29 Sep 2017

The introduction of a new form of work co-operative by the Hungarian government has opened up the job market to pension-age employees.

By Eszter Bohati and Baranabas Buzasi, Wolf Theiss

As the Hungarian workforce has been diminishing over the last few years, employers have faced difficulties in fulfilling their staffing requirements. At the same time, however, there are many individuals in Hungary who need to continue working after their “retirement”. Fortunately, a new form of co-operative has recently been introduced, which is intended to address both “problems” in the labour market.

Within the framework of this new type of co-operative, active, elderly people can work after retirement and utilise the expertise they have accumulated during their working lives. As these co-operatives introduce a more flexible legal framework for “employment”, the desire is that they will create a mutually beneficial situation for both employers and pension-age employees.

Membership of a pensioners’ co-operative is reserved for individuals who personally undertake to participate in the cooperative’s activity by way of a membership agreement. The obligation of personal involvement may also be fulfilled where the pensioners’ co-operative provides services to third parties.

Another requirement is that at least 90% of the co-operative’s members shall be in receipt of their old-age pension. The pensioner is also obliged to make a financial contribution when joining (the method, time and rate of which shall be defined in the pensioners’ co-operative’s statutes). It is possible for the co-operative to fulfil this requirement by requesting that the pensioner pays only a nominal amount in return for the membership.

As is the case with other co-operatives, pensioners’ co-operatives create community funds, which may be used for the social, health, educational and cultural needs of its members or their close relatives living in the same household.

Last but not least, it is important that the related taxation rules are more favourable. Social tax, training fund contributions and health insurance contributions are not payable by the employer in respect of pensioners, which means that they create a significantly lower tax burden for the employer, than for other employees. In light of the above, it is highly likely that the employment of pensioners will be more attractive in the near future.

© 2017 WOLF THEISS

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