What should an employment contract in Hungary include?
An employment contract in Hungary should outline the information listed below:
- The name and contact details of both employer and employee.
- The employee’s job title and responsibilities.
- The working hours and days that the employee must cover.
- The salary amount or wages and any bonuses that will be paid to the employee.
- Employment termination information, including the required notice period from the employee and employer.
- Non-disclosure agreement that the employee should sign.
It’s important that both parties carefully go through all the terms and conditions before signing the contract.
What types of employment contracts exist in Hungary?
Employment contracts in Hungary can be divided into a few categories:
1. Employee contract
In Hungary’s labor market, there are two types of employment contracts:
- Indefinite-term Contract: This is a standard employment contract with no specified end date. It provides both the employer and employee with greater flexibility and typically requires a notice period for termination.
- Fixed-term Contract: This type of contract is used for a specific period or project. It has a predetermined start and end date, and the employment relationship automatically terminates upon the contract’s expiration. The fixed-term contract can’t last longer than five years.
2. Assignment contract
The assignment contract refers to an agreement in which an individual operates as a sole trader and submits invoices to the company for their services. These individuals are called “forced sole traders” (kényszer vállalkozók). Employers in Hungary prefer this contractual arrangement as it offers cost savings since taxes and social security contributions are high in the country. However, the Hungarian Tax Office (NAV) has recently implemented stricter regulations for assignment contracts in response to instances of misuse and exploitation.
3. Outsourcing contract
This contract is utilized when an employee is temporarily assigned to work for a user company through a temporary work agency. The agency takes the role of a formal employer, and the employee works under the supervision and direction of the user company.
How to hire employees in Hungary?
For businesses that want to hire employees in Hungary, they will be required to establish legal entities in the country. Moreover, they must register their business with the Hungarian government and get a business registration number. It’s also important to adhere to Hungarian labor laws and regulations regarding minimum wage, working hours, and benefits packages.
You can easily streamline the hiring process by using our Employer of Record solution. Our fully compliant services will handle payroll management, administration fees, and compliance with local laws. As a business owner, you’ll maintain full control over the daily work of your employees.