Hiring guide in Hungary

What should I know about hiring in Hungary?

Hiring new employees from Hungary can help your business reach the next level, but there are a few important things to consider before you start hiring talent from this Eastern European country.

First, you should know that Hungarian employment is legislated by different national and international laws and regulations, similar to other countries from the European Union.

A written employment contract must be used for both employees and employers in order to commence an employment relationship. These contracts must include details such as the name of the position, salary, location of work and working hours.

With the rise of remote work, employers have to ensure their employment contracts will be compliant with Hungarian legislation.

Why is Hungary a good choice for finding remote employees?

Hungary is a country with outstanding tech talent, diverse opportunities for start-ups and a welcoming business environment.

Looking at the global picture, we can see that individuals and companies are swiftly adopting the concept of working remotely, particularly in the digital and technology industries.

Moreover, Hungary is also one of the most educated countries. They pride themselves on a robust educational system and a literacy rate of over 99%, so it can be a great choice for finding post-graduate talent with a high level of English proficiency.

When it comes to wages, the average wage in Hungary is approximately 60% less than the average in other countries of the European Union. With a solid level of technical education and English proficiency, hiring Hungarian employees, therefore, comes with a great price-quality match.

How can Native Teams help you hire in Hungary?

If you want to start hiring people from Hungary, you must either own a legal entity in the country or use a global employment solutions provider. Native Teams can help you employ your new team members through our Employer of Record services and as well as handle payroll, taxes, benefits and overall compliance of your Hungarian team.

Hire your first Hungarian employee with Native Teams.

Legal requirements for hiring in Hungary

Staying aligned with local labour laws and regulations is crucial to achieving a fully compliant hiring process. In this section, we’ll dive deeper into Hungary’s legal landscape.

Legal framework

Types of employment contracts

Employment contracts can either be for an indefinite period or for a fixed term. Indefinite contracts do not have a set end date, whereas fixed-term contracts are capped at a maximum duration of 5 years, with particular rules governing extensions and special exceptions for senior executives.

An indefinite period employment contract is created when the parties do not set a specific duration for the employment, or they explicitly declare that the contract is for an “indefinite period.” This contract remains in effect until either the employer or employee chooses to end it, following the procedures specified in the contract or by law.

If the contract does not explicitly state a start date for the employment, it is assumed that the employment begins the day after the contract is signed, ensuring clarity about when the employment relationship starts.

Content of an employment contract

Under Hungarian law, an employment contract must include several essential details. These details include the employer and employee’s names and contact information, a clear description of the employee’s job title or role, and the employee’s base salary along with the pay frequency (such as weekly, bi-weekly, or monthly). 

The contract must also outline the terms of any additional compensation or benefits, like bonuses, health insurance, or retirement plans. It should specify the employee’s work schedule and expected hours of work, the duration of the employment (whether fixed term or indefinite), and any probationary period, if applicable, along with the terms associated with it. 

Additionally, the contract must detail the conditions under which it can be terminated by either party, including notice periods and severance arrangements, and include any confidentiality or non-compete clauses, if relevant. The process for addressing grievances or disputes should be covered, along with any applicable legal or regulatory compliance requirements.

Download a free employment contract for Hungary through Native Teams.

Oral, written or electronic employment contracts

In Hungary, a written employment contract is mandatory. The employer has to ensure that all terms and conditions of the employment are clearly documented in writing.

However, if the employer fails to provide a written contract, the agreement does not become invalid immediately. The contract remains legally binding unless the employee objects within 30 days of starting their employment. Therefore, while a written contract is essential for clarity and legal protection, its absence does not automatically nullify the contract unless the employee challenges it within the specified period.

Working hours 

The typical maximum duration for full-time employment is 8 hours per day, with a standard work week usually limited to 40 hours.

However, these regulations do allow for some flexibility. Employers and employees can mutually agree to reduce the number of working hours per day or per week, enabling adjustments to the standard work schedule to suit the specific needs and preferences of both parties.

Night work

Night work is defined as any employment carried out between 10 PM and 6 AM.

This period is considered night work because of its potential effects on employees’ well-being, including disruptions to their natural sleep cycles and social routines. To mitigate these challenges and ensure fair treatment, Hungarian labour regulations require employers to provide extra compensation for employees who work during these hours.

Breaks and types of leaves

Employees in Hungary are entitled to a break if their daily working hours exceed six hours, with a minimum of 20 minutes. If the working day extends beyond nine hours, an additional break of at least 25 minutes must be provided. The duration of these breaks can be extended up to a total of 60 minutes. 

There’s also a minimum of 11 hours of rest between the end of one working day and the start of the next. However, a reduced rest period of at least 8 hours is required for employees who work multiple shifts in a day, follow a continuous work schedule, work in rotating shifts, or engage in seasonal work.

Employees are entitled to an uninterrupted rest period of at least 35 hours per week. This typically includes two rest days, with at least one Sunday off each month. Alternatively, employers may provide a continuous rest period of at least 48 hours per week, which must include a full calendar day.

Annual leave

The standard holiday entitlement is 20 working days. This entitlement increases with the employee’s age, rather than their length of service, by up to 10 additional days. Employees can use their annual leave with the employer’s approval, but 7 days must be scheduled according to the employee’s request.

Public holidays

In Hungary, public holidays include New Year’s Day on January 1st, Revolution Day on March 15th, Good Friday on March 29th, and Easter Monday on April 1st. Labour Day is celebrated on May 1st, followed by Whit Monday on May 20th. Saint Stephen’s Day falls on August 20th, while Republic Day is observed on October 23rd. All Saints’ Day is on November 1st, and the Christmas holidays include Christmas Day on December 25th and the Second Day of Christmas on December 26th.

Salary

For 2024, the gross minimum wage for full-time employees is set at approximately EUR 697. Employers are legally required to pay at least this amount and cannot offer wages below this threshold.

Additionally, performance standards for full-time employees must be set so that meeting them ensures compensation at or above the mandatory minimum wage. Salary adjustments in line with the minimum wage are applied automatically.

To calculate the salary and taxes in Hungary, click here.

Sick leave

Employees in Hungary are entitled to 15 workdays of sick leave per year, during which they are paid by their employer. During this leave, employees receive 70% of what is known as the absentee fee, which is calculated based on their base salary, along with any performance-based compensation and wage supplements earned over the last six months.

If sick leave extends beyond 15 days, employees are entitled to receive support from social security authorities. Under the current social insurance system, the maximum period for sick leave is one year. Employees must provide a doctor’s certificate to cover the duration of their illness.

Parental leave

Both male and female employees are entitled to parental leave upon the birth or adoption of a child. The parental leave lasts 4 months and can be used until the child turns 8 years old.

Paternity and maternity leave

Maternity leave in Hungry lasts 24 weeks or approximately 6 months, while paternity leave is given for 5 days. For twins, the paternity leave is extended to 7 days. The father can use these additional vacation days from the birth of the child until the second calendar month. In addition, this type of leave can be granted to the father in cases when the child is stillborn or passes shortly after birth.

Methods of employment termination

In Hungary, there are several ways through which an employment contract can be terminated. These include mutual agreement, ordinary dismissal, dismissal without notice, and resignation. However, the employee can’t be automatically dismissed from the employment contract.

Ordinary dismissal by the employer

Under this employment termination method, the employer must provide valid reasons unless the employee has an executive role or has reached a retirement age. In cases of termination notice, if the employer doesn’t provide reasons, they might have to pay charges.

Notice period

The notice period is typically set at 30 days, but it can be extended depending on the years of service. For instance, It will be extended by 5 days after 3 years in service, 15 days after 5 years, 20 days after 8 years, 25 days after 10 years, 30 days after 15 years, 40 days after 18 years and 60 days after 20 years of service.

However, the notice period can’t exceed 6 months; the only exception is for senior executives.

Rights and obligations of unemployed individuals

In Hungary, there are 2 types of cash unemployment benefits that can be claimed: jobseeker’s allowance and jobseeker’s assistance before pension. Additionally, jobseekers can receive expense refunds and access various active labour market tools, such as labour market consultancy, mediation, support for becoming self-employed, and training opportunities.

The jobseeker’s allowance is available to anyone seeking employment, whether previously an employee or entrepreneur. To qualify, an individual must have accumulated at least 360 days of entitlement within the 5 years before becoming unemployed, must not be receiving social insurance benefits, and must be unable to find a suitable job through the relevant job centre.

Severance pay

Severance pay is only applicable if an employee has been working for the same employer for at least 3 years at the time of receiving the notice of dismissal or when the employer is terminated without succession. 

In such cases, the employee is entitled to 1 month’s absence fee as severance pay. The amount of severance pay increases with the length of service, reaching up to a maximum of 6 months’ absence fee after 25 years of employment. However, severance pay is only provided if the termination is due to operational reasons or medical grounds.

If an employee is dismissed for non-performance or disciplinary reasons, they are not entitled to severance pay. Additionally, severance pay is not granted if the employee is recognised as a pensioner at the time of dismissal or when the employer is terminated without succession, or if the dismissal is related to the employee’s behaviour in connection with the employment relationship or for reasons other than health-related issues.

Probationary period

The probationary period in Hungary is capped at 3 months from the beginning of the employment relationship. 

However, if a collective bargaining agreement is in effect, the probationary period can be extended up to 6 months. It’s crucial to understand that these maximum durations, once set, can’t be extended further. Any attempt to prolong the probationary period beyond 3 or 6 months would be considered illegal and, therefore, invalid.

Prohibition of competition

The Labour Code imposes non-competition rules that apply during an employee’s time with the company and can extend beyond the end of their employment. These legal restrictions are intended to protect the employer’s economic interests by restricting the employees from participating in competing activities both during and after their employment.

In addition, employers and employees can agree on post-termination non-compete clauses, which may last for up to 2 years after the employment has ended. These clauses can prevent the employee from engaging in activities that could negatively impact the employer’s legitimate economic interests, such as working for or owning a stake in a competing business. 

For such an agreement to be valid, it must be established beforehand and must include compensation amounting to at least one-third of the employee’s base salary during the non-compete period.

Remote working policy

The Labour Code in Hungary requires employees to log their working hours. However, this law doesn’t offer specific instructions for teleworkers or remote employees.

Although the Hungarian Labour Code defines telework, it doesn’t include detailed regulations for home office work. This reveals a broader challenge, as the current legal framework doesn’t adequately distinguish between various forms of remote work.

Responsibilities within a remote work arrangement

When employees work remotely or from a different location, certain obligations and rights come into play. The employer isn’t required to provide the necessary conditions or resources for remote work. Therefore, unless otherwise specified in a contractual agreement, employees are responsible for supplying any tools, equipment, or workspace needed to perform their duties.

Unless a specific agreement states otherwise, employees working remotely are generally entitled to flexible working conditions. This flexibility typically covers work hours, methods, and other conditions relevant to tasks outside a traditional office setting.

Health and safety at home

Employers are responsible for ensuring that remote work environments comply with health and safety standards. This includes evaluating the home workspace and providing necessary equipment and ergonomic furniture if required. Employers should perform a risk assessment of the remote work setup, considering factors like ergonomics, lighting, ventilation, and potential hazards from prolonged sitting or repetitive movements.

Employees working from home should be guided on how to establish an ergonomic workstation, with advice on desk height, chair support, and screen positioning. Encouraging regular breaks and practices to prevent repetitive strain injuries is also important.

Intellectual property rights

The economic rights to any innovations, designs, or software the employee creates during employment typically belong to the employer. 

However, employees retain their moral rights, like the right to be recognised as the author, which are non-transferable and remain with the employee even if the economic rights are given to the employer. Moreover, if the work created goes beyond the employee’s expected duties, they may be eligible for extra compensation, which should be clearly outlined in the employment contract.

Employee data privacy

Employee data privacy is regulated by both EU regulations and local laws in Hungary. According to these laws and regulations, employee personal data must be collected and processed strictly for employment-related purposes, such as payroll management or performance evaluations. Employers are responsible for ensuring that data collection is appropriate and secured.

What are the advantages of hiring employees from Hungary vs other countries?

Hiring employees from Hungary offers several advantages compared to other countries, especially within the context of Central and Eastern Europe (CEE) and the European Union (EU). 

Its central location in Europe makes Hungary a strategic hub for businesses looking to serve both Western and Eastern European markets. It offers excellent connectivity via road, rail, and air, facilitating efficient logistics and supply chain management.

In addition, Hungary has shown consistent economic growth in recent years, making it an attractive destination for businesses. The government has also been actively supporting foreign investment.

Why use Native Teams for hiring in Hungary?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.