Employers of Record (EORs) play a vital role in the recruitment of skilled personnel in Hungary. These specialized employment and recruitment experts possess the knowledge and resources to navigate the hiring process efficiently. With their established networks, EORs can identify and attract highly qualified candidates, simplifying the recruitment process for businesses. They also provide valuable guidance on employment agreements and ensure compliance with local labor regulations, reducing legal risks. By partnering with a Hungary-based EOR, companies can tap into their market expertise, benefit from streamlined HR operations, and access the right talent for their growth and success.

Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Hungary must have a local legal organization and utilize local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Hungary makes compliance with employment laws demanding.

With Gloroots' global Employer of Record (EoR) service, you can let Gloroots handle the heavy lifting of payroll, tax, benefits, and compliance, allowing you to concentrate on what matters most: your employees and company growth.

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The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor or exempts them from certain employment laws and benefits, even if the worker should be classified as an employee and entitled to legal protections, benefits, and rights.

Utilizing a PEO/EOR in Hungary  helps mitigate the risks associated with misclassification by ensuring compliance with labor laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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Employment contracts

When entering into an employment agreement in Hungary, it is mandatory to create a written employment contract. This contract should include essential details such as the identification of both parties, workplace(s), job position, duties and responsibilities. Additionally, it should refer to a separate document specifying the employee's detailed job description. The contract should also outline the basic salary, as well as any other compensation or benefits provided.

Starting from January 2023, employers are required to provide employees with comprehensive information about additional terms of employment, including termination rules, training policy, working hours, and more. This information must be provided on the first day of the employment relationship.

By default, employment contracts in Hungary are considered to be of unlimited duration. However, fixed-term contracts are permissible as long as their duration does not exceed five years.

It's important for employers to understand the intricacies of these programs before making a hire. This might sound overwhelming, but it doesn't have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

Get an overview of what you need to know when hiring in Hungary. Contact us.

Overtime

Employees in Hungary are permitted to work overtime as long as they adhere to the maximum daily limit of 12 working hours. Additionally, employees are not allowed to exceed a total of 48 working hours per week. Over the course of one year, employees can work an additional 250 hours, or up to 300 hours as permitted by certain collective agreements. Overtime work must be compensated with a 50 percent wage supplement.

Minimum Wage

The minimum monthly wage in Hungary is 290,800 HUF for unskilled workers and 348,800 HUF for skilled workers, those with secondary education or professional qualifications. In some sectors, Collective Bargaining Agreements may establish higher minimum wage standards based on industry-specific conditions.

Sick Pay

In Hungary, employers have a legal obligation to offer sick pay to employees who are absent due to illness. The sick pay should amount to 70 percent of the employee's regular wages and is provided for a period of 15 days. After this initial 15-day period, the responsibility for payments is transferred to the Hungarian social security system, which can provide sickness benefits for up to one year.

Maternity leave

Maternity leave in Hungary can last for up to 24 weeks, essentially 6 months. During this period, employers must pay 70% of the employee’s monthly salary. This benefit is called the Pregnancy and Confinement Benefit. 

Paternity leave

Male employees can avail 10 working days of employer-paid paternity leave upon the birth or the adoption of a child. The father may claim paternity leave within two months of birth or adoption; leave may be divided into two installments.

Annual leave

Employees are entitled to a minimum of 20 days of paid time per year. The annual leave increases by age as well. 

Below is a table indicating the number of vacation days employees in Hungary are entitled to.

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Income Tax

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Employer Payroll Contributions

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Employee Payroll Contributions

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Termination Process

In Hungary, employers are generally required to provide a written reason for terminating an employee. The reason must be clearly stated and based on factual grounds. It is important to note that termination is prohibited when an employee is on specific leaves protected by Hungarian law, such as maternity leave or voluntary reserve military service.

Notice Period

Employers in Hungary must provide advance notice of termination, typically ranging from 30 to 90 days. However, for employees on fixed-term contracts, the notice period may not apply if the contract ends on the predetermined date specified in the agreement.

The base notice period of 30 days can be extended based on the employee's length of service:

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Severance Pay

Employees are entitled to severance pay after completing 3 years of service. 

Severance pay in Hungary depends on the employee's tenure and age, ranging from one month's salary to six months' salary. 

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Employment contracts should specify the expectations and procedures regarding severance pay to avoid any misunderstandings. Employees are entitled to severance pay in cases of:

• Unilateral termination by the employer
• Company closure
• Acquisition scenarios
• Employer is terminated without a successor
• The employee quits after a change in the employer, when staying in employment would have been either impossible for the employee or would have hurt their interests
• The employee is found to willfully breach of contract or gross negligence on the side of the employer

Probation Periods

In Hungary, the maximum probation period allowed is three months. Once the probationary period concludes, the employee is considered a full employee and entitled to all the protections provided by Hungarian labor law, even if the employment contract did not specify a probationary period.