Immigration
Impact: High
Summary
A new immigration law will take effect in Hungary later this year, leading to possible new immigration options for guest workers from outside the EU/EEA. The new law intends to reduce the processing times and prevent individuals from remaining in Hungary for other purposes either legally or irregularly. There are, however, some issues that are yet to be clarified, such as how the quotas could be monitored by the employers and which nationalities will be eligible.
You can find our detailed assessment of the changes and possible impact in our publications on Adó Online and Portfolio (both in Hungarian language). Alternatively, we have summarised the relevant changes below.
The Detail
On 23 July 2023 a new law came into force in Hungary aiming to further regulate the situation of third-country nationals arriving to Hungary for the purpose of work. Effective as of 1 November 2023, the Act L of 2023 on the Hungarian employment of Guest Workers introduces a new residence permit type that can be applied for by certain third country (i.e. non-EU, non-EEA) nationals under specific circumstances. This alternative route of employing third-country nationals in Hungary intends to facilitate the residence permit application process in cases falling under the category of “guest worker” and at the same time it aims to prevent the holders of the new permit type from remaining in Hungary in the long run.
Existing options
Hiring workers from third countries had been an option based on the already existing regulations even before the guest worker residence permit was introduced. The permit that third-country nationals can obtain as per the standard Hungarian regulations in most cases is a combined work and residence permit applied for in a single application process, commonly called as single permit. Since the standard immigration routes remain effective, it is worth examining the differences between the classic single permit and the guest worker residence permit, which – according to the new law – is also a type of single permit.
What’s new?
Based on the new regulation, not all third country nationals can be defined as a guest worker. In addition, not all positions are eligible under the regulation. A ministerial decree will announce the list of countries where guest workers could be hired from and the positions that they can fulfil. The overall and per country quotas will also be announced annually in a ministerial decree before the guest worker act becomes effective.
Not all companies in Hungary will be able to opt for hiring a third-country national as a guest worker. Instead, only certain companies will be eligible, such as the strategic partners of the Government, those who implement an investment of preferential status for national economy considerations and a special range of temporary-work agencies.
Practical implications
There are some important yet unanswered questions regarding the new regulation. It is unclear, for example, how the employers can monitor the status of the annual and per country quotas to know whether they can hire (further) guest workers. The hope is therefore that the ministerial decrees will address this question.
In addition, there is a more essential question in connection with the new law: can the third-country national and the prospective employer opt for the classic single permit route instead of applying for a guest worker residence permit if the specific requirements of the latter one are met? The relevance of this question is that hiring someone as a guest worker is not necessarily a better option considering all aspects compared to the classic single permit scenario. An advantage of the guest worker residence permit is that the government office is not involved in terms of work authorization during the first application process only in the permit renewal processes, while this is necessary in the “classic” single permit applications in most cases. The decision-making time is not significantly shorter (60 days instead of the general 70 days) but leaving out the government office from the application procedure could reduce the decision-making time in practice. Moreover, there is an alternative and possibly faster way to fulfil the labour market test that can further reduce the time needed for the immigration authority to make the decision.
The guest worker residence permit can be applied for up to 2 years and can be renewed for an overall 3-year duration counted from the issuance of the first permit. If there is an intention to continue employing the third-country national, it is possible to apply for a new 2-year period guest worker residence permit and renewing it again, however, the same 3-year cap would apply again. However, this is only available for holders of a guest worker residence permit. The classic single permit can be applied for up to 2 years and it can be renewed by 2 years at a time (as a main rule), and, if necessary, other type of residence permits can be applied for during the validity period of a single permit.
Another disadvantage for the third-country national considered as a guest worker is that the holder cannot apply for a permanent residence permit in Hungary, and family members cannot apply for a residence permit as accompanying family members.
In addition, the employer has increased responsibility if the third-country national guest worker does not leave the European Union upon the expiry of the guest worker residence permit as the costs of the expulsion, detention and deportation will be payable by the company if the individual does not have the sufficient means to pay these expenses.
What this means
It is clear that the new law intends to reduce the processing times and prevent individuals from remaining in Hungary for other purposes either legally or irregularly. There are, however, some issues that are still to be clarified, such as how the quotas could be monitored by employers and which nationalities will be eligible. Based on this, it will be possible to determine whether this new permit type will be more favourable and more popular than current existing categories for the employers that are eligible to hire guest workers, assuming that they will have the choice for selecting the type of permit to proceed with.
How we can help
Vialto will continue to monitor developments closely and assess the impact on businesses and employees.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
· Dénes Megyesi – Senior Manager – denes.megyesi@vialto.com
· Kata Magyar – Senior Consultant – kata.magyar@vialto.com
Further information on Vialto Partners can be found here: www.vialtopartners.com
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