At the end of our series of articles on working time, we come to the issue that generates the most dispute between the employer and the employee about working time, the overtime. While in the case of a factory worker, it is most often evident to compensate for the extra work, in managerial or career-promising positions, it is often considered an inherent part of the employment and the employee is expected to handle the issue of working hours "flexibly". In our article, we will find out whether an employer can legally avoid paying wage supplement related to overtime in Hungary.

The previous part of the article is available here: TIME IS MONEY! - PART IV – FLEXIBLE WORKING ARRANGEMENT AND FLEXITIME – DO WE HAVE TO PAY OVERTIME? - Blog - Smartlegal

1. The concept of overtime

Overtime means working in addition to regular working hours. In our series of articles, we showed that for each employment, the amount of working time and its schedule shall be determined, in case the employee works longer than the pre-determined amount, we can usually talk about overtime.

According to the Hungarian Labour Code (“LC”)[i], it is considered overtime if the working hours of the employee

1. differs from the working time arrangement (e.g. an employee who works Monday to Friday from 8 a.m. to 5 p.m., on one day works from 9 a.m. to 6 p.m.);
2. exceeds the amount of time available in the working time banking (during a 3-month working time banking, the assigned working time exceeds 480 hours)[ii];
3. in case of a payroll period[iii], exceeds the underlying weekly working time.

In addition to the above, the duration of on-call work[iv] is also considered overtime.

2. Is only the work ordered by the employer considered overtime?

In relation to overtime, an extremely important aspect is whether it counts as overtime and whether the employee should be paid if the employer does not expressly order extraordinary work, but the employee works more than his working time in order to be able to fulfil his duties.

The basis of the uncertainty about this issue is based on the logic of the Labour Code, which says that overtime is unilaterally ordered by the employer, so it may seem logical at first that we cannot talk about overtime in the absence of an instruction of the employer. In many legal disputes, employers rely on this and claim that they were unaware of the extra work.

However, Hungarian judicial practice is clear that in some cases, overtime can be established even in the absence of an express instruction of the employer[v]:

• Even in the absence of an express order of the employer, the employee's extra work is considered overtime if it can be proved that the work was done in the interests of the employer, and it has been tacitly acknowledged by him[vi];
• It is considered overtime if it is certified that the work was necessary in the interests of the employer, even in the absence of an order[vii];
• The additional hours of work performed by the employee in excess of his normal working hours, shall be counted as overtime, even in the absence of an instruction if it was controlled and certified by the employer[viii];
• However, the duration of work performed contrary to the express instructions of the employer does not constitute overtime even if it was done in the interests of the employer[ix].

Overtime may be ordered without any formal constraints, however, if the employee expressly requests it, the order must be in writing.

It is important that overtime is possible even if the employer did not order it but knew about it and did not raise an objection (so-called tacit acceptance).

3. Tacit acceptance in the case of flexible working arrangement and flexitime

In case the employer schedules the working time, the "tacit acceptance" can solve the legal uncertainty. However, what is the case with flexible working arrangement and flexitime, when the employer usually does not have an overview of the exact amount of time the employee spends with work?

According to the Commentary of Hungarian Labour Code, overtime is generally not possible in the case of flexible working arrangement, with the exception if the employer requires the employee to perform a disproportionately large number of work tasks, taking into account the normal working hours of the day and week.

Therefore, in the case of flexible working arrangement, the determination of overtime is very rare, since, in the absence of employer records and time clock data, it is difficult for the employee to prove that he had to perform additional work in the interests of the employer.

4. Ordering overtime and its limits

In Hungary overtime may be ordered for a maximum of 250 hours in a year, this maximum may be increased by a collective agreement to a maximum of 300 hours. The employee and the employer may conclude a written agreement allowing for an additional 150 hours of overtime in addition to the 250 hours, which the employee is entitled to terminate by the end of the calendar year (voluntary overtime).

An additional limitation is that overtime can be ordered on a public holiday only if the employee could be allocated regular working hours on such a day.

In addition to the above, as already mentioned in a previous article, the duration of overtime is included in the maximum daily working time (12 hours) and the maximum weekly working time (48 hours) of the employee, therefore this also limits the duration of the overtime that can be ordered.

However, under Hungarian labour law in certain cases there are no restrictions on the performance of overtime, therefore overtime may be ordered without limitation in the interest of the prevention or mitigation of any imminent danger of accident, natural disaster or serious damage or of any danger to health or the environment.

However, a certain protected group of workers should in no case be ordered to work overtime, for example for pregnant women or single mothers until the child reaches the age of 3.

5. Remuneration for overtime

Since in the case of overtime, the employee works in addition to his regular working hours, or even on his rest day, the law provides adequate compensation in addition to the base wage, which is regulated by the LC among the wage supplements.

The basis for calculating the wage supplement is the employee's base wage for one hour, so the amount of the wage supplement must be determined based on the base wage.

The table below shows how the amount of wage supplement is calculated in Hungary, depending on when the overtime took place:

When did overtime take place?	Amount of wage supplement
Overtime scheduled to a period exceeding regular working hours	50%
Overtime scheduled to a working day for which the employer has not allocated working time
Overtime ordered in addition to the working time banking and, if the payroll period is applied, in excess of the weekly working time on which it is based.
Overtime scheduled for a weekly rest day/rest period;	100 %, or 50% + another weekly rest day (rest period)
Overtime on public holidays

 

6. Options to avoid paying the wage supplement

Based on the above, the possibility that the court establishes overtime if the employee performs work in the interests of the employer in excess of his working hours cannot be fully excluded under Hungarian labour law. However, the employer has several options for compensating the employee in a different way than with the wage supplements:

a. Provision of time off instead of wage supplement

By agreement of the parties, time off may be granted instead of the wage supplement. The duration of the time off must be at least equal to the duration of overtime. With this solution, the 50% wage supplement can be completely "replaced", and the 100% wage supplement can be reduced to 50%. In case of the time off, the employee is exempted from the requirement of availability and from work duty during his scheduled working time.

It is important to note that in the case of the above solution, the employee is entitled to a base wage for both the duration of the overtime and the time off, so the solution is ultimately more costly than paying the wage supplement:

Paying the wage supplement	Providing time off
base wage for the duration of overtime	100%	base wage for the duration of overtime	100%
wage supplement for the duration of overtime	+50%	base wage for time off (at least the same duration as overtime)	+100%
total costs	150% base wage	total	200% base wage

However, the provision of time off can still be beneficial, since, by agreement of the parties, the expenditure of time off and the payment of the associated wage can be shifted until 31 December of the year following the current year, so this solution can provide an advantage to the employer in the short term.

b. monthly flat rate, which includes wage supplements

In addition to the time off, an additional alternative is the stipulation of a monthly flat rate, which includes wage supplements.

In this case, the parties specify in the employment contract a flat fee that replaces a specified wage supplement.

It is important to note that, the requirement of proportionality has high importance in this case, and the parties must determine an amount which ensures that that the employee is not placed in a disproportionate disadvantage compared to the basic settlement.

7. Summary

At the end of our series of articles, we presented the practical issues related to overtime in Hungary, i.e. whether the employer can be exempted from paying the consideration for overtime.

Based on Hungarian judicial practice, it is clear that overtime can be established without an express instruction from the employer if the work was done in the interests of the employer with its tacit acceptance.

Although in the case of flexible working arrangement and flexitime, where recording working time and rest periods is not mandatory, it is very difficult to prove overtime, it cannot be completely ruled out that the labour court would treat it as overtime if the employee exceeded the amount of working time in the interests of the employer.

However, the employer has several options to compensate for overtime in a different way than paying wage supplement in Hungary: with a period of time off commensurate with the time spent on overtime, or by including a proportionate flat fee in the employment contract.

 

[i] act I of 2012 on the labour code

[ii] see on our article on the working time banking: TIME IS MONEY! – PART III – A LOOPHOLE FOR THE 8-HOURS WORKING DAY IN HUNGARY - Blog - Smartlegal

[iii] see on our article on the payroll period: TIME IS MONEY! – PART III – A LOOPHOLE FOR THE 8-HOURS WORKING DAY IN HUNGARY - Blog - Smartlegal

[iv] When the employer shall be entitled to designate the place where the employee is required to be available e beyond the regular daily working hours arrangement

[v] A Munka Törvénykönyvének magyarázata (HVG-ORAC, page 860 B/5, 2020, updated: 1 January 2022) [1450]

[vi] BH 1997.500, EBH 1999.53, EBH 2006.1443

[vii] EBH 2002.788

[viii] EBH 1999. 53

[ix] BH 2015.201.