Reforms in the employment of pensioners in an employment relationship

The changes planned for 2019 primarily refer to the charges of the employment of the pensioners in an employment relationship set out by the Hungarian Labor Law. According to the intention of the legislator, only the personal income tax shall be deducted from the salary of the pensioners employed in an employment relationship. It is an important change in light of the fact that besides the personal income tax, the pension contribution of 10% and also the health insurance contribution of 4% are currently deducted from the salary of the pensioners employed in an employment relationship. By reviewing the charges of the salary, the legislation intends to favor not only the pensioners employed in employment relationship from 2019 but probably also the employer will not be obliged to pay the social contribution tax of 19,5% and of the vocational training contribution of 1,5%. The government bill according to which the termination of the insurance legal relationship will be deleted from the requirements of the determination of the pension in the future, means a further important and positive change for the retired employees. Behind this concept is the recognition that currently the requirement according to which the retirement pension can be determined only if the person requesting the above is not in an insurance legal relationship, has increased only the administrative costs of the employers and employees and has not achieved any other results. It is an open question with what kind of text the above mentioned planned changes will be actually codified. However, it is a fact that according to our current knowledge, the legislator does not intend to change the basic requirements of the carry out of work as pensioner.
Summarizing the above, we describe these criteria as follows. The legal provision does not determine any restriction regarding the employment of retired employees in the private sector. However, basic restrictions are applied in the private sector: the payment of the retirement pension shall be put on hold if the pensioner is in a public-sector employee relationship and the budgetary authority falling within the scope of the Act on the legal status of public-sector employees is entitled to conclude an employment agreement only if the activity affected by the employment agreement cannot be considered as public service falling within its scope of activities.