Partner of V4 Group (Tax, Audit & Legal Advisory Group)
Slovak Republic | Czech Republic | Poland | Hungary

Covid-19 recovery package: the Hungarian Kurzarbeit

Covid-19 newsletter
13 April, 2020

The government has released the relevant legislation to its economy recovery package on 10 April. Since then many experts, economists, accountants and tax advisers have been evaluating and interpreting the rules which happened to turn out very complicated.


Additions to social security tax and KIVA exemptions.

To the previously defined supported industries newers have been added that get exempted from social security tax and KIVA:

  • cultivation of plant propagating material (TEÁOR and TESZOR 01.30),
  • cultivation of other non-perennial crops (TEÁOR and TESZOR 01.19),
  • cultivation of other perennial crops (TEÁOR and TESZOR 01.29),
  • wholesale of ornamental plants (TEÁOR and TESZOR 46.22),
  • retail sale of ornamental plants, seeds, fertilizers, pet food (TEÁOR and TESZOR 47.76),
  • game management, game management services (TEÁOR and TESZOR 01.70),
  • production of distilled spirits (TEÁOR and TESZOR 11.01),
  • production of grape wine (TEÁOR and TESZOR 11.02),
  • brewing (TEÁOR and TESZOR 11.05) and
  • viticulture (TEÁOR and TESZOR 01.21).


R&D emplyee support.

The government will grant a support the employer that employs researcher-developer (as defined in Act LXXVI of 2014 on Scientific Research, Development and Innovation)

The employee:

  • does not receive any other employment-related allowance in respect of the same employment relationship,
  • is employed with the employer as a researcher and developer at least from the date of the declaration of the emergency
  • does not spend his notice

The employer:

  • in its application for the support sets out the economic circumstances justifying its application
    being in direct and close link with the emergency, and the actions taken and expected to be taken to overcome the economic difficulties,
  • does not receive a reduced-time employment allowance at the time of the application in respect of the same employment relationship in relation to the worker named in the application
  • at the time of the application, is not awarded a job creation or job maintenance aid to the worker covered by the application
  • has been in operation for at least 6 months at the time of application

The duration of the aid is maximum three months from the submission of the aid application.
The monthly amount of the subsidy may not exceed HUF 318,920 per employee, with further clarifications in the legislation.

The employer shall undertake some obligations:

  • will maintain the statistical average number of headcount in the month before the application.
  • will further employ the worker at least for the same length of time as the aid is being paid
  • will not reduce the salary

The employer shall also have orderly labor relations.

Support for reduced working time employment - the Hungarian Kurzarbeit.

We expected an easy and straightforward scheme that would give both the employer and the employee peace of mind in these critical times. The government went the opposite way, as we had to learn from the legislation. The support eventually became complicated in its calculation and in the conditions. Here are the details.

During part-time employment, part of the employees' lost income is taken over by the state, which helps to keep their jobs.

The rate of reduction in the working hours may be at least 30 per cent but not more than 50 per cent, however, working hours may not be reduced to less than 4 hours per day on average. The state subsidy will be 70 percent of the wage calculated for the time lost in proportion to the reduction in working hours.

In practice, this means for example that if an employee's net basic salary has been HUF 200,000 so far and his working hours have been reduced by 50% due to the emergency, the state guarantees him 70% of the lost wages, ie HUF 70,000. For the remaining 30 percent of the reduced working time, the employer shall provide the employee with development or expect him to contribute to other development related to the employer's activity, for which it shall pay salary.

There are a couple of definitions that are laid out here to be able to understand the rest.

Reduced working time: the part working time that shall be at least half and at most 70 percent of the 3 months average working time before the reduction, and shall at least be 4 hours a day.

Consequently, those who have been employed originally in a 4 or less hour contract, will not be able to apply for this support.

Individual development time: an employee is exempted from the obligation to work to the extent of 30 percent of the time lost due to reduced working hours for the purpose of development related to his / her job or the activity of the employer.

A theoretical example: if someone works 40 hours and is transferred to 20 hours of work, then 30 percent of the lost working time (20 hours), i.e. 6 hours, does not have to work, you can spend this time on "development". This is not optional, but the regulation does not clarify exactly what is accepted for development.

Staffing obligation: the employer shall maintain its statistical average number of headcount at the date of the application.

Accordingly, in practice the employer shall not make anybody redundant, or if so then a new employee shall be hired to maintain the average headcount.

Absence fee: the absence fee calculated according to § 148 of the Labour Code. Our comment: it comprises of:

  • base salary,
  • flat-rate wage supplement,
  • performance wages and wage supplement paid for the previous six months.

The government will grant support on the joint request of the employee and the employer.

The employee:

  • does not receive any other part-time employment allowance in respect of the same employment,
  • has been employed by the employer at least from the date on which the emergency is declared, and
  • does not spend his notice,

The employer:

  • employs the worker being in employment on a part-time basis in order to prevent redundancies, and with whom they submit the joint application with him ,
  • in its application for the support, it sets out the economic circumstances justifying the employment in part-time work, their direct and close link with the emergency, and the measures taken and expected to take to overcome the economic difficulties,
  • has exhausted the possibilities for rescheduling working time until the application has been submitted,
  • has been in operation for at least six months, and
  • at the time of application does not receive aid for job creation or retention, or aid for the employment of workers engaged in research and development in relation to the worker who they submit the joint application,
  • the working time frame has expired or has been closed.

The duration of the support is maximum three months.

The rate of the allowance shall be 70 per cent of the proportion of the amount of the absence allowance for the lost working time of thirty, forty or fifty per cent. (Comment: in our opinion it's impossible to interpret what the regulator meant by this, so far this is the exact phrasing in the government decree)

The maximum amount of absence allowance may not exceed twice the mandatory minimum wage.

The employee will receive the support monthly, retrospectively.

Both the employee and the employer shall undertake that they mutually agree in reduced working time, and above that individual development time.

The employee shall work in reduced time with reduced salary, and shall make themselves available to the employer for the individual development time.

The employer shall maintain the staffing obligation for at least the period of the support and one more month. Extraordinary work during the period of the support is not allowed. During the period of the support the worker's salary shall reach the worker's absence fee, and the worker shall be paid salary for the individual development time.

If for example someone originally being employed in an 8 hour contract, and that is reduced to 4 hours, then the individual development time (30% of the lost time, which is 4x30%=1.2 hours) will be added to that. Consequently, the 4 hours employment will cost: 4 hours + 1.2 hours individual development time, that is 5.2 hours in total.

The employer shall also have orderly labor relations.

The employer shall demonstrate that the economic rationale for part-time employment is directly and closely related to the emergency and provides credible evidence that the retention of employees is in the national economic interest in the context of its continuing economic activity.

Comment: it's not clear however, how is it justifiable that the part-time employment falls within the national economic interest.

If the application gets rejected, the employer and the same employee may repeat their application only one more time.
Repeated application in continuation of a previous application are not allowed.