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In brief

The employment supervisory authority has published its annual report summarizing its findings from inspections carried out over 2023. The main objective of the inspections was to assess the extent to which employers comply with the basic rules on employment.

We highlight the most important takeaways of the authority’s report and our expectations for the future.


Contents

  1. Key takeaways
  2. In depth
  3. Comment

Key takeaways

The following are the key takeaways from the employment supervisory authority’s 2023 report:

  1. Industry-specific irregularities
  • Construction sector: undeclared work
  • Manufacturing sector and agriculture: noncompliance with recordkeeping rules
  • Commerce: noncompliance with working time rules
  1. Complex subcontracting chains
  • The construction sector faced challenges due to complex subcontracting chains.
  • Identifying the exact employer was difficult.
  • Subcontractors faced conditions that hindered the proper reporting of employees.
  1. Enforcement measures
  • Fines were applied in 27% of labor decisions for illegal employment. 
  • Warnings with obligations to take action were also common (21%).

In depth

The employment supervisory authority has published its annual report setting out its key findings from inspections undertaken in 2023. The main objective of the inspections was to assess the extent to which employers comply with the basic rules on employment.

Statistics show the common types of irregularities observed in certain industries. The most serious problems are:

  • In the construction sector, undeclared work.
  • In the manufacturing sector and agriculture, noncompliance with recordkeeping rules.
  • In commerce, noncompliance with working time rules.

Once again, irregularities relating to leave were also scrutinized. It was found that 54% of the corrective measures taken by the authority were in commerce, but the most affected workers were in the processing industry (44%).

In the construction sector, a specific problem was highlighted. In its investigation, which focused on large-scale undeclared work over the summer months, the authority found that complex subcontracting chains often make it difficult to identify the exact employer and that parties higher up the chain impose conditions on their subcontractors that prevent them from having enough time or financial resources to report their subcontracted workers.

Fines accounted for 27% of the labor decisions regarding illegal employment, but warnings with an obligation to take action were also common (21%).

Comment

Employers’ illegal practices are usually only discovered either during inspections or after the employment relationship has ended, but they can be prevented by raising awareness within the company.

Based on the latest investigation plan of the employment supervisory authority and the occupational health and safety authority, the authority will focus on investigating employers who employ migrant workers and the circumstances of those employees who are intensely exposed to carcinogenic or mutagenic substances.

For more information and advice on assessing and managing these risks, please contact us.

Author

Dr. Ákos Fehérváry serves as managing partner of the Firm’s Budapest office, while co-heading the M&A/Corporate Practice Group and heading the Employment Practice Group in Budapest.

Author

Dr. Nóra Óváry-Papp is a Counsel in Hegymegi-Barakonyi & Fehérváry Baker & McKenzie Attorneys-at-Law, Budapest office.

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