employee and the employer may deviate from the provisions of the Labour Code in a separate agreement. This provision therefore allows derogations from the provisions guaranteeing a minimum level of protection for employees (for example, minimum wage, protection rules for termination of employment initiated by the employer, protection rules regarding employees with special characteristics such as single parents and mothers with small children, etc.) to an unlimited extent. In the complainants’ view, this rule indirectly means that employers can avoid collective bargaining and collective agreements that have already been concluded in order to achieve the measures they consider necessary in the event of emergency, through individual agreements. The complainants suggest that in such a precarious situation, employees are more easily persuaded to sign agreements that provide them with less protection in exchange for the hope of keeping their jobs.
5. 211. The complainants also indicate that, according to section 54(2) of the Fundamental Law, Hungary accepts the generally recognized rules of international law, from which it is not possible to deviate even in an event of emergency, unless international law itself allows it. The complainants recall that Article 4 of Convention No. 98 imposes an obligation on Member States to promote voluntary collective bargaining between employers and employees and argue that section 6(4) of Government Decree No. 47/2020 violates this obligation.
6. 212. The complainants state that, as interpreted by the Committee on Freedom of Association, the scope of the right to bargain collectively and the collective agreements may be limited, but only as an exceptional measure, to the extent necessary and reasonable, and accompanied by adequate safeguards to protect the employees’ living standards. In the complainants’ view, ensuring that employees and employers agree to fully derogate from the Labour Code not only restricts collective bargaining and the application of the already concluded collective agreements in practice, but even makes it completely impossible, which goes beyond what is necessary. Furthermore, the complainants question the temporary nature of the restriction, as it essentially depends on the length of the event of emergency, which is not yet foreseeable.
7. 213. The complainants also denounce a restriction of the right to collective bargaining when ordering a working time frame (which stipulates the number of working hours that must be worked by each employee) of up to 24 months. They point out that section 4 of Government Decree No. 104/2020 provides that a unilateral order by the employer of a working time frame of a maximum of 24 months, or the employment under the agreed working time frame in accordance with section 6(4) of Government Decree No. 47/2020, is not affected by the termination of the emergency. The complainants emphasize that this provision means that the working time frame ordered during the emergency period, but still in progress at the time of its termination, will be maintained until the end of the working time frame, despite the termination of the event of emergency.
8. 214. The complainants indicate that, according to sections 94(3) and 99(7) of the Labour Code, a working time frame of four months or, in some cases, six months, can be unilaterally ordered by the employer, and that a working time frame of up to 36 months can only be ordered on the basis of a collective agreement, in agreement with the trade union. These provisions also stipulate that the above-mentioned statutory reference periods of four or six months can only be increased by a collective agreement to a maximum of 12 months.
9. 215. The complainants further indicate that in an event of emergency, the unilateral order of a working time frame of up to 24 months by the employer or the unilateral extension of an already ordered working time frame to a maximum of 24 months also limit the pre-existing exclusive right to collective bargaining. They consider that this restriction should not go beyond what is necessary and proportionate, and that a working time frame of up to 24 months during an emergency, or even beyond, can no longer be considered a temporary restriction. They therefore believe that it is violating the international law obligation set out in Article 4 of Convention No. 98 to promote free and voluntary collective bargaining.
10. 216. In their communication dated 29 June 2020, the complainants provide additional arguments against the working time frame of up to 24 months which can be ordered unilaterally by the employer. They allege that Government Decree No. 104/2020 was adopted in a non-transparent manner, with the complete absence of tripartite social dialogue and without any preceding consultation, and that it is criticized by national trade union confederations and national employer associations alike.
11. 217. The complainants further indicate that Government Decree No. 104/2020 raises compliance concerns and ambiguities in the light of European Union labour law. They state that, according to Article 19 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organization of working time, “Member States shall have the option, subject to compliance with the general principles relating to the protection of the safety and health of workers, of allowing, for objective or technical reasons or reasons concerning the organization of work, collective agreements or agreements concluded between the two sides of industry to set reference periods in no event exceeding 12 months”. The complainants therefore argue that, in the spirit of the Directive, the absolute maximum of the “reference period” is 12 months, and that this would be possible only under certain preconditions.
12. 218. According to the complainants, Government Decree No. 104/2020 also raises concerns in terms of public law. They indicate that the legal measures to tackle the state of emergency and the COVID-19 pandemic are temporary in nature, and that article 6(2) of Government Decree No. 47/2020 allows the application of the Labour Code with certain derogations, until the expiry of a period of 30 days following the end of the state of danger. They also point out that Government Decree No. 104/2020 is intended to amend and supplement Government Decree 47/2020. In the complainants’ view, the working time frame of up to 24 months may only be ordered and applied while Government Decree No. 104/2020 is in effect, which is during the state of emergency.
13. 219. In addition, the complainants argue that trade unions have essentially been removed from their bargaining positions, as their consent is no longer required for the introduction of a longer working time frame. They argue that Government Decree No. 104/2020 is therefore contrary to its own legal policy objectives, namely the protection of jobs and the economy, and to the Hungarian State’s international legal obligation to promote collective bargaining, which is paramount and ever-increasing in crisis situations. They indicate that article 1(3) of Decree No. 104/2020 transforms sections of the Labour Code relating to, among others, the minimum and maximum schedule of the daily working time, daily and weekly rest periods and rest days, into mandatory provisions, rendering even more favourable provisions of collective bargaining agreements unlawful, and thus unreasonably restricting the scope of collective bargaining. They further indicate that article 1(4) of Decree No. 104/2020 states that collective agreements which derogate from the rules laid down in this decree should not apply during the period of application of this decree. The complainants therefore conclude that the Decree overwrites and annuls collective agreements regulating the same subject matter.
14. 220. The complainants argue that, in their view, Decree No. 104/2020 is not adequately targeted, as its universal scope extends to the entire economy and to any employer. They consider that this may be practically unjustified and may give rise to severe abuses, as there are a number of economic sectors where there is no pressing, reasonable justification for such a rule in the event of a pandemic (for example, retail, certain public services, etc.).
15. 221. Furthermore, the complainants indicate that on 16 June 2020, the Hungarian Parliament adopted Act LVII of 2020 on the Elimination of Emergencies Act and that, based on this, Government Decree No. 282/2020 was issued with effect from 18 June 2020 and abolished the Decrees that were previously issued due to the emergency. As a result, the infringed provisions of the Decrees referred to in the initial complaint also lapsed because the maximum working time limit of 24 months ordered pursuant to section 4 of Government Decree No. 104/2020 was applying until its expiry.
16. 222. The complainants report, however, that since the submission of the initial complaint, the Parliament has passed Act LVIII of 2020 on the transitional rules related to the termination of the emergency situation and the epidemiological preparedness, which affected the elements raised in the initial complaint.
17. 223. According to the complainants, section 56(3) of Act LVIII of 2020 made it possible to derogate from the provisions of the Labour Code by agreement between the employer and the employee until 1 July 2020, which means that this situation would end on 1 July 2020 but that its negative impact would continue (for example, reduced working hours, reduced wages or the granting of annual leave during an emergency without the need for a 15 day period of prior statutory information, as agreed by the parties, and unpaid leave granted by agreement between the parties, in which case unemployed workers had to pay health insurance contributions from their own savings in order to receive free medical treatment in the event of illness). The complainants explain that the listed examples refer to the most common cases of retaining jobs during an emergency, and that in these situations, collective agreements could have played a major role in concluding agreements that provide a non-discriminatory and more favourable future for the employees. They report that there are currently no accurate statistics on the agreements concluded between employers and employees under the emergency provisions and the employees affected by them, but that, according to information provided by the Government to the social partners on 22 June 2020, 14,000 companies have applied for wages for part-time workers, which in itself indicates a large number of people affected.
18. 224. The complainants also indicate that section 56(4) and (5) of Act LVIII of 2020 introduced another detrimental provision for employees. They explain that this provision allows a governmental body to allow a maximum of 24 months of working time or a settlement period for a job-creating investment at the request of the employer after the emergency has been lifted (during the new period of epidemiological preparedness) if the investment is in the national interest. Therefore, they argue that the new provision essentially maintains the situation complained of indefinitely, and even exacerbates it, since during the new epidemiological preparedness (the length of which is uncertain), only a government body can decide, and only at the unilateral request of the employer on a significant extension of the maximum period of working time specified in the Labour Code, thereby completely excluding the possibility of collective bargaining. The complainants point out that the conditions for granting the permit (job-creating investment, national economic interest) are not specified, which means that the decision may be based entirely on the discretion of the governmental body. They argue that the fact that this working time frame is not based on the Labour Code but on a separate piece of legislation, which is not covered by the guarantee rules of the Labour Code, also makes collective bargaining impossible in this area.

B. The Government’s reply

1. 225. In a communication dated 15 July 2020, the Government states that a special legal order had been in effect in Hungary pursuant to its Decree No. 40/2020 of 11 March on the declaration of the state of danger, under which the purpose and limits of legislation were determined by Act XII of 2020 on the containment of coronavirus, which was in force between 31 March 2020 and 17 June 2020.
2. 226. The Government indicates that section 2(1) of Act XII of 2020 provides that during the period of the state of danger, in addition to the extraordinary measures and rules laid down in Act CXXVIII of 2011 on disaster management and amending certain related Acts, the Government may, in order to guarantee the protection of the life, health, person, property and rights of the citizens and the stability of the national economy, by means of a decree, suspend the application of certain Acts, derogate from the provisions of Acts and take other extraordinary measures. It further indicates that section 2(2) of Act XII of 2020 stipulates that the Government may exercise its power under paragraph 1 of the Act for the purpose of preventing, controlling and eliminating the human epidemic referred to in Decree No. 40/2020, and preventing and averting its harmful effects, to the extent necessary and proportionate to the objective pursued.
3. 227. The Government also states that section 3(1) of Act XII of 2020 stipulates that on the basis of article 53(3) of the Fundamental Law, the National Assembly authorizes the Government to extend the applicability of the Government Decrees under article 53(1) and (2) of the Fundamental Law adopted in the state of danger until the end of the period of danger. Moreover, pursuant to section 3(2) of Act XII of 2020, this authorization may be withdrawn before the end of the period of the state of danger.
4. 228. The Government indicates that Act LVII of 2020 on terminating the state of danger entered into force on 18 June 2020. This Act stipulates that Act XII of 2020 is repealed upon the state of danger being declared ended. The Government states that the emergency was lifted in accordance with its Decree No. 282/2020, which repealed Decree No. 40/2020.
5. 229. The Government explains that its intention to enact Decree No. 47/2020 of 18 March 2020 on immediate measures necessary for alleviating the effects of the coronavirus pandemic on national economy and Decree No. 104/2020 of 10 April 2020 on supplementing the labour law rules of Decree No. 47/2020, within the framework of the Economic Protection Action Plan, aimed at ensuring occupational health and safety at the highest possible level in light of changed occupational conditions, and to simultaneously protect jobs and prevent mass lay-offs. It states that these Decrees aimed to minimize the effects of the COVID-19 pandemic and the employment measures introduced on jobs as a result, and thus to mitigate its negative consequences on workers and their families. The Government stresses that neither the extent of the risk (that is, duration of the pandemic) nor its economic effects were foreseeable at the time of the Decrees’ enactment, but that job retention was a priority in terms of the future restart of the economy to ensure that plants can launch operations after the pandemic has been overcome.
6. 230. With regard to the complainants’ allegations regarding the possibility of derogation from the Labour Code, the Government indicates that section 6(2) of Decree No. 47/2020 provides that until the expiry of a period of 30 days following the end of the state of danger, the Labour Code must be applied with the following derogations: (a) the employer may alter a work schedule made known even in a way different from the rules on making work schedules known laid down in section 97(5) of the Labour Code; (b) the employer may unilaterally order employees to work at home or telework; and (c) the employer may take the necessary measures for checking the health of employees. Section 6(3) of Decree No. 47/2020 also stipulates that, as long as this Decree is in force, provisions of collective agreements derogating from these rules must not apply. Moreover, according to section 6(4) of Decree No. 47/2020, the employee and the employer may depart from the provisions of the Labour Code in a separate agreement.
7. 231. The Government underlines that Decree No. 47/2020 expired at the end of the state of danger, as it was repealed on 18 June 2020. It emphasizes that the prohibition of applying provisions of collective agreements was only a temporary measure effective between 19 March 2020 and 17 June 2020, and only in relation to the above-mentioned legislative matters, for enforcing compliance with prohibitions and restrictions during the state of danger.
8. 232. The Government indicates that section 2 of Act LVIII of 2020, which entered into force on 18 June 2020, provides that the Act sets out transitional rules relating to the extraordinary measures which were adopted during the state of danger and are temporarily applicable after the termination of the state of danger to guarantee the protection of the life, health, personal safety, property and rights of the citizens, and the stability of the national economy. It points out that section 56(2) of Act LVIII of 2020 explicitly stipulates that the derogation from the provisions of the Labour Code in relation to the above-mentioned three legislative matters and generally from the rules of the Labour Code in a special agreement between the employee and the employer has been permitted only until 1 July 2020 to ensure the regulatory transition relating to the extraordinary measures implemented during the state of danger, and to guarantee legal certainty.
9. 233. The Government stresses that the derogation from the rules of the Labour Code permitted by section 6(4) of Government Decree No. 47/2020 was a temporary measure to manage problems arising during the state of danger, and highlights that an agreement between the parties may not lead to the circumvention of the legal guarantees introduced in Hungarian law.
10. 234. The Government indicates that the implementation of Convention No. 98 is primarily served by provisions of the Labour Code and that, based on article Q) (2) of the Fundamental Law and the case law of the Constitutional Court, any applicable legal regulation should be interpreted in consideration of and consistently with international law. The courts are therefore required to ensure consistency between Article 4 of Convention No. 98 and the Hungarian legal provisions serving its implementation.
11. 235. According to the Government, this requirement of interpretation in accordance with international law was applicable to section 6(4) of Decree No. 47/2020 and the provisions of the Labour Code relating to collective bargaining, collective agreements and the regulation of collective agreements which serve the implementation of international legal provisions. It argues that, consequently, the special agreements derogating from the rules of the Labour Code could not have resulted in the circumvention of guarantees introduced in Hungarian law on the basis of article 4 of the Convention.
12. 236. As regards the complainants’ alleged restriction of the right to collective bargaining when ordering a working time frame of up to 24 months, the Government states that Decree No. 104/2020 was in force between 11 April 2020 and 17 June 2020. It indicates that section 1(1) and (2) of the Decree stipulates that to ensure compliance with the prohibitions and restrictions prescribed during the state of danger, in addition to the provisions set out in section 6(2) of Decree No. 47/2020, the Labour Code should be applied with the derogation by which the employer may order a working time frame of a maximum of 24 months, and the employer may extend the working time frame ordered before entry into force of this Decree to a period of a maximum of 24 months. Section 1(4) of Decree No. 104/2020 also stipulates that provisions of a collective agreement derogating from the rules laid down in this Decree may not be applied during the effective period of the Decree. Moreover, section 4 of Decree No. 104/2020 provides that the termination of the state of danger is without prejudice to employment based on a working time framework which was ordered by an agreement and concluded in accordance with section 1(1) and (2) of this Decree and section 6(4) of Decree No. 47/2020.
13. 237. The Government indicates that Decree No. 104/2020 was repealed on 18 June 2020, but that Act LVIII of 2020 lays down additional provisions in relation to the working time framework. It states that, according to section 56(3) of Act LVIII, the termination of the state of danger is without prejudice to employment within a working time framework ordered unilaterally or by agreement between the parties during the emergency until the end of the working time framework.
14. 238. The Government explains that the aim of Act LVIII of 2020 is to enable the Hungarian National Assembly to regulate the legal relationships established during the emergency concerning matters falling within the scope of emergency legislation after the emergency by ensuring a clear and predictable regulatory transition, also in consideration of the principle of the protection of legitimate expectations, and to provide the legal guarantee of an unchanged regulatory environment by an adopted act.

The Committee’s recommendations

1. 251. In the light of its foregoing conclusions, which do not call for further examination, the Committee invites the Governing Body to approve the following recommendations:
   • (a) Concerned by the allegations that the measures subject of this case were taken without prior consultation, the Committee trusts the Government’s promotion of the full development and utilization of collective bargaining machinery will secure a mutually agreed transition of the extraordinary measures implemented during the state of danger, including the derogation from the provisions of the Labour Code by section 6 of Government Decree No. 47/2020.
   • (b) The Committee encourages the Government to engage in dialogue with employers’ and workers’ organizations in order to limit the duration and the impact of the measures introduced by sections 1 and 4 of Government Decree No. 104/2020 and section 56 of Act LVIII of 2020, and ensure the full use of collective bargaining as a means of achieving balanced and sustainable solutions in times of crisis.