How to hire and pay EMPLOYEES IN

Hungary

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This guide was last updated on
May 1, 2023
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Before hiring

EMPLOYEES IN
Hungary

Before hiring employees in Hungary, there are a few important things you’ll need to know. Firstly, all employees are required to pay an income tax of 15% no matter their salary bracket. Employees also pay 18.5% in social security contributions. 

In Hungary, probation periods are optional, but they can be included in employment contracts at the agreement of the employer and the employee. They cannot exceed three months.

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

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

At a Glance

CURRENCY

HUF

OFFICIAL LANGUAGE

HUNGARIAN

PAYROLL FREQUENCY

MONTHLY

PUBLIC HOLIDAYS

11

(based on region;
see here
)

EMPLOYER TAXES

19%

of gross salary

13th / 14th SALARY

N/A

Good to know

  • Employees are entitled to a minimum of 20 days of paid vacation per year. Starting at the age of 25, the number of annual vacation days an employee receives increases by one day every three years during their twenties, and every two years during their thirties and forties.
  • Non-compete agreements in Hungary are enforceable for up to two years from contract termination. Employers must provide a minimum level of compensation to the employee; this is generally 50% of the employee's last average salary for each month of the restriction period.
  • Employers terminating an employee must offer a “garden leave” for half of the notice period. During this period, the employee will be exempt from work duties, but is still entitled to their absentee pay.

Employment in

Hungary

Working hours and overtime

Employees in Hungary work eight hours per day and 40 hours per week.

Overtime hours during the week are paid at a rate of 150%. Overtime hours on weekends and bank holidays are paid at a rate of 200%.

Employment contracts


Probationary period

A probation period is optional in Hungary, but it can be included in employment contracts at the agreement of the employer and the employee. It cannot exceed three months.

Pensions
Notice period

Termination of a permanent contract with cause requires a notice period of at least 30 days. This can be extended in proportion to the length of the service, if the termination is carried out by the employer.

Employers terminating an employee can offer a “garden leave” for half of the notice period. During this period, the employee will be exempt from work duties, but is still entitled to their absentee pay.

IP protection and non-compete agreements

Non-compete agreements in Hungary are enforceable for up to two years from the termination of a contract. Employers must provide a minimum level of compensation to the employee. It cannot be less than one-third of the employee’s base wage for the entire period.

Employment cost calculator

Holidays

View a list of recognized public holidays in Hungary here.

View a list of recognized public holidays in Hungary here.

Employer tax

An employer can expect to contribute 17% in social contributions on top of an employee’s salary. This includes 15.5% social contribution tax and 1.5% that goes to the vocational training fund. 

Individual tax

Employees in Hungary all pay a flat rate income tax of 15%. Employees also pay 18.5% in social security contributions.

Termination of employment

In Hungary, both the employee and employer must provide notice of termination in writing that contains a justified reason for dismissal.

Severance pay varies depending on the length of employment.

Start hiring employees in

Hungary

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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