There can be unforeseen pitfalls in premium payments

There can be unforeseen pitfalls in premium payments

The pandemic and its impacts may inconvenience some unexpected companies this year. It is not excluded that they are currently facing an unwanted obligation to pay the premium.

For companies that previously had an employer policy setting out bonus terms, it is now especially important that meticulous work be done in compiling them. The conditions for paying the premium can also be settled in the employment contract, however, employers – who usually have more employees – prefer to apply the employer’s regulations in this regard.

“If conditions are only generously constrained, for the employer, the unintended development now may be that despite the poor performance caused by the pandemic, the company will be required to pay a premium. The employer’s regulations are that although it is not mandatory to publish one, but if the company does, it adheres to its contents.

The situation may be particularly sensitive, according to Hungarian judicial practices, the premium qualifies as salary, so the employee can claim his wages in court. So business owners should include limits in the annuity scheme that prevent them from having to make payments even during the loss period that may affect the company.

In order to avoid litigation, it is highly recommended to indicate the largest amount available in the terms of the premium. It should also be regulated to what extent an employee is entitled to a premium if the condition is partially met. Moreover, an important aspect is that the company clearly defines the reasons that exclude its payment (such as losing business profits) or undervalue it.

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All this is especially important because already published employer regulations can only be terminated in exceptional cases or amended at the employee’s expense – Tibor Nitray emphasized.

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