Unemployment protection for the self-employed and platform workers in Hungary

Main principles of the Hungarian social security scheme

In life-situations where an individual cannot meet his or her needs, the Hungarian State provides support. The new Fundamental Law of Hungary, which entered into force on 1 January 2012, amended the fundamental right to social security set out in the previous Constitution. Article XIX of the Fundamental Law identifies seven situations in which an individual is entitled to State assistance and in which the State endeavours to provide services: maternity, sickness, disability, invalidity, widowhood, orphanhood and involuntary unemployment. In its decision 23/2013 (25.IX.), the Hungarian Constitutional Court held that, when developing this new concept of social security, it was necessary to reduce the previous social security entitlements because of ‘sustainable economic development and the gradually deteriorating demographic situation’ and ‘changed economic circumstances’ (Mélypataki, 2020: 73; Téglási, 2019: 335). ⁴ In its decision, the Hungarian Constitutional Court analysed the constitutional basis for the reduction, abolition or conversion of a social security benefit – early retirement pensions. In this context, it interpreted the new principle of social security in the Fundamental Law: the provision stating that Hungary shall endeavour to provide social security to all its citizens. Applied to the topic we are examining here, the Hungarian State must continue to provide unemployment benefits in the event of unemployment, but it will need to consider the principles of sustainable economic development when determining the rules for the design of the system. This means that, if required for the purpose of sustainable economic development, the unemployment protection provided may be reduced.

In Hungary, social security is enshrined in social legislation. The division of social law presented in this chapter is that most commonly used in the legal literature (Eichenhofer, 2004: 8; Prugberger, 2008: 413–430; Szamel, 1998: 15–22; Tóth and Mélypataki, 2023: 50–68).

The first category of benefits comes under the Hungarian social security insurance system. In Hungary, social insurance covers health insurance, accident insurance, pension insurance and, more broadly, unemployment benefits. These services and benefits constitute the largest part of the State (social law) functions described in Article XIX of the Fundamental Law, namely the right to social security. The second category of benefits fall under what is called the care or compensation system, in which benefits are linked to objective life situations, with citizens becoming entitled to a service if this particular situation exists, without any other prior criteria. Finally, the third type is the social assistance scheme, which is characterised by means-tested benefits and is subsidiary in nature.

According to this division, the Hungarian social system is of a hybrid nature, with both insurance and social assistance. On the basis of the criteria mentioned in the previous paragraph, we can identify the social benefits provided as follows: social insurance benefits in category one; family benefits and other benefits for families with children in category two; and benefits provided by the social assistance system in category three.

Definition of ‘insured person’ in the Hungarian social security legislation

The following laws currently regulate in-kind and financial services in the compulsory social security system: Act CXXII of 2019 on Persons entitled to Social Security Benefits and on the Coverage of these Benefits (hereinafter referred to as Tbj.); Act LXXXI of 1997 on Social Security Pension Benefits; Act LXXXIII of 1997 on Compulsory Health Insurance; Act CXCI of 2011 on the Benefits of Persons with Changed Work Ability and on the Amendment of Certain Acts and; Act IV of 1991 on Job Assistance and Unemployment Benefits.

Under the Hungarian social insurance scheme, which is compulsory, the insured person is entitled to social security benefits. Section 6 of the Tbj further explains the definition of ‘insured person’ under the social insurance scheme. Insured persons are defined as persons receiving job-seeking assistance, such as employees. The definition of insured persons also covers private entrepreneurs, as well as persons performing work for remuneration in any work-related relationship; however, it does not cover private entrepreneurs if their income from these activities comprising part of the contribution base for the month reaches 30% of the prevailing minimum wage, or one-thirtieth of the said minimum wage for each calendar day. Persons subject to flexible taxation in accordance with the Act on the Fixed-Rate Tax of Self-Employed Persons ⁵ are also classified as insured persons. In conclusion, the self-employed and (employed and self-employed) platform workers are, in general terms, included in the personal scope of the current Hungarian social insurance system.

Defining employment

A work relationship between parties can take the form of a mandate, a service agreement under the Civil Code, or an employment contract under the Labour Code. Self-employment in Hungary refers to work performed on the basis of a mandate or a service agreement.

According to the Hungarian Labour Code, ⁶ an ‘employee’ means any natural person who works on the basis of an employment contract. The Labour Code does not define the employment relationship but sets out the basic rights and obligations arising from an employment contract. Under such a contract, the employee is required to work as instructed by the employer; the employer is required to provide work for the employee and to pay wages. ⁷ This definition is relevant to the distinction between employment and other work relationships. The employment relationship is characterised by the fact that the employee works under the direction (instructions and control) of the employer. The legal relationship imposes an obligation on the employer to provide work for the employee and to pay remuneration. If the employee is subordinate and subject to the employer's broad right of direction, it is to be considered an employment relationship, even if the parties have considered themselves bound by another type of work relationship (Kártyás et al., 2020: 37–38.).

Guidance is provided by Joint Directive No. 7001/2005 (MK 170) of the Ministry of Finance and the Ministry of Economy and Labour, on the classification of contracts for work relationships. Although this Directive is no longer in force, the criteria listed therein are still used in practice as a basis for delineating certain employment relationships. According to the Directive, a distinction can be made between primary and secondary criteria used to classify the employment relationship.

The primary qualifying criteria may in themselves be decisive for the classification of the employment relationship. These qualifying criteria therefore generally support the existence of an employment relationship even in the absence of other qualifying criteria. The primary qualifying characteristics are: the nature of the activity; the definition of the set of tasks; the personal obligation to work; the employer's obligation to employ; the availability of the employee; and the subordinate role of the worker.

In comparison, the secondary qualifying criteria are not necessarily decisive on their own and can often only lead to the classification of the legal relationship as an employment relationship when supported by other qualifying characteristics. The secondary qualifying characteristics are: the right to direct, instruct and control; the determination of the duration of work, the scheduling of working hours and the place of work; remuneration for work performed; the use of the employer's work equipment, resources, and provision of safe working conditions.

However, when identifying a type of work relationship, all the circumstances of the case must be considered. Case law plays an important role in distinguishing between employment and self-employment (Szekeres, 2018: 128–144). ⁸

The relevant cases can be classified as follows: employment versus mandate; employment versus long-term assignment (standing orders); and employment versus entrepreneurship. In several cases, the judges responsible stated that the relevant factors are the obligation to be available and the unlimited right to give instructions, direct and control, as well as the obligation to employ. ⁹ In another case, the important criteria to be taken into account were working time and pay, ¹⁰ specific place and time of work, regular work, personal work, right to give instructions, ¹¹ specific job title and specific salary, ¹² specific hours of work, subordination, the right to give instructions and the personal obligation to work. ¹³ Recently, an employment relationship was declared on the basis of:

 ‘ … performance of his tasks alongside the regional coordinator, assisted him in his work, and had to act in accordance with his instructions and expectations as laid down in the contract of assignment, so there was a relationship of subordination between them. It was not disputed by the parties that the applicant had to be available to the employer for 4 h a day, had to carry out his activities personally and could not decide independently how to do so. The place of work was also adapted to the activity to be carried out in accordance with the coordinator's expectations and the tasks assigned.’ ¹⁴

The Hungarian Supreme Court also declared the relevance of the requirement for the employee to be available and the unlimited right of the employer to give direct instructions and exercise control.

From the case law, we can learn that there is no consistent set of criteria used in judicial practice when classifying the contracts applying to work relationships. The primary and secondary qualifying criteria often differ. ¹⁵ From this case law, we can also learn that ‘a contract could not give rise to an employment relationship if the predominant civil law elements predominated’. ¹⁶ In case Mfv. I. 10.468/2012/4., the Hungarian Supreme Court stated that the pre-contractual negotiations between the parties, the content of the statements made at the time of conclusion of the contract and during performance, the nature of the work and the rights and obligations of the parties are all relevant when classifying the work relationship. In this case, as the parties did not agree on a job title or salary, and as no employment contract was concluded, the applicant had no employment obligation. ¹⁷ When an employment relationship and self-employment had essentially the same content, the decisive point was a relationship of subordination rather than autonomy. ¹⁸ In another decision, the decisive points were the name of the contract, the fact that the income was not declared as income from employment, and that the applicant was not entitled to sick pay, as the entrepreneur must have known that this was not an employment relationship. The Hungarian Supreme Court said that the imposition on an individual of an obligation to work, the right to give instructions and definition of the place and means of work are also typical of civil law relationships. ¹⁹

Defining self-employment

The concept of a ‘self-employed person’ is not homogeneous, as it includes several activities viewed as ‘self-employment’ in addition to the definition of self-employed person set out in Act CXV of 2009 on Private Entrepreneurs. Notaries, court bailiffs, private patent agents, veterinary service practitioners and attorneys are listed as self-employed under tax and social security law. In practice, the type of case (tax, social security) will determine who is viewed as self-employed.

In Act CXV of 2009 on Private Entrepreneurs, self-employment is defined in Hungarian law as the right for a natural person to pursue an economic activity in return for remuneration on their own account, in the territory of Hungary, with a view to making a profit. ²⁰ This is a general definition.

In tax law, Act CXVII of 1995 on Personal Income Tax gives a general definition of a private entrepreneur as meaning any private individual shown in the register of private entrepreneurs according to the Act on Private Entrepreneurs and Sole Proprietorships, in respect of the business activities indicated in such a licence. ²¹ The Act also refers to notaries, court bailiffs, private patent agents, veterinary service practitioners and attorneys. This means that the concept is the same in social security law and tax law.

Under social security law, in Act CXXII of 2019 on the Entitlements to Social Security Benefits and on the Funding of these Services, a private entrepreneur means any natural person shown in the register of private entrepreneurs, according to the Act on Private Entrepreneurs and Sole Proprietorships. This Act gives the general definition and lists more categories, such as private individuals who are authorised to pursue the activities of veterinary service practitioners and private individuals who are authorised to engage in private practice providing pharmaceutical services; lawyers; private patent agents; notaries public who do not belong to a notaries’ office; and independent court bailiffs who do not belong to a bailiffs’ office. ²² When assessing the insurance relationship, the actual work or the commencement of the activity is irrelevant; what is important is registration as a private entrepreneur. ²³

For social security purposes, self-employment is categorised as a main activity (full time), secondary or ancillary activity. Insured full-time self-employed workers are those who are not simultaneously employed for at least 36 h a week and are not pursuing studies. The second group is made up of self-employed persons who are simultaneously insured for more than one insurance period (secondary activity), who are also employed and work for 36 h a week while running their business or who are studying while running their business. The third group is made up of self-employed persons engaged in an ancillary activity who continue their business activity as a pensioner, and of persons in receipt of a widow's pension who have reached the age of retirement. In the case of a person who is self-employed as a side activity, no social security contribution is payable if their flat-rate income is less than half the annual minimum wage, which has an important impact on the amount of unemployment benefit one can receive (Information notice, 2023).

In 2019, the number of self-employed persons was 494,000, and in 2022 it was 589,000, representing 12% of the total working population in Hungary.²⁴

Defining platform work

According to the PPMI research, an estimated 28.3 million people in the EU-27 work through platforms more often than just sporadically. Available evidence shows that the vast majority of the platform workers are formally self-employed. Based on further analysis, up to around 5.51 million of this group are at risk of misclassification of employment status (PPMI, 2021: 5). Little information is currently available in Hungary on the number of persons performing platform work. There are fewer than 150 digital labour platforms in the country (CEPS, 2021: 32). In 2021, the projected number of people working in Hungary through on-location and online digital labour platforms was 136,277 as a main activity, 515,936 as a secondary activity, and 217,911 as a marginal activity, making up a total of 897,124. However, as indicated earlier, this is far higher than the official number of self-employed persons in 2021 – 576,000 – taking into account the fact that most platform workers work as self-employed. The average weekly hours worked by the delivery platform couriers interviewed were 17.34 h in Hungary, which is very low for the European Union Member States (PPMI, 2021: 98, 194).

In Hungary there is a very strict binary work classification of platform workers: they can work as dependent workers (‘employees’) with a simplified employment contract resulting in lower protection, or as self-employed under a mandate or a service contract. ²⁵ In one recent case, the Hungarian judiciary had to review the classification of platform workers. The court of second instance, contrary to the decision of the court of first instance, classified the legal relationship between a platform worker and the platform as an employment relationship. ²⁶ The court of first instance had not considered the personal obligation to work to be decisive, nor had it stated that the rating of the worker had any consequences for their remuneration. ²⁷ The court of second instance found that the duties performed by the claimant had in fact been defined by the defendant as a job similar to that of other employees. The claimant was personally obliged to perform his duties, the decision held that the employer had a duty of employment and the employee a duty of availability. The court of second instance also pointed out that a relationship of subordination could be established between the parties. The defendant exercised the rights to direct, instruct and control over the claimant. The remuneration for the work was determined unilaterally by the defendant. In the court's view, the claimant was integrated into the defendant's organisational system. ²⁸ Finally, the Hungarian Supreme Court stated that the relationship was a civil law relationship. Contrary to the reasoning of the court of appeal, it pointed out that the courier's sole task under the framework contract was to deliver food and drink, from a specific address to a specific address. Nor could it be concluded that the defendant had in fact defined the tasks as a job. The claimant had not shown that the defendant had any control over the performance of the task, or that it determined the manner in which the task was to be carried out or the essential conditions of its performance. ²⁹ The claimant was entitled to determine whether he wanted to be available to the defendant during an active period. ³⁰ The claimant did not work in the defendant's organisation and his activities were not linked to the defendant's company structure. There was no strict relationship of subordination and superiority. ³¹ We can see that several tests were used in the reasoning of the court, and that the Joint Directive was taken into account.

It is important to stress that platform workers can perform their work under a simplified employment regime (Rácz, 2021: 10). Casual work is one form of simplified employment with lesser protection. Casual work means a fixed-term employment relationship between an employer and an employee, for a maximum of five consecutive calendar days and at most 15 calendar days in a calendar month, as well as a maximum of 90 calendar days in a calendar year. This form of employment entails very low public charges and creates uncertainty for the employee, who is not liable to pay social security contributions or advance personal income tax. ³² In the case of casual work, the number of workers employed in a simplified employment relationship on any one calendar day may not exceed one person for an employer who employs no full-time employees, two persons for someone employing one to five employees, four persons for an employer with six to 20 employees, and 20% of the number of employees in the case of an employer with more than 20 employees. ³³

Thus, we can conclude that platform workers are also in a precarious position in Hungary, and they pay low contributions, which results in a low level of unemployment benefits, as discussed further below.

Protection provided to jobseekers

Entitlement. The Hungarian unemployment benefit scheme is governed by Act IV of 1991 on Job Assistance and Unemployment Benefits. According to the conditions set out in this act, jobseekers shall be entitled to receive jobseeker support in the form of an unemployment benefit (also called a jobseeker’s benefit), pre-pension jobseeker’s allowance, and reimbursement of expenses. A ‘jobseeker’ means any person who is not employed and is not pursuing any other gainful activity – with the exception of being engaged in a relationship recognised as temporary employment or as a registered foster carer – and who meets the conditions necessary for the establishment of an employment relationship. The jobseeker shall not pursue studies as a full-time student at any educational institution, shall not be eligible for an old-age pension and shall not receive benefits provided to workers with disabilities. The jobseeker must cooperate with the competent government employment agency to find employment. The jobseeker must be registered with the government employment agency as a jobseeker. ³⁴ Like employees, the self-employed and platform workers can only apply for unemployment benefits if they are registered as jobseekers.

Unemployment benefits shall be granted to a person who is in search of a job and has spent at least 360 days in any kind of employment over the three-year period prior to becoming a jobseeker, so as to fulfil the eligibility period criterion. The jobseeker is required to find any kind of job, but has not succeeded and the competent government employment agency is unable to offer suitable employment. ³⁵ A job is considered suitable if it is within the framework of a regular employment relationship, among other criteria. ³⁶

Contribution base of an unemployment benefit. The amount of an unemployment benefit is calculated on the basis of the average monthly sum comprising the social security contribution base earned by the jobseeker during the four calendar quarters prior to the time when the application was submitted or – if admitted to the registry of jobseekers subsequently – prior to becoming a jobseeker. This is the contribution base. To calculate the average monthly sum, the amount of the contribution base earned during this period is divided by the number of months during which the jobseeker had any income comprising part of the contribution base. If the jobseeker’s contribution base for a given month does not cover the entire month, it shall be taken into consideration as a fraction of a month for the purposes of calculating the average monthly sum. ³⁷

If a jobseeker was employed by more than one employer during the four calendar quarters prior to becoming a jobseeker, the amount of the unemployment benefit is calculated on the basis of the contribution base on earnings received from all employers. ³⁸

If the contribution base for the previous four calendar quarters cannot be established, the amount of the contribution is determined on the basis of the monthly average contribution base earned during a period shorter than four calendar quarters. If the jobseeker has no contribution base at all for the previous four calendar quarters, the base for determining the jobseeker’s benefit is 130% of the mandatory minimum wage prevailing on the first day of eligibility for the benefit. ³⁹

The above shows that low social security contributions will lead to lower unemployment benefits. In particular, employed and self-employed platform workers, with irregular work patterns, will have difficulties accessing unemployment benefits. The same applies to the self-employed in general, who, under the favourable tax rules discussed below, may also have a low contribution base.

Duration of payment of an unemployment benefit. The duration of payment of an unemployment benefit (payment period) is calculated on the basis of the period previously spent in an employment relationship or under a personal service contract, or engaged in small-scale farming activities during the three-year period preceding the date of becoming a jobseeker. Importantly, also, the insured person must have paid contributions (the ‘eligibility period’). The duration of the eligibility period does not include any period during which the jobseeker was provided with unemployment benefits.

For the purpose of calculating the duration of payment of unemployment benefits, 10 days of employment constitute one day of eligibility. The longest period of payment of unemployment benefits is 90 days. ⁴⁰ The European Committee of Social Rights (hereinafter: ECSR) held that the duration of the Hungarian unemployment benefit – up to 90 days – was too short. The ECSR notes in its conclusions for Hungary that support of registered jobseekers can be managed dynamically, primarily by supporting employment or by involving the persons concerned in active labour market instruments. As a result, extension of the period of payment of unemployment benefit has not been on the Hungarian Government's agenda. However, the ECSR points out that, to be in conformity with Article 12 of the European Social Charter, unemployment benefits must be payable for a reasonable duration (ECSR, 2021: 27). The European Commission also urged Hungary to increase the unemployment protection provided by paying unemployment benefits for a longer time, as this would allow people to improve their skills and look for jobs that are more suited to their skills and where they could thus work more productively. By tackling these challenges, Hungary could contribute to reaching the 2030 EU headline target on employment (Commission Staff Working Document, 2022: 12, 18).

If a person receiving unemployment benefits enters into an employment relationship for an unfixed term within the eligibility period and if this employment is a part-time job of at least four hours per day, the benefits due for the remaining period are paid out in a single lump sum at the request of the jobseeker. Another prerequisite for this payment is that the person receiving the unemployment benefits must remain in employment without interruption during the period beginning on the day of suspension and ending on the day when the request is submitted. The employer must confirm that the person was employed. ⁴¹

Amount of the unemployment benefits. The unemployment benefit to which registered jobseekers are entitled is earnings-related. The amount of the unemployment benefit for one day is calculated on the basis of one-thirtieth of the monthly sum used for social security contributions. The amount corresponds to 60% of the daily amount, with a fixed maximum amount. The maximum cannot exceed the statutory minimum wage. The maximum amount of the jobseeker's allowance corresponds to approximately 36% of median gross earnings, which is below the poverty threshold. In 2023, the median gross monthly earnings were HUF 423,400 (KSH Gyorstájékoztató 2023, KSH Szegénységi küszöb egyes háztartástípusok szerint).

Financing. The unemployment scheme is financed by social security contributions. According to Section 26 of the Act on Persons Entitled to Social Security Benefits and on the Coverage of these, the State tax authority transfers 54% of the social security contributions paid to the Pension Insurance Fund as pension contributions, 37.9% to the Health Insurance Fund as health insurance contributions and 8.1% to the separate State fund for employment programmes as labour market contributions. Labour market contributions are paid to the National Employment Fund, a separate public fund for employment programmes, the purpose of which is to provide benefits to jobseekers, to promote employment, to create and maintain jobs, to support the adaptation of the workforce and to support jobseekers’ access to employment.

Employment services. As referred to earlier, Act CXXXV of 2020 on Services and Aids Intended to Promote Employment, as well as Government Decree No 100/2021 (27.II.), contain various forms of support: labour mediation, information, cash benefits, aid for the employment of severely disadvantaged people, aid to avoid or mitigate the consequences of collective redundancies, wage support, mobility allowances, labour market adjustment aid and aid to promote entrepreneurship.

The reason for the creation of the law was that the decades-old regulation of employment subsidies and labour market services had become outdated and had fallen behind labour market processes. It is essential for labour market actors to maintain, support and create as many jobs as possible that provide legal employment. The economic situation during the Covid-19 pandemic highlighted the need to protect jobs as a priority and to ensure that the legislation in place responds effectively to the challenges of the economic environment and the labour market. The aim of the Act was therefore to create modern legislation responding to real labour market needs.

However, the Act does not establish a separate support scheme for the self-employed or for self-employed platform workers. According to the explanatory memorandum, the subsidies and services are designed to encourage employment. There is, however, one subsidy that supports self-employment. According to Article 43 of the Government Decree, support to become self-employed may be granted to jobseekers who have been registered as jobseekers for at least one month and who acquire the legal and financial skills necessary to start a business. The aid is granted at a rate of 100% of the minimum wage for six months, or a one-off repayable or non-repayable capital grant of up to 15 times the minimum wage.

Protection provided for the self-employed

The self-employed are insured via the social insurance scheme for unemployment if they cease their activity fully and register as jobseekers.

The amount of the unemployment benefit is calculated on the same basis as in the case of employees. If a jobseeker was involved in more than one entrepreneurial activity at the same time, the amount of the unemployment benefit is calculated in accordance with the contribution base on earnings received from all entrepreneurial activities. ⁴²

This contribution floor for the self-employed is set at a minimum: the basis for the social security contribution of an insured self-employed person is at least the minimum monthly wage. ⁴³ This has a negative impact on the level of all cash social insurance benefits, which are low.

The duration of the private entrepreneurship or business partnership – provided the jobseeker has satisfied the entrepreneurial contribution payment obligation – is considered as the eligibility period, and the general rules apply.

If a person receiving unemployment benefits starts a business, the provision allowing benefits due for the remaining period to be paid out in a single lump sum does not apply. ⁴⁴

The amount of the unemployment benefit is calculated in the same way as for employees. The prior wage is calculated on the basis of the period spent as a private entrepreneur or as a member of a business partnership, provided that the jobseeker has satisfied the entrepreneurial contribution payment obligation during this time. Ten days of private entrepreneurship or membership of a business partnership constitute one day of eligibility for unemployment benefits. The longest period of payment of unemployment benefits is 90 days. The amount of the benefit for one day is calculated based on one-thirtieth of the monthly sum calculated from the contribution base, which is 60% of the daily amount, with a fixed maximum amount. The maximum is 100% of the minimum wage.

Regarding financing issues, we consider it important to highlight the special rules for the taxation of the self-employed, who are subject to a favourable tax regime with a reduced contribution burden. This reduced contribution rate has a serious impact on the income and social security rights of the Hungarian self-employed, including lower unemployment benefits. On 1 September 2022, Act XIII of 2022 on the Fixed-rate Tax of Self-Employed Persons (hereinafter referred to as ‘KATA’) entered into force. One of the major changes it introduces is that from its entry into force, the subject of the specific tax ‘can only and exclusively be a self-employed person registered as a sole proprietor, whose main occupation is the activities recorded in the register’. ⁴⁵ We stress that only the fully self-employed can apply for this favourable taxation, while self-employed workers having a second job or ancillary activity are not entitled. Moreover, this taxation applies only if the self-employed person provides services to individuals (Solymosi-Szekeres and Mélypataki, 2022: 33–39). ⁴⁶

There are no data available on the number of self-employed who have ceased their activity and received benefits from the unemployment scheme before, during and since Covid-19. Due to the more favourable tax rules, a large number of self-employed prefer not to declare their full income and to pay contributions equivalent to the contribution limit, i.e. the, minimum wage. Tax authority data show that 426,321 persons in 2020, and 450,003 persons in 2021, chose this favourable tax regime (NAV Évkönyv, 2021): the numbers are increasing, and this taxation regime is still popular despite the change described above.

Protection provided to platform workers

In Hungary, platform workers are considered to perform their activity as either a self-employed person or as an employee. They are insured via the social insurance scheme for unemployment. They can also be insured as persons performing work for remuneration in any work-related relationship under a civil contract, if their income reaches 30% of the prevailing minimum wage, or one-thirtieth of the minimum wage for each calendar day. This contribution floor is much lower than in the case of the self-employed, i.e, the minimum wage.

As mentioned earlier, platform workers can perform their work under a simplified employment regime. This form of employment entails very low public charges and the employee is not liable to pay social security contributions or advance personal income tax.

The change in KATA legislation has had a significant impact on platform workers too. As only fully self-employed people can apply for the favourable taxation, large platform providers have adopted various solutions. One of the most radical solutions transforms the former ‘subcontractor’ relationship. Consequently, couriers working for that company will continue to work as employees, even if they prefer not to. ⁴⁷ This might seem to be a good thing, providing security for these workers; however, it can encourage forced employment relationships against the parties’ will.

There is another exemption contained in the tax legislation – the Simplified Public Expenditure Contribution (hereinafter referred to as ‘EKHO’). This scheme seems suitable for most platform workers; however, there are no data available on how many platform workers use this form of taxation. Individuals who are engaged in one of the specified professions (creative artists, technical, media and sports professions) and who earn taxable income from these activities can opt for taxation under EKHO. It can also be chosen if the individual was previously a KATA payer. In general, the individual will have to pay 15% of the amount of the EKHO base. The low contribution paid on the income legally taken into account for the EKHO base replaces the personal income tax and the social security contribution payable by the insured person. These taxpayers are entitled to health service, accident medical service, accident allowance and pension insurance benefit, but unfortunately they are excluded from many other cash benefits, such as sick leave and unemployment benefit.