A machine operator falls into a shaft that has been left open in the middle of a shift, breaks a leg and is on sick pay for three months. The company has group accident insurance, and the insurer does pay for the fracture and the days in hospital. This is usually the point at which the managing director asks: “So does that settle our liability as well?” As a broker, I see that these two things – the group cover payout and the employer's liability for damages – often merge in people's minds, even though they involve two different legal relationships and two different logics. This article separates the two and shows where they do meet after all.
- Group accident cover is fixed-benefit insurance: it pays the amount set in the contract to the insured employee – or, in the event of death, to the beneficiary – regardless of who is liable for the accident.
- Under Section 166 of the Hungarian Labour Code (Mt.), the employer must compensate damage caused in connection with the employment relationship regardless of fault; it is the employer that has to prove either of the two narrow grounds for exemption.
- Section 172 of the Mt. requires social-security and voluntary mutual fund benefits to be deducted from the compensation; whether the group payout can be set off is a matter of legal judgement that is worth clarifying with a lawyer.
Two channels, two logics
Group life and accident insurance is fixed-benefit insurance: the insurer pays the amount fixed in advance in the contract if the insured event occurs – a fracture, hospital treatment, permanent impairment of health, accidental death. It does not examine who is liable, and it does not compensate the actual loss but pays the amount stated in the policy. The person entitled is the insured employee or, in the event of death, the designated beneficiary – not the employer. The insurer pays only for what is an insured event under the contract, and the exclusions and waiting periods in the policy conditions apply here too.
The employer's compensation, by contrast, is a question of liability: the actual loss suffered by the employee must be compensated, within the scope and to the extent laid down by law. Neither replaces the other, and they are not about the same thing: one is a benefit agreed in advance, the other is the company's statutory obligation.
What does the Labour Code require of the employer?
Under Section 166(1) of the Hungarian Labour Code (Act I of 2012, Mt.), the employer must compensate the employee for damage caused in connection with the employment relationship. This is liability regardless of fault: the question is not whether the company made a mistake but whether the damage arose in connection with the employment relationship. Paragraph (2) allows two grounds for exemption: if the damage was caused by a circumstance outside the employer's sphere of control that it did not have to reckon with and could not have been expected to avert; or if the damage was caused solely by the unavoidable conduct of the injured party. The employer has to prove either of them, and the courts interpret both narrowly.
Under Section 167, the full loss must be compensated, except that damage whose occurrence was not foreseeable at the time it was caused need not be compensated, nor the part caused by the employee's culpable conduct. Sections 169–171 list the heads of damage: lost income, material damage and reasonable costs incurred, and in the event of death, compensation to relatives in place of maintenance – in addition, there is restitution for the violation of personality rights (sérelemdíj). There is no upper limit: the extent of liability is determined by the actual loss and the court's judgement.
Can the group payout be deducted from the compensation?
This is the question in the title of this article, and the answer is not a single sentence. Section 172(1) of the Labour Code lists exactly what must be deducted from the amount of compensation: benefits provided by the social-security system or by a voluntary mutual insurance fund, what the employee earned or could reasonably have been expected to earn, what they obtained by using the damaged item, and what they saved as a result of the damage. The payout under group insurance taken out by the employer does not appear on this list.
Under the general rule of civil law – Section 6:522(3) of the Hungarian Civil Code (Ptk.) – compensation must be reduced by the financial benefit the injured party derives from the damage, unless this is not justified in view of the circumstances of the case. Civil-law practice typically regards a fixed-benefit insurance payout not as a benefit derived from the damage but as the consideration for the insurance premium; whether this also holds when the employer paid the premium as an employee benefit is decided by the court on the circumstances of the case. As a broker, I therefore say two things: do not regard the group cover as something that automatically reduces your liability risk, and if an actual damages claim arises, clarify the set-off question with a lawyer, not with the insurer or with me.
What covers the company's risk: employer's liability insurance
There is a separate product for the employer's obligation to pay compensation under the Labour Code: employer's liability insurance. It does not pay a fixed amount to the employee; instead, it pays on the company's behalf – up to the contract limit and in line with the policy conditions – the loss for which the company is liable by law. The scope of cover (sérelemdíj, subcontractors, deductible, limit) varies from insurer to insurer, and the exclusions matter here too. Group insurance and employer's liability insurance are therefore not alternatives to each other: one protects the employee's sense of security and household budget, the other protects the company's balance sheet. In plants with physical risks and in construction, both are typically needed.
Occupational accidents and state benefits
If the accident qualifies as an occupational accident (üzemi baleset) under social-security rules – under Section 52 of the Health Insurance Act (Ebtv., Act LXXXIII of 1997), this is an accident suffered while working in the course of one's occupation or in connection with it – the employee is entitled to accident sick pay, which, according to the guidance of the Hungarian State Treasury (Magyar Államkincstár), amounts to the full amount of the underlying income for a workplace accident and 90% of it for an accident on the way to or from work. The occupational nature is established by a decision of the health insurance authority, which typically also requires the workplace accident report. Section 172 of the Labour Code requires this benefit to be deducted from the compensation; a separate article covers the relationship between the state social-security system (TB) and group cover.
What should you do after the accident?
The first step is notification, investigation and recording under Section 64 of the Occupational Safety and Health Act (Act XCIII of 1993, Mvt.), with the workplace accident report – this may be needed both for recognition as an occupational accident and for the group claim. The group benefit claim is reported by the entitled employee themselves via the insurer's claims line or online portal; the employer helps with the documents and certificates but does not handle the case. If a case gets stuck or disputed, I help where I can, acting on the client's behalf – in the claim itself, however, I do not represent either the employee or the company, and a dispute over compensation needs a legal representative. My practical advice: size the group cover to where the real accident risk lies, and handle the liability risk separately – that way neither stays in the other's shadow.
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Sources
- Hungarian Labour Code (Mt., Act I of 2012) Sections 166–172 – the employer's liability for damages, calculation of compensation
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:522 – extent of the obligation to compensate, financial benefit
- Occupational Safety and Health Act (Mvt., Act XCIII of 1993) Section 64 and Section 87 point 3 – notification and investigation of workplace accidents; definition of a workplace accident
- Health Insurance Act (Ebtv., Act LXXXIII of 1997) Sections 52 and 55 – occupational accident, accident sick pay
- Hungarian State Treasury (Magyar Államkincstár) – Accident sick pay (rate: the full base, 90% for accidents on the way to or from work; occupational accident established by official decision)
- Jogpontok: The employer's liability for damages under the Labour Code (publication, updated 2021)
