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Hiring in Hungary
The Hungarian labor code gives strong protection to employees. There are specific rules and procedures that must be followed in cases of termination, illness, or maternity benefits, and companies can be fined and sanctioned if they do not follow the statutes. Both collective bargaining and works councils, which represent employees, are permitted.
When negotiating the terms of an employment contract with an employee in Hungary, it may be useful to keep the following standards in mind.
Employment contracts in Hungary
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.
Employment contracts must be in writing, in the local language, and must include the terms of the employee’s compensation, benefits, responsibilities, hours and holidays, probation period, and job title. It is best practice to also include termination requirements. An offer letter and employment contract in Hungary should always state the salary and any compensation amounts in Hungarian forint rather than another currency.
Working hours in Hungary
The standard workweek in Hungary consists of up to 8 hours a day, 5 days a week. Employees can work no more than 250 hours in overtime per year and must be paid 50% on top of gross salary, but if the overtime work is conducted on weekends or public holidays, the compensation is 100% of the normal salary for that day.
Holidays in Hungary
Hungary celebrates 11 public holidays for which employees are given the day off, including:
- New Year’s Day
- Revolution Day
- Good Friday
- Easter Monday
- Labor Day
- Whit Monday
- Saint Stephen’s Day
- Republic Day
- All Saints’ Day
- Christmas Day
- Second Day of Christmas
Vacation days in Hungary
Employees in Hungary are entitled to at least 20 days off per year. The amount increases based on the age of the employee as follows:
- Up to the age of 25: 20 business days
- From the age of 25: 21 business days
- Up to the age of 31: an additional business day every 3 years
- Up to the age of 45: an additional business day every 2 years
- From the age of 45: 30 business days
Parents are entitled to additional holidays based on the number of children they have:
- 1 child: 2 extra days
- 2 children: 4 extra days
- > 2 children: 7 extra days
In case of a child with special needs, 2 additional days per child.
Hungary sick leave
Employees are entitled to 15 sick days annually while enrolled in the national social security system. Employees generally receive 70% of their salary which is paid by the employer. After 15 days, the amount paid varies from 50% – 60% depending on the term of service; 1/3 is paid by the employer and the remaining amount is paid by the state.
If an employee is unable to work due to a work-related accident or occupational illness for 4 days or more but less than 3 months, the employer must pay the injured employee at a rate of pay of at least 75%. If the employee is unable to work for a period longer than 3 months, the employee must claim compensation from the Compensation Fund.
Maternity and paternity leave in Hungary
Pregnant employees are entitled to 24 weeks of maternity leave (CSED). The leave must start at least 4 weeks prior to the scheduled delivery date. The amount of the childcare fee per calendar day is 100% of the calendar day’s base or the calendar day’s income.
Fathers are entitled to 10 days off for paternity leave no later than 2 months after the birth or adoption of the child, which can be granted in no more than two parts. For the first 5 days, fathers are entitled to an absence fee, during days 6-10 they are entitled to 40% of the absence fee.
Parental leave: One parent is entitled to take additional leave until the child reaches 2 years of age. The amount paid is 70% of previous earnings, however, the amount cannot exceed 70% of twice the minimum daily wage. One parent is also entitled to extra annual paid time off, 2 days for 1 child, 4 days for 2 children, or 7 days for more than 2 children under 16 years of age.
The employee is eligible for 44 working days of parental leave until the child’s 3rd birthday provided that the employee has 1 year of employment at the company – not necessarily at the time of the childbirth or adoption. If this requirement is met later, the employee can claim the parental leave.
Health insurance in Hungary
Hungary provides full medical coverage to all citizens, with payroll contributions as one source of funding. The government pays contributions for certain groups such as the unemployed and pensioners.
Bonuses
The 13th-month bonus is not mandatory in Hungary, but performance-based bonuses are common.
Termination/severance in Hungary
Employers can set a probationary period in the employment contract. Local labor laws do not specify the maximum probationary period; however, it must be reasonable given the circumstances of the job.
When terminating employment, either party must provide a notice period of at least 30 days but no more than 1 year. The 30-day notice period must be extended by the following amounts:
- 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
Employees are entitled to severance pay if the employer terminates the employment by ordinary termination (as a result of the employee’s ability or behavior in relation to the employment relationship or the employer’s operations or economic reasons). The following payments apply:
- 1 month for up to 3 years of employment
- 2 months for up to 5 years of employment
- 3 months for up to 10 years of employment
- 4 months for up to 15 years of employment
- 5 months for up to 20 years of employment
- 6 months for up to 25 years of employment
The amount of severance pay is increased by 3 months if the employee is terminated within 5 years of their eligibility for old age pension or old age pension with age allowance.
Paying taxes in Hungary
The employer’s statutory social security contribution is 13% of gross salary. The employee’s contribution is 18.5% to 10% for pension contribution, 7% for social security, and 1.5% for unemployment contribution.
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