17. April 2020

Hungary: Some important questions nowadays in Hungary: Conversion of business methods, employee’s leave, suspension of business activity for small and mid-sized enterprises

17. April 2020
act legal Hungary

Conversion of regular business methods into ordering and contracting by telephone

The spread of the coronavirus poses new challenges for businesses that have so far been using primarily personal contact or paper-based methods during their activities. Many would introduce processing orders and making contracts by telephone in their administration to replace personal contact. In our newsletter, we represent the most important legal aspects should companies consider such conversion of their business methods.

The first question is how detailed the tenderer must describe the content and elements of the contract in the telephone contracting process in order for it to be validly concluded. In order for the contract to be valid, the essential elements of the contract must be agreed by the parties. Such material elements are typically the amount of the product or service, the payment deadline, the main features of the product or service, or the method of payment, but it varies from contract to contract as to what may qualify as a material item. Many companies already enter these essential elements into their contracts in accordance with their general terms and conditions (GTC) and regulate their details therein.

We would also recommend this method as a starting point for regulating telephone and online contracts, as it is the simplest form of detailed and prudent contracting. When concluding a telephone contract, it is always necessary to inform and draw the customer’s attention to the detailed knowledge of the GTC and the terms of purchase.

Recording telephone conversations

Another important aspect of telephone order is the matter of voice recording. Most customer services record calls and a machine voice automatically notify customers thereof. This can later be important to a business, if we think about what happens if the customer claims to have been invoiced for a different amount than the amount of the order, or if he/she received a different product. Recording the telephone conversations serve as a perfect solution in the event of a dispute, as the voice recording has probative value if it is lawfully recorded.

According to the information provided by the Hungarian National Authority for Data Protection and Freedom of Information, telephone conversations can only be recorded and stored pursuant to the mandatory requirements of law or upon the prior consent of the person concerned as data subject.

However, in addition to the consent of the data subject, it is a further condition that the data subjects are to give their consent after being duly informed of the purpose, duration and conditions under which the conversation will be recorded, stored and used. For this purpose, a statutory privacy statement published on the company’s website and accessible to all may be appropriate. However, data management must always remain within the necessary framework and be capable of achieving the desired purpose.

From the above summary, it is pointed out that there are relatively many legal obligations associated with lawfully recording telephone orders, but its introduction in accordance with the law can be a long-term solution for businesses. Of course, our summary does not cover all aspects of regulatory design, we have only highlighted some important issues.

Independent 14 days of the employee’s leave

This time, we draw attention to a lesser-known provision of Hungarian labor law that may be useful for companies where it is not feasible to work from home, or which are forced to shut down temporarily as a result of preventive government measures.

Granting leave by the employer

Employers generally seek to treat the current situation fairly, within the limits of economic reasonableness, and to avoid, as far as possible, dismissing workers. If the employer is unable to meet its employment obligation, it seems an obvious solution to grant leave to the workers concerned.

The „14 days rule”

Leave is generally granted by the employer, but the parties must pay attention to certain restrictions. Such a restriction is that, unless otherwise agreed, the leave must be granted in such a way that the employee is released from his/her obligation to work and to be available for at least fourteen consecutive days once per calendar year.

Unless otherwise agreed, if the employer is forced to grant leave to its employees anyway, they can use the current situation to fulfill their obligation described above.

Idle time/Downtime

If the employer is unable to meet its employment obligations, i.e. to give work to its employees during the working hours, we are talking about downtime/idle time. In this case, the employee is still entitled to the base salary or, if he or she was entitled to a wage supplement according to his or her position, the employer is also obliged to pay it to him or her. An employer may be released from its payment obligation only if it can prove that it was unable to fulfill its employment obligation for an unavoidable external reason.

By external reason we mean all the reasons that fall outside of the scope of interests and powers of the employer, and the employer could not prevent or eliminate, and this was not to be expected from the employer. However, we would like to draw your attention to the fact that we cannot automatically talk about the occurrence of force majeure at the same time as the introduction of the state of emergency. At present, no „general quarantine” has been ordered, so in theory the employer would still be able to employ the employee if the employer can provide the employee with safe and healthy working conditions.

Suspension of the business activity

Entrepreneurs subject to KATA taxation (a special form of simplified taxation applicable to certain small and mid-sized enterprises, entrepreneurs in Hungary) who have not been exempted from paying their KATA tax  , but who cannot generate income in the present situation, should consider suspending their business activities. , The suspension of the business activity must be communicated towards the tax authority, the local government responsible for the local business tax and to the competent professional chamber. During the break, these small and mid-sized enterprises still have to pay a small amount of monthly contribution to social security.

act legal - Bán & Partners