Case 56/1995 (IX.15.) AB

Petitioners challenged several amendments to statutes regulating employee benefit entitlements, which were inexorably connected to their social security entitlements under Hungary’s “mixed system” of social security (insurance and solidarity). The challenged amendments (1) provided that an employee was entitled to 25 sick days per year, for 5 of which she was not entitled to remuneration, and for the remaining 20 of which she was entitled to 75% of her basic salary; (2) excluded certain health care services from insurance coverage; and (3) provided for obligatory co-payment of patient transport within ambulance services.

Petitioners argued, inter alia, that (a) the sections relating to sick leave unconstitutionally left persons without remuneration for certain periods of time and discriminated against entrepreneurs (who were not entitled to sick leave) (b) the sections excluding certain health care services from coverage conflicted with the constitutional guarantee to provide for the highest attainable level of physical health, which guarantee could not be limited by financial constraints and (c) the sections requiring an obligatory co-payment for patient transport violated the guarantee in Article 70/D of the Constitution and related health act for free patient transport.

The Court held that the provisions of Act XXII of 1992 on the Labor Code” (“ALC”) altering employees’ sick pay entitlements  were unconstitutional because such provisions resulted in the petitioners’ mandatory payment into social security while excluding certain illnesses from insurance coverage. The scheme was further unconstitutional for arbitrarily disentitling certain employees from sick pay (e.g., entrepreneurs).

The Court determined that paid sick leave for the period of lost of earning capacity was among the most basic rights implicated by the social security system and was constitutionally protected as a “bought right” (property interest). However, interests of maintaining the social security system’s operability could constitutionally justify such a sick pay/ social security scheme when the legislator shared the increased costs between the insured, the employer, and the bodies of social security. However, by revoking more than 3/4ths of covered employees’ right to sick pay during the period of loss of earning capacity, the restrictions on employee entitlements challenged here were disproportionate to the public interest in maintaining the operability of the social security system. The Court also noted that previous restrictions on employee entitlement to sick pay, including statute amendments establishing a 10-day sick-allowance and alterations in the degree of sick-allowance, had not fallen below the constitutional baseline/ minimum standard of service.

The Court further held that the challenged provisions violated the constitutional requirement of value guarantee, ensuring a proportional balance legal rights and obligations. Insured persons  could expect increased stability of the system in return for compulsory payment of social security tax. The amendments at issue disproportionately altered the balance of legal rights and obligations, decreasing employee entitlements without providing a sufficient return.

The Court upheld the challenged provisions relating to the reduction in health services and copayment for patient transportation, which could be constitutionally acceptable to a degree where (as here) there were overriding concerns for the public interest (e.g., “the nature of the legal ties of social security, the tendency for modernization, the difficulties of the operability of the system, the sustainability and the underlying guarantee of the State”). Beyond basic health care services, the scope of health care interventions, the Court said, was a legislative – not a constitutional – question. These provisions further did not violate the constitutional requirement of the highest attainable physical/ mental health, which guaranteed only that the State create an economic and legal environment most amenable to citizens’ healthy lifestyle and conduct--including the establishment of health care institutions and the organization of medical care. However, the State did not have an obligation to provide citizens with dental care, sanatorium, free patient transportation etc., as petitioners requested.  The Court additionally held that the legislature was also entitled to decide who was covered by the insurance scheme, within the limits of positive discrimination.

“The legal regulations challenged devolve the expenses of 25 day loss of earning capacity to the ensured, and respectively to the employer obliged to pay social security tax, which means that the sickness branch of social security – while maintaining the internationally also prominently high social security tax – “withdraws” from the most classical field of social security – from the cover sphere for loss of earning capacity due to sickness – and with that practically “empties” the service bought by social security tax for the period of sickness. Consequently the proprietary- expectant position of the ensured considerably declines, i.e. the fundamental protection of property is infringed.” Section II.3

“75% “reduction” of the coverage of service entitlement for the period of loss of earning capacity due to sickness or other reasons, such a decrease of social security services qualify as a constitutionally disproportionate restriction of property. The operability and sustainability of the social security system, and the increasing difficulties of the underlying guarantee of the State are indisputably “public interest” that substantiates the constitutional limitation of property. The method and degree – 75% exception of the guarantee for the so-called classical “right to sick-allowance” from social security – of the alteration regulated in the legal provisions concerned already violate the protection of property, declared as constitutional fundamental protection in Article 13 of the Constitution, hence is unconstitutional.” Section II.3

“[T]he system itself is not untouchable, its alteration to a certain extent – disadvantageous to the ensured - can be justified by the nature of the legal ties of social security, the tendency for modernization, the difficulties of the operability of the system, the sustainability and the underlying guarantee of the State. According to the standpoint of the Constitutional Court these aspects of “public interest” make the reduction in health services to a certain degree constitutionally acceptable. The deprivation or limitations to dental care, sanatorium, and medical bath etc. services without any charges, additionally the obligatory co-payment of ambulance services per transportation case – within the entirety of health care services - cannot be considered as disproportionate, hence the alteration does not violate the fundamental right to protection of property.” Section III.2