Hire in Hungary

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Last updated at June 16, 2022
beautiful scenery in the country of hungary

Currency

Hungarian Forint (HUF)

Capital

Budapest

Time Zone

GMT+1

Key Country Facts

Introduction

Hungary is a unitary, parliamentary, representative democratic republic with a population of 10 million people. The capital of Hungary, Budapest, is also the largest and most populated city. Hungarians consider their country as part of Central Europe, rather than Eastern Europe. The expression Central-Eastern Europe can also be deemed appropriate.

Area

Hungary is landlocked, spanning 93,000 square km and shares borders to the north with Slovakia, to the northeast with Ukraine, to the east with Romania, to the south with Serbia and Croatia, to the southwest with Slovenia, and to the west with Austria.

Climate

The climate of Hungary is typical European continental influenced with warm, dry summers and fairly cold winters.

Culture

Heritage and tradition are important to Hungarians, and are displayed in the country’s national celebrations, folk music, dance and in the strong family ties reaching across generations. Hungarians are vibrant, friendly and value the family above all else. Hospitality is a major part of the culture.

Religion

Hungary claims no official religion and guarantees religious freedom. The majority of Hungarians are Christians (54%), with Roman Catholics and Hungarian Reformed Calvinists making up the bulk of these.

Official Language

The official language is Hungarian.

 

Hungary HR at a Glance

Employment Law

Employment relations in Hungary are governed by the Act I of 2012 on Labour Code and other labour law legislation, collective bargaining agreements and individual employment contracts. The Labour Code governs the terms and conditions of employment such as working hours, holidays, and rest periods, wages, overtime, employment relationships. Another important source of law is the Constitution of Hungary, which protects the basic rights of employers and employees.

In the context of labour disputes in Hungary, courts generally protect employees’ rights by interpreting the provisions of the Labour Code, collective bargaining agreements and employment contracts often in favor of the employees.

Employment Contract

  • The Labour Code requires that employment contracts be concluded in writing, which is to be arranged for by the employer. An employment contract not concluded in writing can be cited as invalid by the employee within a period of thirty days from the commencement of work. The employment contract may not be contrary to the collective bargaining agreement unless it stipulates more favorable terms for the employee.
  • The base salary of the employee, the job position, the period of employment (whether fixed-term or indefinite) and the place of work must always be defined in the employment contract.
  • In addition to the employment contract, within 15 days from the commencement of the employment relationship the employer must provide the employee with a written information sheet including the basic terms of employment (working time, benefits, holiday rules, rules of termination of employment etc.).

Contract Terms

The general rule in Hungary is that employment contracts are executed for an indefinite duration. Fixed-term contracts are also allowed if they are for temporary or seasonal work.

Probation Period/ Trial Period

Upon concluding an employment contract, a probationary period may be agreed upon between the employer and the employee, which is commonly used:

  • The statutory limit is 3 months;
  • A probationary period that is shorter than three months can be extended once; provided, however that together with the extension the total term thereof may not exceed three months.
  • A collective bargaining agreement may stipulate a probationary period of six months.
  • Extension of the above determined probationary periods is prohibited and will be deemed null and void.
  • During the probationary period, the employment may be terminated by either party with immediate effect and without justification.

Working Hours

The general statutory limitation on the length of a normal workday is 8 hours per day and on the length of a normal work week is 40 hours per week. Employer and employee may also agree on a shorter length of daily and weekly working time. Further rules apply in relation to rest breaks and rest periods between working days, e.g. the employee is entitled to two days off weekly or 48 hours uninterrupted rest period (weekly rest period).

Overtime

In exceptional cases the employee may be required to perform overtime work (according to the terminology of the Labour Code “extraordinary work”). Even if the employer orders the employee to perform extraordinary work, the working time cannot exceed 12 hours per day and 48 hours a week. The yearly limit on extraordinary work is 250 hours per year, which can be increased to 300 hours per year in a collective bargaining agreement.

However, by written agreement of the employer and the employees, the employer can require 150 hours (or 100 hours, if the annual maximum overtime limit is already raised to 300 hours by collective agreement) of additional overtime annually from employees subject to the agreement.

The law strictly defines when extraordinary work may be ordered, and employees may be required to do extraordinary work only under justified and not foreseen extraordinary circumstances:

  • Extraordinary work on public holidays can be ordered only if the employee can otherwise be required to work on such day; or
  • In the interest of the prevention or mitigation of any imminent danger of accident, natural disaster or serious damage or of any danger to life, health or physical integrity.
  • Extraordinary work cannot be ordered if it imposes any danger to the physical integrity or health of the employee, or if it constitutes any unreasonable hardship to the employee in respect of their personal, family or other circumstances.
  • Extraordinary work cannot be required from pregnant women from the date of the diagnosis of their pregnancy to the time when the child reaches the age of three; men caring for their children as single parents, up to the time when the child reaches the age of three.

An employee is entitled to a wage supplement for overtime, which is 50% of base salary in case of overtime above the regular daily working time. A wage supplement must also be paid in return for any “extraordinary” work completed on weekly rest days or public holidays (50% plus a day off or 100%).

Health & Safety in Workplace

The Labour Code requires employers to ensure the safety and health conditions of the workplace by complying with the relevant legislation, including, in particular, the provisions of Safety and Health Regulation Act. Employers are required to establish the appropriate working conditions and methods to be used at the workplace within the framework of the Safety and Health Regulation Act and other legislation and standards. The minimum safety and health requirements applicable regarding special circumstances are specified in various ministerial decrees.

Bonus

The 13th month bonus is not mandatory in Hungary, however, performance-based bonuses are common. The employer may grant to an employee a bonus (premium), in addition to their salary (usually to a fixed salary). The granting of a bonus is normally in the employer’s sole discretion and may not be claimed by the employee; provided that the parties so agreed, and the employer reserved the right to do so.

If the employer prefers to have a bonus system based solely on its discretion, the respective governing document should provide only for the possibility that the employer may, from time to time and within its sole discretion, pay bonuses to the employees in addition to their salaries and should retain the right to withdraw the bonus or modify its terms.

In the case that the bonus is promised in advance to an employee upon completing a specific task, such bonus can be claimed by the employee. The terms and conditions of the bonus may be included in the employment contract or a separate bonus policy.

Termination

Termination by notice is possible in cases of indefinite term employment. In case of fixed-term employment, termination by notice is less common. All employees are protected against unfair and unlawful termination of employment.

For indefinite term employment, dismissal is only permitted for a reason connected with:

  • The employee’s performance
  • The employee’s behavior relating to the employment
  • The operations of the employer

For fixed-term employment, the employer may only terminate the employment by notice:

  • If undergoing liquidation or bankruptcy proceedings; or
  • For reasons relating to an employee’s performance.
  • If maintaining the employment is no longer possible due to an unavoidable external reason.

Restricted or prohibited terminations – According to the Hungarian Labour Code, for some special groups of employees, further termination restrictions apply. The employer may not terminate employment by notice (though termination of employment by mutual agreement is permitted during these periods):

  • pregnant employees,
  • employees on maternity leave,
  • employees on unpaid leave for nursing a child,
  • employees on reserve military service,
  • women receiving treatment related to a human reproduction procedure, for up to six months from the beginning of such treatment.

Mass layoff rules – The dismissal of a certain large number of employees due to a change in the employer’s operation constitutes a mass layoff and is subject to special information and consultation rules.

Dismissal without notice – Employer or employee may terminate an employment relationship without notice if the other party:

  • willfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship; or
  • otherwise engages in conduct that would render the employment relationship impossible.

Unfair dismissal – Where the court decides that a termination is unlawful, the employer must pay the employee compensation for damages.

  • Lost salary will form part of the damages, subject to a maximum of 12 months’ “absence fee.”
  • Any amount earned by the employee during the period after the termination has to be deducted.
  • Reinstatement is also possible but in specific cases only, if the breach is considered to be serious (e.g. violation of termination protection).

Notice Period

In case of dismissal with notice, the employment relationship is terminated at the end of a notice period, which will be a minimum of 30 days and a maximum of 6 months, depending on length of service or in line with the parties’ agreement. Where employment is terminated by the employer, the thirty-day notice period shall be extended:

  • by five days after three years;
  • by fifteen days after five years;
  • by twenty days after eight years;
  • by twenty-five days after ten years;
  • by thirty days after fifteen years;
  • by forty days after eighteen years;
  • by sixty days after twenty years of employment at the employer.

The period of notice for the termination of a fixed-term employment relationship by notice may not go beyond the fixed term.

If a unilateral termination notice is served by the employer on an employee during their period of sick leave, the notice period will only commence on the earlier of the employee’s return to work and the expiry of the one year sick pay period.

Post-Termination Restraints/ Restrictive Covenants

Post-termination restraints are common in Hungary for employees in senior positions in order to protect the employer’s economic interests for a period post-termination. Such restraints should always be tailored to individual employees.

Non-competes – Permissible for up to 2 years, if specifically included in the parties’ agreement, if reasonable in geographical reach and scope, and if the employer pays a sufficient amount of compensation in exchange which must be at least 1/3 of the employee’s salary.

Customer non-solicits – Permissible, if included in the parties’ agreement. Compensation is payable, but since separate compensation is not required for each different type of covenant, compensation for a non-compete will also cover a customer covenant.

Employee non-solicits – Permissible, if included in the parties’ agreement. Compensation is payable, but since separate compensation is not required for each different type of covenant, compensation for a non-compete will also cover an employee covenant.

Redundancy/ Severance Pay

  • In case of termination by notice due to business operational reasons, employees employed for at least 3 years are entitled to severance payment.
  • The amount of severance pay is a minimum of 1 month’s pay and a maximum of 6 months’ “absence fee,” depending on length of service. The employment contract may stipulate a higher amount of severance.
  • If the termination of employment takes place within five years prior to the date when the employee becomes entitled to an old-age pension, the severance payment must be increased by an amount of 1-3 months of absentee fee, depending on the employee’s years of service.
  • No severance payment is due if the reason for termination is related to the behaviour or ability of the employee, or the employee has already become entitled to a pension.

Timesheets

In 2019, the European Court of Justice stated that companies must set up a system to record the working time of their employees. Thus, employers are obliged to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.

Trade Unions/ Collective Agreements

Collective bargaining agreements are usually established at company level; some industrial collective bargaining agreements are also applicable. Around 2,100 collective bargaining agreements are currently applicable at company level, and 5,000 collective bargaining agreements are applicable within Hungary (including the public sector).

Trade unions are entitled to require information from the employer which is related to the employee’s interest and to initiate consultations with the employer. Trade union officers may use working time allowance for their activities and they are protected against the employer’s termination by notice (approval of the higher trade body is needed). Only trade unions have the right to conclude collective bargaining agreements.

Works Councils – The Labour Code provides that a works council is to be elected at all of the employer’s independent sites where the number of employees exceeds 50. If the number of employees (in total or at any independent division of the employer) is less than 51 but exceeds 15, no works council is required to be elected, but a works representative is to be elected by the employees. The Labour Code’s provisions regulating the rights and obligations of a works council apply equally to the works representative. Works council and the works representative is elected for a five-year term.

Fixed Term Contracts

The employer and the employee may agree on a fixed term employment. The duration of a fixed-term employment relationship may not exceed five years (except for executive employees). In order to establish the overall term of a fixed term contract, the term of another definite term relationship which was terminated within six months of the date of the new fixed term employment relationship, must be added together.

An employment relationship for a definite period may be renewed or extended between the same parties only if rightful interests of the employer justify such renewal or extension, and that may not aim at compromising the rightful interests of the employee.

Tax and Social Security

Personal Income Tax

Employment income is taxable. The general personal income tax flat rate is 15% of taxable gross income.

Mothers are exempted from personal income tax (PIT) until the end of their lives if they have raised four or more children.

Social Security

Employers in Hungary are required to pay the following taxes and contributions on the gross salaries of their employees (2022):

Contribution Employee (%) Employer (%)
Social contribution tax 13.0
Pension contribution 10.0
Social security contribution 7.0
Employment contribution 1.5

*The above rates serve as a broad guideline. Actual rates charged will differ.

Employees

Salary Payment

Unless otherwise provided by law, the base salary must be established and paid in Hungarian Forints, payable in a single payment monthly in arrears, at the latest by the tenth day of the month following the relevant month through bank transfer (or cash).

The three different arrangements for structuring an employee’s salary under the Labour Code are:

  • Fixed (time-based) Salary – The employee may receive a fixed salary (e.g. monthly or weekly), which is not related either to their or the company’s performance.
  • Performance-Related Salary – The salary of an employee may also be linked to their performance. In this case the performance requirements and the factors for the calculation of the performance-related salary must be established in advance within the frame of a procedure taking into account objective criteria and assessing whether the requirements and factors are realizable. If an employee receives performance-related salary, a guaranteed salary must be defined and paid, which must be at least half of the base salary of the employee. The determination of whether a performance requirement is achieved must be objective and may not merely depend on the employer’s determination, in its discretion, as to such achievement.
  • Combination of Fixed and Performance-related Salary – An employee’s salary may also be defined as a combination of fixed and performance-related salaries as described above.

Employers in Hungary must withhold income tax and social security contributions from employee salaries and submit them to the relevant authorities.

Payslip

  • Employees must be given a written, detailed salary slip (electronic statements provided online are also acceptable), and deductions may be made from the salary only pursuant to the legal provisions, an enforceable decision or the employee’s consent.
  • The payslip must show the employee’s gross pay, the amount deducted in tax and social security contributions, and the net amount of salary paid.
  • Employers issue employees with a tax certificate of payments and deductions required for their tax returns.

Annual Leave

The amount of the paid basic holiday is 20 days per year which is increased according to the age of the employee, up to 30 days for employees over 45 years of age:

a. one working day over the age of twenty-five.

b. two working days over the age of twenty-eight.

c. three working days over the age of thirty-one.

d. four working days over the age of thirty-three.

e. five working days over the age of thirty-five.

f. six working days over the age of thirty-seven.

g. seven working days over the age of thirty-nine.

h. eight working days over the age of forty-one.

i. nine working days over the age of forty-three.

j. ten working days over the age of forty-five.

Carry Over Rules – Employees must use the statutory amount in the holiday year. Only any additionally granted extra days can be carried over but these must be used within one year.

Sick Leave

Employees are entitled to 15 days of sick leave per year, during which they receive 70% of their salary by way of an “absence fee” which is entirely borne by the employer. After the first 15 days of sick leave in a calendar year, the employee will become entitled to sick pay, which is, generally speaking, 60 per cent of the employee’s salary and lasts for a maximum of one year. The State’s social security takes over payment of two thirds of the sick pay and one third is contributed by the employer.

Incapacity to work must be certified by a doctor and the employee must present this certificate to the employer.

Compassionate & Bereavement Leave

Employees are relieved from the obligation to work in the following circumstances:

  • Upon the death of a close relative, for at least 2 paid working days per occurrence;
  • If the employee is unable to appear at work for personal or family reasons or due to circumstances beyond their control.

Other Right for Leave of Absence

  • In Hungary, employees are relieved from the obligation to work in the following circumstances:
  • For the duration of performing civic duties;
  • If the employee is incapable of working due to illness;
  • For the duration of compulsory medical examinations (including pregnancy tests) with pay;
  • For the duration of service as a volunteer firefighter;
  • For the duration of absence to donate blood (minimum four hours) with “absence pay”;
  • For the duration of classes if employees are pursuing elementary school studies or for the duration of training if participating by agreement with the employer with pay;
  • For the duration required to attend any calling from the court or authority;
  • For the duration of treatment related to a human reproduction procedure.

Maternity & Parental Leave

There are a number of family friendly rights set out in the Hungarian Labour Code, for instance:

  • Maternity leave is 24 weeks during the pregnancy period and after giving birth. A maximum of four weeks’ leave is to be taken before the planned date of childbirth. If eligible, employees receive 70% of their average salary for this period, which is covered by the social security system.
  • Employees are entitled to parental leave without pay until the child reaches the age of 3 in order to care for the child at home (longer for disabled or sick children). During this period, the employee receives childcare pay from the social security system amounting to 70% of average salary until the child reaches 2 years of age, and the minimum amount of old age pension after the 2nd birthday of the child until it reaches the age of 3 years.
  • Additional holidays for parents.
  • Limitation of termination of employment during pregnancy and maternity leave.
  • Prohibition of night work during pregnancy and until the child reaches three years of age.
  • Unpaid leave for nursing a relative.
  • Limitation of assignment to another workplace, job or employer during pregnancy and until the child reaches three years of age or, if the parent raises the child alone, until the child reaches 16 years of age and in the case of permanent nursing of a relative.
  • Mandatory offer for mothers to amend their job title until the child reaches one year of age in order to adjust the employee’s work duties to her health conditions.
  • Obligation for the employer to accept a mother’s request to be employed part time until the child reaches three years of age.

Paternity leave

Upon the birth of his child, a father is entitled to five paid working days’ leave and in case of twins, seven paid working days’ leave which shall be taken within two months following the date of birth on the days as may be requested by the father. The leave shall be provided also if the child is stillborn or dies.

Adoption leave

Maternity leave shall also be provided to a woman who has been given custody of a child for the purpose of adoption. The duration is 24 weeks of unpaid leave.

Childcare leave

Based on the parents’ decision, the employee assuming the greater role in raising a child (as well as single parents) is entitled to extra time off:

  • Two days a year for one child.
  • Four days a year for two children.
  • Seven days a year for more than two children under 16 years.
  • The extra vacation time for children shall be increased for children with disabilities by two working days per child.

Public Holidays

  • Hungary celebrates 11 public holidays for which employees are given the day off.
  • If a public holiday falls on a weekend, no change applies for employees working on a Monday through Friday basis.
  • Sundays that are public holidays are treated differently from regular Sundays. On public holiday Sundays, shops are typically closed, and if an employer requires employees to work, different wage supplements will apply.
  • Since in Hungary people prefer to have long weekends rather than having one rest day during the week, if a public holiday falls on e.g. a Thursday, the following day will become a ‘rest day’ to create a 4-day long weekend. In exchange for the extra ‘rest day’, a Saturday is declared a workday to keep the yearly number of workdays the same.
  • In addition to public holidays and rest days in Hungary, there are also some “short” days, when most employees are allowed to leave early, shops close around noon, and public transport switches to night mode in the afternoon. These are: December 24th (Christmas Eve) and December 31st (New Year’s Eve).

Benefits to the Employee in Hungary

Statutory Benefits

Employees may be eligible for certain statutory benefits due to the length of their continuous employment, such as:

  • Longer notice periods.
  • Severance payment and/or higher amounts of severance payment.
  • Eligibility for sick pay and/or higher amounts of sick pay.
  • Eligibility for longer terms of sick pay.

Other Benefits

In certain cases, employers may pay fringe benefits to their employees:

  • fixed (the benefit is the same for every employee for example HUF 10,000 food voucher for every employee/ month)
  • optional (the benefits can be chosen by the employer from list of benefits within frames of a determined amount) – optional system called “Cafeteria scheme”

Most common benefits in Hungary:

  • Vouchers – Erzsébet voucher (food support); School starting voucher; Culture vouchers; Gift voucher;
  • SZÉP Card – the card has 3 “pockets”, from each pocket different kinds of cost can be funded at a place where the card is accepted (restaurant meals, accommodation, culture);
  • Local public transport season ticket;
  • Health Care Fund Card;
  • Voluntary pension fund additions.

Visas and Foreign Workers

General Information

Visa requirements:

  • Nationals of the European Economic Area (EEA) and Switzerland have the right to work in Hungary without a visa or a work permit. The employer must register its EU/EEA/Swiss employee at the local employment authority.
  • Non-EU family members holding a residence card issued to a family member who is an EU national are exempt from obtaining a visa.
  • In Hungary, visa matters are the responsibility of the Ministry of Foreign Affairs and Trade.
  • Non-EU citizens (“Third-country nationals”) must have a work visa and work permit to work and live in Hungary.
  • Normally, most of the bureaucracy related to a visa application is handled by the employer, who is required to provide various documents to the immigration authorities, such as proof of qualifications and health certification.

Requirements for obtaining a working visa when making the application:

  • Valid Work Permit
  • Labour agreement
  • Proof of accommodation

The work permit and the working visa are issued for two years. Both of these documents can be renewed if the employee wishes to extend their stay in Hungary and continues to fulfil the application requirements.

Work permit

The application process itself takes up to 25 days:

  • A workforce demand is required. The hiring company must advertise the job at the Hungarian Labour Office (Munkaügyi Központ) for a fixed period of 15 days. This is to give a chance for unemployed Hungarian citizens to apply for the position.
  • Once fifteen days have passed, but the employer was not able to fill their vacancies with Hungarian employees within the given time frame, the employer can apply for the work permit on behalf of the employee. The work permit will be ready after a further 10 -15 days.
  • An individual work permit can be granted for a maximum of two years and may be renewed an unlimited number of times.
  • After being granted a work permit, the employee can apply for the working visa in person at the Hungarian Consulate (Magyar Konzulátus) in their home country or in the country where they currently hold legal residence.
  • Exceptions from the work permit requirement (munkavállalási engedély) may apply for executive employees, academic employees.
  • Local public employment services (Regionális Foglalkoztatási Szolgálat) and immigration offices (Bevándorlási Hivatal) of the future employer’s seat issue the work and residence permits. The work permit is incidental to a residence permit.
  • Obtaining the work permit is free of charge but the employee bears the cost of official translations of the documents verifying the qualification of the employee.

Residence permit

In Hungary, the Ministry of the Interior, as well as the National Directorate-General for Aliens Policing and its regional directorates are responsible for matters related to residence:

  • EU nationals and their family members are entitled to stay for longer than three months in Hungary if they are in active, paid employment or studying, or support themselves and their family members with their own funds, including full health care coverage.
  • EU nationals and their family members are entitled to permanent residence after residing legally and continuously in Hungary for five years, and receive a permanent residence permit accordingly.
  • Third-country citizens must have a residence permit for the purpose of work before starting to work in Hungary.

Public Holidays in 2022

S.No Occasion Date
1. New Year’s Day January 1st
2. Revolution Day March 15th
3. Good Friday April 15th
4. Easter Monday April 18th
5. Spring day May 1st
6. Whit Monday June 6th
7. Saint Stephen’s Day August 20th
8. Republic Day October 23rd
9. All Saints’ Day November 1st
10. Christmas Day December 25th
11. 2nd Day of Christmas December 26th

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