Hire in Hungary
Here’s where you get started with human resources best practices and hiring in Hungary.
Hungarian Forint (HUF)
Key Country Facts
Hungary is a unitary, parliamentary, representative democratic republic with a population of 10 million people. Budapest, the capital, is also the largest and most populated city. Hungarians consider their country part of Central Europe rather than Eastern Europe. The expression Central-Eastern Europe is also deemed appropriate.
Hungary is landlocked, spanning 93,000 square kilometers. The country 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.
Hungary has a typical European continental-influenced climate, with warm, dry summers and fairly cold winters.
Heritage and tradition are important to Hungarians, expressed in the country’s national celebrations, folk music, dance and strong family ties across generations. Hungarians are vibrant, friendly and value family above all else. Hospitality is a major part of the culture.
Hungary has no official state 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.
The official language of Hungary is Hungarian.
Hungary HR at a Glance
Employment relations in Hungary are governed by the Act I of 2012 on Labor Code and other labor law legislation, collective bargaining agreements and individual employment contracts. The Labor Code governs the terms and conditions of employment such as working hours, holidays, rest periods, wages, overtime and employment relationships. Another significant source of law is Hungary’s Constitution, which protects the fundamental rights of both employers and employees.
In the context of labor disputes in Hungary, courts generally protect employees’ rights by interpreting the provisions of the Labor Code, collective bargaining agreements and employment contracts often in favor of employees.
- The Labor Code requires employment contracts to 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 start 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 7 days from the commencement of the employment relationship, the employer must provide the employee with more extensive information regarding the terms of employment in writing, such as commencement and duration of employment, place of work, days on which work can be scheduled, the potential duration of overtime, specific nature of the employer’s activities, rules relating to the termination of employment, employer policy on training, and the time that employees can spend on training, name of the authority to which an employer pays employment-related taxes, etc.
In Hungary, the general rule is that employment contracts are to be concluded for an indefinite duration. Fixed-term contracts are also permitted in cases of temporary or seasonal work.
Under the labor code, except for the first 6 months of employment, employees may request a transfer to full-time or part-time employment, teleworking or indefinite-term employment if available based on information provided by the employer. In such cases, employees may request the modification of their employment contracts in writing and by providing reasons. The employer is obliged to respond in writing within 15 days.
Probation Period/ Trial Period
Upon concluding an employment contract, a probationary period may be agreed upon between the employer and the employee. The following provisions apply:
- The statutory limit is 3 months.
- A probationary period shorter than three months can be extended once. However, with that extension, the total term of the probation period must not exceed three months.
- A collective bargaining agreement can 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 relationship can be terminated by either party with immediate effect and without justification.
In the case of a fixed-term employment contract no longer than 12 months, the probation period shall be established proportionally.
In the event of extending a fixed-term employment contract or the re-establishment to the same or similar post within six months of terminating the fixed-term contract, a probation period cannot be imposed.
The general statutory limitation on the length of a normal workday is eight hours per day. The normal work week is 40 hours. The employer and the employee can 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. For example, the employee is entitled to two days off weekly or 48 hours uninterrupted rest period. This is called the weekly rest period.
In exceptional cases, the employee can be required to perform overtime work This is called “extraordinary work” according to the terminology of the Labor Code. 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 limit on extraordinary work is set at 250 hours per year. This can be increased to 300 hours per year in a collective bargaining agreement.
By written agreement of the employer and the employees, the employer can require 150 hours of additional overtime annually from employees subject to the agreement. Alternatively, this requirement can be 100 hours if the annual maximum overtime limit is already raised to 300 hours by collective agreement.
The law strictly defines when extraordinary work can be ordered. Employees can be required to do extraordinary work only under justified and unforeseen extraordinary circumstances:
- Extraordinary work on public holidays can be ordered only if the employee can otherwise be required to work on such days.
- Extraordinary work can also be ordered if it is 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. This also applies to 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 Labor Code requires employers to ensure the safety and health conditions of the workplace by complying with the relevant legislation. This includes, 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 and 13th Month Pay
The 13th month bonus is not mandatory in Hungary but performance-based bonuses are common. The employer can grant to an employee a bonus (premium) in addition to their salary. This bonus is usually added to a fixed salary. The granting of a bonus is normally in the employer’s sole discretion and cannot be claimed by the employee, provided 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 employees in addition to their salaries. The document should outline that the employer retains the right to withdraw the bonus or modify its terms.
In the case a bonus is promised in advance to an employee upon completing a specific task, the bonus can be claimed by the employee. The terms and conditions of the bonus can be included in the employment contract or a separate bonus policy.
Termination by notice is possible in situations of indefinite term employment. In the case of fixed-term employment, termination by notice is less common. All employees in Hungary 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 can only terminate the employment by notice if one of the following situations apply:
- The employer is undergoing liquidation or bankruptcy proceedings.
- Employment is being terminated for reasons relating to an employee’s performance.
- The employment is no longer possible due to an unavoidable external reason.
Restricted or prohibited terminations: According to the Hungarian Labor Code, further termination restrictions apply for some special groups of employees. In the following cases, an 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 operations will be deemed a mass layoff. This is subject to special provisions and consultation rules.
Dismissal without notice – An employer or an employee can terminate an employment relationship without notice if the other party does either of the following:
- Willfully, or by gross negligence, commits a serious violation of any substantive obligations related to the employment relationship
- Engages in conduct that would render the employment relationship impossible
Unfair dismissal – If the court decides a termination is unlawful, the employer must pay the employee compensation for damages.
- The lost salary will form part of the damages. This is subject to a maximum of 12 months’ “absence fee.”
- Any amount earned by the employee during the period after the termination must be deducted.
- Reinstatement is also possible. This applies only in specific cases where the breach is considered serious (e.g. violation of termination protection).
In the case of dismissal with notice, the employment relationship is terminated at the end of a notice period. This period will be a minimum of 30 days and a maximum of six months, depending on length of service or in line with the parties’ agreement. If employment is terminated by the employer, the thirty-day notice period will 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 must 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 start upon the employee’s return to work and the expiration of the one year sick pay period.
Post-Termination Restraints/ Restrictive Covenants
Post-termination restraints are a common practice in Hungary for employees holding senior positions. The intention is to protect the employer’s economic interests for a set period post-termination. Such agreements should be tailored to individual employees.
Non-competes – Permissible for up to two 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. This amount must be at least one-third 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 the case of termination by notice due to business operational reasons, employees employed for at least three years are entitled to severance payment.
- The amount of severance pay is a minimum of one month’s pay and a maximum of six months’ “absence fee.” This will depend on the employee’s length of service. The employment contract can 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 one to three months’ absentee fee. This will depend on the employee’s years of service.
- No severance payment is due if the reason for termination is related to the behavior or ability of the employee. Also, no payment is required if the employee has already become entitled to a pension.
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 should implement an objective, reliable and accessible system that allows the recording of the daily workday performed by each employee.
Trade Unions/ Collective Agreements
Collective bargaining agreements are usually established at the company level. Some industry-wide collective bargaining agreements are also applicable. Around 2,100 collective bargaining agreements are currently applicable at the company level while 5,000 collective bargaining agreements are applicable within Hungary. This includes the public sector.
Trade unions are entitled to require information from the employer related to the employee’s interest and to initiate consultations with the employer. Trade union officers may use working time allowance for their activities. These individuals are protected against the employer’s termination by notice. Approval of the higher trade body is needed instead. Only trade unions are entitled to conclude collective bargaining agreements.
Works Councils – The Labor 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. However, a works representative is to be elected by the employees. The Labor Code’s provisions regulating the rights and obligations of a works council apply equally to the works representative. The works council and the works representative are elected for a five-year term.
Fixed Term Contracts
An employer and an employee can agree on a fixed-term employment relationship. The duration of a fixed-term employment relationship must 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 can be renewed or extended between the same parties only if rightful interests of the employer justify such renewal or extension. This must not aim to compromise the rightful interests of the employee.
Tax and Social Security
Personal Income Tax
Employment income in Hungary is taxable. The general personal income tax flat rate is 15% of taxable gross income.
Mothers are exempt from personal income tax (PIT) until the end of their lives if they have raised four or more children.
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|
|Social security contribution||7.0||–|
*The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ.
Unless otherwise provided by law, the base salary must be established and paid in Hungarian Forints. This must be disbursed in a single payment monthly in arrears. At the latest, the payment should be made 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 Labor Code are:
- Fixed (time-based) Salary – The employee can receive a fixed salary (e.g. monthly or weekly) which is not related either to their performance or the company’s performance.
- Performance-Related Salary – The salary of an employee can 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 a performance-related salary, a guaranteed salary must be defined and paid. This must be at least half of the base salary of the employee. The determination of whether a performance requirement is achieved has to be objective and must not merely depend on the employer’s determination in its discretion.
- 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 employees’ salaries and submit them to the relevant authorities.
- Employees must be given a written, detailed salary slip. Electronic statements provided online are also acceptable. Deductions can 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, social security contributions and the net amount of salary paid.
- Employers are to issue employees with a tax certificate of payments and deductions, as this is required for their tax returns.
The amount of paid basic holiday leave is 20 days per year, which is enhanced according to the age of the employee up to 30 days for employees over 45 years of age:
- one working day over the age of twenty-five
- two working days over the age of twenty-eight
- three working days over the age of thirty-one
- four working days over the age of thirty-three
- five working days over the age of thirty-five
- six working days over the age of thirty-seven
- seven working days over the age of thirty-nine
- eight working days over the age of forty-one
- nine working days over the age of forty-three
- ten working days over the age of forty-five
Carry Over Rules – Employees must use the statutory amount in the holiday year. Only additionally granted extra days can be carried over. However, these must be used within one year.
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.” This fee is entirely borne by the employer. Following the first 15 days of sick leave in a calendar year, the employee is entitled to sick pay. This is, generally speaking, 60% of the employee’s salary and lasts for a maximum of one year. The government’s social security authority takes over payment of two-thirds of the sick pay while 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 work obligation in the following circumstances:
- Upon the death of a close relative, for at least two 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 ordered appearance 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 Labor Code:
- 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. This period will be longer in the case of 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. They receive the minimum amount of old age pension after the 2nd birthday of the child until it reaches the age of 3 years.
- Additional holidays are offered to parents.
- Employees enjoy protections against the termination of employment during pregnancy and maternity leave.
- Night work is prohibited during pregnancy and until the child reaches three years of age.
- Unpaid leave for nursing a relative is available.
- There is a limitation against the assignment of an employee to another workplace, job or employer during pregnancy and until the child reaches three years of age. If the parent raises the child alone, this provision lasts until the child reaches 16 years of age The provision also applies in cases where the employee is the permanent caregiver of a relative.
- Mothers must be allowed 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.
- Employers must accept a mother’s request to be employed part time until the child reaches three years of age.
Upon the birth of his child, a father is entitled to 10 paid working days’ leave. The employee is entitled to full absentee pay for 5 working days of the leave and only 40% of the absentee pay from the 6th working day of the leave.
Maternity leave must also be provided to a woman who has been granted custody of a child for the purpose of adoption. The duration is 24 weeks of unpaid leave.
Employees are entitled to 44 working days of parental leave until a child reaches 3 years of age, provided that the employee has at least one continuous year of employment with his/her employer. The employee is entitled to 10% of absence fee during the parental leave from which certain social security benefits (e.g., childcare allowance) are to be deducted.
Five days of carer’s leave annually for nursing a relative or a person living in the same household who needs care for serious health reasons. The absence fee is due for the whole period.
- 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. If an employer requires employees to work, different wage supplements will apply.
- People in Hungary prefer to have long weekends rather than having one rest day during the week. If a public holiday falls on, for example, a Thursday, the following day will become a ‘rest day’ to create a four-day long weekend. In exchange for the extra ‘rest day,’ a Saturday will be 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. Employees are allowed to leave work early, shops close around noon and public transportation switches to night mode in the afternoon. These days include December 24th (Christmas Eve) and December 31st (New Year’s Eve).
Benefits to the Employee in Hungary
Employees may be eligible for certain statutory benefits due to the length of their continuous employment, such as:
- Longer notice periods
- Severance payment or higher amounts of severance payments
- Eligibility for sick pay or higher amounts of sick pay
- Eligibility for longer terms of sick pay
In certain cases, employers can pay fringe benefits to their employees:
- Fixed: The benefit is the same for every employee. For example, this can include a HUF 10,000 food voucher for every employee each month
- Optional: the benefits can be chosen by the employer from a list of benefits within frames of a determined amount. This optional system is called the “cafeteria scheme.”
The most common benefits in Hungary include:
- Vouchers – ‘Erzsébet’ voucher (food support), school voucher; culture vouchers, gift voucher
- SZÉP Card – This card has three “pockets.” From each pocket, different kinds of costs can be funded at a place where the card is accepted (restaurant meals, accommodation, culture, etc.)
- Local public transport season ticket
- Healthcare fund card
- Voluntary pension fund additions
Visas and Foreign Workers
- 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 are exempt from obtaining a visa if they hold a residence card issued to a family member who is an EU national.
- In Hungary, visa matters are the responsibility of the Ministry of Foreign Affairs and Trade.
- Non-EU citizens (“third-country nationals”) must obtain 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. This includes proof of qualifications and health certification.
Requirements for obtaining a working visa when making the application:
- Valid work permit
- Labor agreement
- Proof of accommodation
The work permit and the working visa will be issued for two years. Both of these documents can be renewed if the employee wishes to extend their stay in Hungary and continues to fulfill the application requirements.
The application process takes up to 25 days:
- A workforce demand is required. The hiring company must advertise the job at the Hungarian Labor 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.
- If fifteen days pass and the employer is unable to fill their vacancies with Hungarian employees, the employer can apply for the work permit on behalf of the employee. The work permit will be ready after a further 10 to 15 days.
- An individual work permit can be granted for a maximum of two years and can 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 translating the documents to verify their qualifications.
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, are studying or support themselves and their family members with their own funds. The latter includes full healthcare coverage.
- EU nationals and their family members are entitled to permanent residence after residing legally and continuously in Hungary for five years. They will receive a permanent residence permit accordingly.
- Third-country citizens must obtain a residence permit for the purpose of work prior to starting work in Hungary.
Public Holidays in 2023
|1||New Year’s Day||01.Jan.2023|
|7||Saint Stephen’s Day||20.Aug.2023|
|9||All Saints’ Day||01.Nov.2023|
|11||2nd Day of Christmas||26.Dec.2023|
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