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.
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Get an overview of what you need to know when hiring in Hungary below.
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%.
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.
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.
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.
Employees in Hungary 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 is increased by one day every three years during an employee’s twenties, and every two years during their thirties and forties.
In Hungary, employees are entitled to 15 days of sick leave per year, paid by their employer at a rate of 70% of their salary.
From the 16th day of leave, employees are paid between 50% and 60% of their salaries, depending on their term of service.
A third of the payment is paid by the employer and two thirds are paid by the National Health Insurance Fund.
Employees in Hungary are entitled to 24 weeks of maternity leave. For the first six months, they’re entitled to a Pregnancy and Confinement Benefit (CSED) at a rate of 70% of their salary. This is paid by the National Health Insurance Fund of Hungary (NEAK).
Employees are also entitled to five days of paid paternity leave, which must be taken within two months after the birth of the child.
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.
Employees in Hungary all pay a flat rate income tax of 15%. Employees also pay 18.5% in social security contributions.
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.
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.