Background information

Ad hoc cooperation agreements are available to companies undergoing large-scale collective redundancy or economic difficulties with negative consequences on employment. ‘Collective redundancy’ is defined as the termination of employment for at least 10 to 30 people, depending on staff size (at least 20). These agreements exist only in companies (typically the larger ones) where social dialogue and collective bargaining is working well. 

Content of measure

An ad hoc agreement is traditionally concluded between trade unions and the employer in case the company would have to dismiss a large number of employees either due to financial constraints or because of technological developments. While representation through a trade union is optional for an employee, electing a works council is mandatory for each organisation employing over 15 people. The labour code specifies the works council as a mandatory negotiation partner for an organisation that is considering collective redundancy, whereas the negotiation must cover – among others – some means of mitigating the consequences. The aim of these ad hoc agreements is to reduce the negative consequences of mass dismissal on the labour market. This measure can be set up by companies that wish to go beyond the statutory agreements between employees and employers. There are a number of possible tools which companies can use to help employees' transition, particularly in cases of collective redundancies. These include:

• Establishing an intranet that effectively works as a career portal;

• Facilitating employees' transition to new employment by offering other jobs within the organisation or by facilitating contact with other similar companies;

• Granting training/education subsidies;

• Subsidising retirement schemes

This instrument encourages employers to try to do the utmost for employees during a period of economic difficulty with negative consequences on employment. The partners cooperate and can solve the disputes at the company level. Such agreements are concluded only in companies where the social dialogue and collective bargaining is working well.

Use of measure

The ad hoc cooperation agreements were, in most cases, successful in restructuring jobs and retraining employees. From the cases examined (Hungarian Railways MÁV, Rail Cargo Hungaria Zrt (RCH)), it is apparent that mass layoffs have not been the trend in the past years, companies are faced with labour shortages rather than a need to shred workers. As an alternative to layoffs, they try to retrain and restructure employment to raise standards in human resources. In May 2022 RCH signed a cooperation agreement with the Baross-Gábor Vocational School of Economics and Transport of SZC Miskolc to secure and locally employ up-and-coming young professionals necessary for the economic recovery of the region, RCH reported.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Public employment service	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Unknown	Unknown

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

• 01 July 2012: Act I/2012 on the labour code, Section 40 (par 71-76) (njt.hu)
• 13 March 2017: Együttműködési megállapodás (cooperation agreement of the MÁV Group) (www.vsz.hu)
• 23 May 2022: RCH-Cooperation for securing the next generation of experts in Northern Hungary (rch.railcargo.com)