Coronavirus Crisis Shines a Light on Labor Law


Alexander Limbach /

The outbreak of the pandemic caused a headache not only for employers, but also for lawyers who had to be really creative when applying legislation that never envisaged such a crisis. Following the first shockwave, the government introduced some changes to the labor law which helped somewhat ease the burden on employers.

In response to the pandemic, the authorities introduced new regulations governing kurzarbeit, short-time working. Photo by Alexander Limbach /

One major driving principle was to help employers retain workforce without risking the existence of their business. The government opted for a method originating from German-speaking countries. Kurzarbeit, or short-time work, is a form of employment where staff continue to work for the company but at reduced hours and pay, and where the government will make up some of the lost income.  

In Hungary, the first local version of kurzarbeit, introduced in mid-April, laid out strict rules on who could actually enter the program. By the end of the month, at the suggestion of various business chambers and other market players, a new, modified version was rolled out which allowed for a significantly larger number of companies to make use of the subsidy. To receive it, there has to be an agreement between an employer and its employee.  

As for the actual period of time to be worked, the law says working time has to be at least 25% but not more than 85% of the employee’s previous hours. Within this range, any percentage of reduced working time can be determined.  

The rate of the subsidy is 70% of the part of the base salary less the personal income tax and individual contribution applicable on the day of the declaration of the state of emergency (March 11) in proportion to the lost working time. The maximum term of the subsidy is three months. The subsidy is paid directly to employees by the public employment service in arrears on a monthly basis.  

Rule of Thumb

As a rule of thumb, any modification in employment had to be agreed upon by both the employers and the employee, but that was not always the case. Some companies unaware of how long the crisis would last and they could stay afloat laid off many of their workers, even though one-sided steps are not allowed by the law.

This was, however, more likely to take place at smaller companies that did not really have any backup, or in industries that came to a complete halt.

“If looking at PwC’s clients, my experience is that companies tried to and indeed did handle these situations well,” László Szűcs of Réti, Várszegi & Partners Law Firm PwC Legal told the Budapest Business Journal.  

“These companies have an HR-department and so the preparations and communication to employees was broad. Trade unions were also involved and everyone aimed to implement changes in a way that employees understand it,” he adds.  

Yet companies where reserves were finite and whose orders disappeared entirely did not have safety margins to retain employees, the expert notes.

The pandemic has also shed light on the vulnerability of some other employment forms including temps or ad hoc engagement agreements. Generally, these roles offer the least security and were the first ones employers terminated. In general, most parties were trying to work out a mutually beneficial solution (within limitations) but there were several examples where that was not the case, Szűcs says.

Positive Impact

Fortunately, the pandemic has had some positive impact on the labor market. For example, it has proven that working from home can be effective. “This forced transition to home office has reassured employers who had been doubting the efficiency of this form of employment that they can trust their employees and the efficiency won’t be compromised,” Szűcs says.

With the easing of restrictions, employers are now faced with a new legal obligation concerning the return to work. They cannot be obliged to provide a 100% virus-free environment, but they have to do their best to keep the risk of infections low.

To ensure, that the return to work is safe, the employer has a legal obligation to perform a risk assessment before the office/site reorganization to take stock of the hazards associated with the operation and manage its effects, Szűcs says. Failure to do so could result in a fine.

Another question that arises is how and to what extent employers can check the health of their employers returning to work. The regulations introduced during the state of emergency allow the employer to monitor the health of their employees to the extent necessary, but this right is not unlimited.

Once the working conditions have been determined after the reorganization, the employer is obliged to inform and educate employees in writing about the new occupational safety conditions.

Employers are advised to place information and pictograms for occupational safety purposes at the place of work, and to conduct general and, if necessary, additional occupational safety training for each area of operation before work restarts.

László Szűcs
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