Hungary

Guide to employing in Hungary

Capital city: Budapest

Currency: Forint (HUF)

Population site: 9,772,756 (2023)

Language Spoken: Hungarian

 

1) Overview 

Hiring employees in a foreign country can be a challenging and resource-intensive task.. COBERON CHRONOS is an expert provider of Employer of Record and staffing services in Hungary.

We offer an EOR solution as a cost-effective and compliant way to handle all aspects of onboarding, payroll management/administration, tax payments and benefits without you having to establish a legal entity in Hungary.

When you choose to partner with COBERON CHRONOS as your employer of record in Hungary, our own local EOR entity assumes all the responsibilities of an employer. We assist you in navigating the applicable employment regulations of the specified country while you focus on unlocking your business’s full potential.

 

2) Coberon Chronos - Hire employees in Hungary

The Hungarian labour market operates under the labour code, which ensures fair and transparent labour practices and protects the rights of both employers and employees. This labour code specifies rules and procedures that companies must comply with when hiring employees in Hungary and includes regulations regarding working hours, paid time off, illness termination and maternity benefits. 

Ensuring labour practices are correctly implemented requires a thorough understanding of the labour code, and implementing it correctly can be a time-intensive task. Non-compliance with the labour code can be costly and lead to fines and sanctions for the offending company. COBERON CHRONOS understands the importance of these regulations and will work diligently to prevent any potential pitfalls, allowing your business to flourish in Hungary's dynamic market.

When you hire employees in Hungary using an EOR service, it’s important to note that Hungarian EOR service providers are strictly regulated and legally required to have a valid temporary agency licence. Coberon Chronos can assist your company in navigating the intricacies of the labour market when you hire employees in Hungary. With our extensive knowledge of the Hungarian labour code, we offer you seamless guidance and support, ensuring proper labour practices are always maintained.

When you partner with COBERON CHRONOS, we will ensure your company complies and stays current with any Hungarian labour code changes. 

 

3) Best Practices in Hungary

The following information is a basic guideline for employment in Hungary to you to understand the approximate costs.

It is very important that when the negotiating is on for the terms and condition of a new employment, the offer letter is advised to be revised locally and finalized in a written format, but possibly get signed by both parties. Offer letter needs to include an expiry date, usually 7 or max. 14 days recommended.

 

Employment Contract

Employment contracts may be fixed term or for indefinite duration. Fixed-term contracts are allowed for up to a maximum 5-year period (including breaks) if they are for temporary, seasonal work or EOR scheme. 
   
Probation Period Probationary period is 3 months from the date of commencement of the employment relationship. In the event of a shorter period being agreed on, the parties cannot extend the probationary period.
   
Working Hours Full time employment means 40 hours per working week in Hungary. Less hours will automatically mean part-time work. 
Employees can work no more than 250 hours in overtime (OT) per year and other special conditions apply for other extraordinary working hours and corresponding payments. Employment agreements must stipulate the agreed working hours per week for the employee.
   
Flexible Work Schedule  Employees telecommuting i.e. working remotely in “home-office” may work flexible hours, however special labor law conditions apply for both a flexible telecommuting or uneven time-framed working schedule scheme.
   
Minimum Wage From 1 Jan 2024 the minimum gross wage is HUF 266,800 per month for a 40-hours a week, full-time contract. In the case of jobs requiring a high secondary education / qualification, the minimum guaranteed wage is HUF 326,000 per month for a full-time contract.
   
13th month salary  In Hungary, the 13th month salary is not mandatory, however if it is offered then all employees must receive it on the equal rights specified in the Labor Law.
   
Benefit package  In Hungary, there are no obligatory fringe benefits that an Employer must offer however a voluntary plan can be set up which is referred to as a Cafeteria system (see more details in the Benefits section).
   
 Payroll cycle  Monthly salaries must be paid within 10 calendar days following the relevant month and after payroll is closed for all employees.
   
 Health insurance  Hungary provides full medical coverage to all residents, with payroll contributions as one source of funding. The government pays contributions for certain groups such as the unemployed and pensioners.
 

 

4) Public Holidays in Hungary

New Year’s Day: January 1
National Day / Memorial Day of the 1848 Revolution: March 15
Good Friday / Friday before Easter Sunday: Varies yearly (first Friday in April)
Easter Monday: Varies yearly
Labor Day / Anniversary of the accession to the EU: May 1
Pentecost Sunday: May 21
Saint Stephens Day: August 20
Republic Day: October 23
All Saints Day: November 01
Christmas Day: December 25
Second Day of Christmas: December 26

4) Type of Leaves in Hungary

 

Paid Leave

 

Employees are entitled to be paid annual leave based on the time spent at the contract. The days increases based on the age of the employee, the number of children in the family or other special health conditions.

Statutory paid leave is 20 days per year and increases with +1 day in every 3 years until the employee’s age reaches 45 when a max +10 days vacation applies.

Extra vacation days are applicable to both parents based on the number of children:
For 1 child: + 2 days
For 2 children: + 4 days
For 3 children or more: + 7 days

 
   
Sick Leave  

An employee is entitled to 15 sick-leave days yearly while enrolled in the national social security system. During this 15 days of period employees must receive max. 70% of their base gross salary which is paid by the Employer. After 15 days, the amount paid varies from 50% – 70% depending on employment social security coverage the employee has had 760 days backwards. The sick leave allowance gets paid one third by the employer and the remaining amount is paid by the state. Sick leave is required to be proved by a medical certificate issued by a local certified doctor (GP). Such a certificate is to be provided to the local payroll immediately in every 8 days. Sick leave is maximized in one year if such leave occurs during termination period.
   
Pregnancy and maternity leave  

Expecting women have 24 weeks maternity leave, but are allowed to take up to three years off and receive maternity benefits. The maternity leave have to start 4 weeks prior to the scheduled delivery date unless the employee would like to work up to the delivery day on her own risk. After delivery and for the first 6 months, a woman receives 70 % of her base salary paid by the State; this support is called Pregnancy and Confinement Benefit. For the next 18 months, until the child’s 2nd birthday, a Child Care Fee is available, however the employee is entitled to work part-time and still receiving this benefit by the State.
   
Paternal leave The father is entitled to 5+5 days off for paternity leave which the employer must allocate within two months following the date of birth upon the father’s request. As a paternity leave, the father can take a leave instead of the mother until the child reaches 2 years of age. Other special paternity leave depends on the lenghts of current employment (min. 1 year required) for a 40-days paternal leave. The 10% of the monthly salary is payable maximum during this period)-
   
Short-term child care leave  Employees are entitled to short-term and paid child care leave. This type of special leave is certified by the employee’s GP.
   
 

Other Leave

  

Unpaid leave: Unpaid leave can only be defined as quasi extraordinary vacation without pay, which is an opportunity, but also there are compulsory cases according to the Hungarian Labour Law for reasons. Employees shall convey the request for leave of absence without pay in writing, at least fifteen days in advance, for example for

  • Long-term child care leave.
  • Compassionate leave: when a close family member (i.e spouse or grandparents) of the employee is seriously or life-threateningly ill or be in such and requires care.
  • Emergency and short absence leave.
  • Military service

5) Termination of Employment and Severance in Hungary

An employment relationship may be terminated:
- by mutual consent;
- by notice;
- by dismissal without notice.

The reasoning shall clearly specify the grounds for termination. The burden of proof to verify the authenticity and substantiality of the grounds of the act of termination shall lie with the party taking the legal act. The employment can not be terminated during the period or a maternity/paternity leave and based on other special reasons local Labor Code specifies. 
 
The employer can set a probationary period in the employment contract and during this period the contract can be terminated by either party, but no explanation for reason is required. 

The employer may terminate the definite period of time contract with explanation or no explanation, but the gross base salary for the remaining period of the original contract must be paid within 5 days the written termination is handed over to employee. 

When terminating employment, either party must provide a notice period of at least 30 days but no more than one year. The 30-day notice period must be extended by the following:
- 5 days after 3 years of employment
- 15 days after 5 years of employment
- 20 days after 8 years of employment
- 25 days after 10 years of employment
- 30 days after 15 years of employment
- 40 days after 18 years of employment
- 60 days after 20 years of employment
The employee is entitled to severance pay if the employer terminates the employment by ordinary termination (as a result of the employee’s work or performance ability well documented, behavior in relation to the employment relationship or the employer’s banckruptcy economic reasons). The following payments apply:

1 month base gross for up to 3 years of employment
2 months base gross for up to 5 years of employment
3 months base gross for up to 10 years of employment
4 months base gross for up to 15 years of employment
5 months base gross for up to 20 years of employment
6 months base gross for up to 25 years of employment

The employment contract can be terminated by mutual consent with agreed terms between Employer (Employer of Record) and Employee.

6) Employment Taxes

Applicable from Jan/1/2024
The employer pays into social security at a rate of  13.00% monthly. Additional monthly 'rehabilitation tax' is applicable for each employee (average 1,5% but min. 10,000 HUF / employee per month), payable quarterly.

Employee's contributions are the Personal Income Tax / SZJA (15%) and other 18.5% social security contribution. Both Employer's and Employee's taxes and social contributions may vary year by year or even from a specific date may announced by the government in Hungary.

Service provider tax on EOR/PEO/Staffing: +2% of service revenue billed.
 

WHY COBERON CHRONOS?

In Hungary to hire a small or large number of staff can be time consuming, expensive and complex without the extensive knowledge of the local Labor Code but mostly to apply it to the best practices.

We can help your business to hire your candidates, handle all the hiring administration and payroll and ensure that you’re in compliance with local labour laws, without the burden of setting up a large office or subsidiary abroad in a rush. 

Our employment services lets you focus on running your key business in a new country.

If you have an immediate EOR needs or just would like to discuss how we can provide a seamless temp staffing, contingent workers solutions for hiring employees in Hungary, please contact us at hungary@coberonchronos.com