Payroll & Employment Guide Hungary

In Hungary, employment contracts must be concluded in writing and should clearly outline essential terms such as job title, duties, place of work, salary, working hours, and the start date. While contracts can be either fixed-term or open-ended, they must comply with the Hungarian Labour Code, ensuring lawful employment practices and protection of employee rights.

Employers are required to provide employees with written information on additional terms, such as notice periods, probationary terms, and leave entitlements, within seven days of the employment start date. Contracts must also account for rules regarding overtime, health and safety, and non-discrimination. Any changes to the agreement must be mutually agreed upon and recorded in writing.

Notice periods: Vary based on length of service and contract type.

Termination of employment: Can occur through notice, mutual agreement, or dismissal with cause, in accordance with legal procedures.

In Hungary, employee benefits include both mandatory entitlements and a wide range of supplementary perks offered by employers to attract and retain talent. Legally required benefits include contributions to Social Security, which covers healthcare, pensions, unemployment insurance, and parental leave support. In addition to these statutory provisions, many companies offer extra benefits to enhance employee well-being and promote a healthy work-life balance.

• Mandatory benefits: Social security contributions (healthcare, pension, unemployment), paid annual leave, sick leave, and parental leave.
• Common perks: Flexible working hours, development programmes, health and wellness initiatives, transportation allowances.
• Leave policies: Paid annual leave, national holidays, sick leave, parental leave.

Hungary has a structured tax system that applies to both individuals and businesses. Employers are responsible for withholding the Personal Income Tax (PIT) and employee social security contributions, which cover health insurance and pensions. Additionally, employers are required to pay a social contribution tax and a vocational training contribution.

Various tax allowances, such as family tax benefits and personal deductions, can reduce taxable income. Understanding these obligations is essential for ensuring compliance and managing overall employment costs efficiently.

Personal income tax rate: 15%

VAT: 27%

Tax allowances: Family tax benefits and personal deductions

Additional tax reliefs: PIT Allowance for First-Time Married Couples, PIT Allowance for Individuals Under Age 25, PIT Allowance for Mothers Under Age 30, Student Loan Debt Cancellation, Voluntary Mutual Pension Savings for Housing and more.

In Hungary, employers are required to process and pay salaries on a monthly basis, unless otherwise agreed in the employment contract. Payroll must include base salary along with any applicable allowances such as meal or travel benefits, overtime pay, or shift premiums. Employers must withhold 15% personal income tax and 18.5% social security contributions from employees’ wages, while also covering employer-side contributions.

Salary payment deadline: Typically by the 10th of the following month.

Taxes and contributions payment deadline: By the 12th of the following month.

Payroll declarations deadline: By 20 May of the following year.

Payroll currency: HUF, EUR

Hungarian employment law is governed by the Labour Code (Act I of 2012), which encompasses contracts, working conditions, terminations, protections against discrimination, and employee benefits. It is supplemented by collective agreements, the Equal Treatment Act, and regulations on health, safety, data protection (aligned with GDPR), and foreign employment. The law mandates written employment contracts, outlines working hours, and provides guidelines for wages, bonuses, and severance pay. It also prohibits discrimination and ensures equal treatment. Employers must comply with occupational health and safety regulations to maintain a safe workplace.

Total employment cost:

• Employer’s social security contributions: 13%
• Employer’s health insurance costs: 13%
• Employees’ social security contributions: 18.5%
• Employees’ health insurance costs: 7%

Minimum wage: HUF 290,800 gross per month

Probation period: Up to three months

In Hungary, foreign workers need a work permit and a residency status to work legally. The employment of foreigners is regulated by immigration and labour laws to ensure compliance with legal requirements.

For digital nomads, Hungary offers the White Card, a digital nomad visa that allows remote work for non-EU/EEA nationals. It requires proof of employment with a foreign company, a minimum income of EUR 3,000/month, health insurance, and suitable accommodation. The White Card is valid for one year and can be renewed for an additional year.

Types of permits: Hungary White Card, Digital Nomad Visa

Process length: Typically 21-30 days

Process cost: White Card costs 110 EUR, additional costs may apply.

Using Employer of Record (EOR) services in Hungary allows you to hire workers legally without setting up a local company. The EOR acts as the legal employer on your behalf and handles all employment-related responsibilities, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

PEO services in Hungary provide HR and administrative assistance while you retain full legal employer status. These services are ideal for companies with an existing legal entity in the country that require support in managing day-to-day workforce operations, such as:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator designed explicitly for Hungary’s labour laws. This tool helps you easily estimate gross and net salaries, required deductions, and social insurance contributions for both employers and employees in Hungary.