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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 governed by different national and international laws and regulations, similar to other countries in 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.
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 postgraduate talent with a high level of English proficiency.
With a solid level of technical education and English proficiency, hiring Hungarian employees therefore comes with a great price-to-quality match.
Native Teams’ Employer of Record services help you hire and pay your team through an owned infrastructure in Hungary. We handle everything from legal employment to ensuring your team is paid and managed compliantly and with care, without any third parties involved.
Hire your first Hungarian employee with Native Teams.
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.
Employment in Hungary is primarily governed by the Labour Code (Act I of 2012). It establishes the main rules governing the employment relationship, including:
The Labour Code is supplemented by other employment-related legislation. The Equal Treatment Act (Act CXXV of 2003) prohibits discrimination on grounds including gender, race, ethnicity, religion, disability, age and sexual orientation.
Collective agreements may also apply. These are negotiated between employers or employer organisations and trade unions or employee representatives and can establish additional industry- or company-specific rules alongside those contained in the Labour Code.
Hungarian employment is also subject to regulations covering areas such as health and safety, data protection and the employment of foreign nationals, with data protection requirements aligned with the GDPR.
Employment contracts in Hungary can be concluded for either an indefinite period or a fixed term.
Indefinite period employment contracts
An indefinite period employment contract has no specified end date. This applies where the parties do not agree on a fixed term or explicitly state that the employment relationship is for an indefinite period.
The employment continues until either the employer or employee terminates it in accordance with the applicable contractual or legal requirements.
If the employment contract does not specify a commencement date, employment is considered to begin on the day following the signing of the contract.
Fixed-term employment contracts
Fixed-term employment contracts are concluded for a specified period and are generally limited to a maximum duration of five years. Specific rules apply to extensions of fixed-term contracts, with certain exceptions applicable to senior executives.
Under Hungarian law, an employment contract must clearly set out the main terms and conditions governing the employment relationship. It should include:
Download a free employment contract for Hungary through Native Teams.
In Hungary, an employment contract must be documented in writing. The employer is responsible for ensuring that the agreed terms and conditions of employment are formally recorded in a written contract.
If the employer fails to provide a written contract, the employment relationship is not automatically invalidated. The contract remains valid unless the employee objects to the lack of written form within 30 days of starting employment.
There is no specified language requirement for the employment contract. However, preparing the contract in Hungarian or bilingually is advisable to ensure that the terms are clear and to reduce the risk of misunderstandings.
The standard working schedule in Hungary is 8 hours per day and 40 hours per week for full-time employment.
Employers and employees may mutually agree to shorter daily or weekly working hours, allowing the working schedule to be adjusted according to the needs and preferences of both parties.
In Hungary, night work is defined as work performed between 10 PM and 6 AM.
Employees working during these hours are entitled to additional compensation. This requirement recognises the potential impact of night work on employees, including disruption to normal sleep patterns and social routines.
Breaks
Employees whose scheduled daily working time exceeds 6 hours are entitled to a break of at least 20 minutes.
If the scheduled working time exceeds 9 hours, employees are entitled to an additional break of at least 25 minutes, bringing the minimum total break time to 45 minutes.
The employment contract or an applicable collective agreement may provide for longer breaks, up to a maximum of 60 minutes.
Daily rest
Employees must generally receive at least 11 consecutive hours of rest between finishing work and starting work the following day.
The minimum daily rest period may be reduced to 8 hours for employees:
Weekly rest
Employees are generally entitled to two rest days per week, with at least one Sunday provided as a rest day each month.
Instead of providing two weekly rest days, employers may provide an uninterrupted rest period of at least 48 hours, which must include one full calendar day.
The weekly uninterrupted rest period must not be shorter than 35 hours.
Employees in Hungary are entitled to a basic annual leave allowance of 20 working days.
Additional leave is granted based on the employee’s age rather than length of service, with the entitlement increasing by up to 10 additional days.
Annual leave is generally taken with the employer’s approval. However, 7 days of annual leave must be allocated according to the employee’s request.
Unless otherwise agreed in the employment contract, the employer must schedule annual leave so that the employee receives a continuous period of 14 days of leave within the calendar year.
The mandatory minimum wage in Hungary is set annually by the government in consultation with the National Economic and Social Council.
Employers must pay employees at least the applicable minimum wage and cannot offer compensation below this threshold.
For full-time employees whose pay is based on performance, performance standards must be structured so that meeting the required standards results in compensation at or above the mandatory minimum wage.
Salary adjustments required to reflect changes to the mandatory minimum wage are applied automatically.
To calculate the salary and taxes in Hungary, click here.
Employees in Hungary are entitled to 15 working days of sick leave per year, paid by the employer at 70% of the absentee fee.
The absentee fee is calculated based on the employee’s base salary, performance-based compensation and wage supplements received during the previous six months.
If the employee remains unable to work for more than 15 days, they may be entitled to statutory sickness benefits from the social security authorities. Under the current social insurance system, sickness benefits may be provided for a maximum period of one year.
Employees must provide a doctor’s certificate confirming their illness and inability to work.
Sickness compensation
During an employee’s period of incapacity, two forms of compensation may apply:
Employees in Hungary are generally entitled to four months of parental leave following the birth or adoption of a child.
Parental leave is an individual right available to both men and women and is intended to allow employees to care for their child.
The entitlement applies until the child reaches a specified age of up to eight years, as determined by the applicable national rules.
Paternity leave
Fathers in Hungary are entitled to 10 working days of paternity leave following the birth of a child. The first 5 working days are paid at 100% of the employee’s absence pay, while the remaining 5 working days are paid at 40%.
Paternity leave must be taken within four months of the child’s birth and may be divided into a maximum of two instalments, according to the days requested by the father. The same entitlement applies if the child is stillborn or dies shortly after birth.
The employer initially pays the employee and may request reimbursement from the Hungarian State Treasury for both five-day periods. Reimbursement requests must be submitted electronically to the appropriate regional office and may be made quarterly.
Maternity leave
Mothers are entitled to 24 consecutive weeks of maternity leave, with at least two weeks being mandatory. Unless otherwise agreed, maternity leave must begin no later than four weeks before the expected date of birth.
During maternity leave, eligible employees may receive the infant care allowance (CSED) from the Hungarian State Treasury for up to 168 days. The allowance is generally equal to 70% of average daily earnings and requires at least 365 days of insurance coverage during the two years before birth.
After maternity leave, parents may also qualify for GYED (Child Care Fee) until the child turns two and GYES (Child Home Care Allowance) until the child turns three.
Employees are protected from termination during maternity, paternity and parental leave.
Under the Hungarian Labour Code, an employment relationship may only be terminated in the circumstances and according to the procedures established by law.
An employment relationship may be terminated by:
Employment may also end automatically by operation of law in certain circumstances, including:
As these circumstances are established by the Labour Code, an employment contract cannot provide for additional situations in which the employee would be automatically dismissed.
Employers in Hungary must generally provide a valid reason when terminating an employment relationship by ordinary notice.
The employer is not required to justify the dismissal where the employee:
Where justification is required, acceptable grounds for dismissal may relate to:
If an employer terminates employment without lawful grounds where justification is required, the termination may be considered unlawful, and the employer may be liable to pay damages.
For fixed-term employment contracts, the grounds for termination by notice are more limited than for indefinite-term contracts, and both parties must provide justification when terminating the employment relationship.
The statutory notice period in Hungary is at least 30 days. A longer notice period may be agreed in the employment contract, but it generally cannot exceed six months, unless the employee is a senior executive.
Where employment is terminated by the employer through ordinary notice, the 30-day notice period increases according to the employee’s length of service with that employer:
If an employee is dismissed by ordinary notice, they must be released from their work duties for at least half of the notice period, commonly referred to as garden leave.
The provided information does not specify the procedure or time limits for challenging a dismissal.
Two types of cash unemployment benefits are available to eligible jobseekers in Hungary:
To qualify for jobseeker’s allowance, an individual must generally:
Eligibility is not limited to former employees and may also apply to individuals who previously worked as entrepreneurs.
Jobseekers may also be entitled to reimbursement of certain expenses and access to active labour market support, including labour market consultancy, job mediation, assistance with becoming self-employed and training.
Employees in Hungary may be entitled to severance pay after at least three years of employment with the same employer. Entitlement applies where the employer terminates the employment relationship or where the employer ceases to exist without a legal successor.
After three years of employment, severance pay amounts to one month’s absence fee. The amount increases according to the employee’s length of service, up to a maximum of six months’ absence fee after 25 years of employment.
Severance pay is generally due where the termination is based on operational grounds or medical reasons. Employees are not entitled to severance pay where dismissal is related to non-performance, disciplinary reasons or conduct connected with the employment relationship.
An employee is also not entitled to severance pay if they are considered a pensioner at the time the notice of dismissal is given or when the employer ceases to exist without a legal successor.
The probationary period in Hungary may last for a maximum of three months.
If the employment contract initially provides for a probationary period shorter than three months, the employer and employee may agree to extend it once. However, the total probationary period, including the extension, cannot exceed the three-month maximum.
During the probationary period, either the employer or the employee may terminate the employment relationship with immediate effect.
Neither party is required to provide a reason for the termination, allowing both sides to end the employment relationship if they determine that the arrangement is unsuitable during the probationary period.
Intellectual property created by an employee within the scope of their employment duties generally belongs to the employer, unless otherwise agreed in the employment contract.
This may include software, designs, inventions, technical innovations and other creative works produced during the course of employment, under the employer’s direction or as part of the employee’s assigned duties.
While the employer generally acquires the economic rights to such intellectual property, employees retain their moral rights, including the right to be recognised as the author. These rights cannot be transferred to the employer.
If an employee creates work that goes beyond their anticipated employment duties, they may be entitled to additional remuneration. The applicable terms should be clearly established in the employment contract.
Employee data privacy in Hungary is governed by EU data protection regulations, Act CXII of 2011 on the Right of Informational Self-Determination and on the Freedom of Information, and the Hungarian Labour Code (Act I of 2012).
Employers must ensure that employees’ personal data is collected and processed fairly, transparently and for specific employment-related purposes, such as payroll administration or performance evaluations.
The collection and processing of employee data must also be proportionate and secure, and personal data should only be retained for as long as necessary for the relevant purpose.
Employees have rights over their personal data, including the right to access and correct their information and request its erasure.
The Hungarian Labour Code imposes non-compete obligations during employment to protect the employer’s lawful economic interests. These restrictions may also continue after the employment relationship ends if the employer and employee enter into a separate non-compete agreement.
Post-termination non-compete agreements
Employers and employees may agree to restrict certain competitive activities for up to two years after termination of employment. The restrictions may include activities that could harm the employer’s lawful economic interests, such as working for or holding an ownership interest in a competing business.
For a post-termination non-compete agreement to be valid, it must be agreed in advance and provide compensation to the employee. The compensation must amount to at least one-third of the employee’s base salary for the duration of the non-compete period.
Under the Hungarian Labour Code, employees are required to record their working hours. However, the legislation does not provide specific working-time recording rules for employees working remotely.
The Labour Code defines telework, but provides limited guidance on home office work, meaning the two forms of remote work are not regulated in the same level of detail.
Telework requires an agreement between the employer and employee and is subject to specific health and safety requirements. By contrast, home office work does not require such an agreement and is not subject to additional health and safety measures under the framework described.
When an employee works remotely or from a separate location, the employer is generally not required to provide the equipment, resources or workspace necessary to perform the work, unless otherwise agreed in the employment contract.
Employer’s duties
Unless the parties agree otherwise, employees are responsible for providing the tools, equipment and working environment needed to perform their duties remotely.
Employee entitlements
In the absence of a specific agreement to the contrary, remote employees are entitled to flexible working arrangements. This may include flexibility in relation to working hours, working methods and other conditions connected with performing work outside the employer’s traditional workplace.
The general provisions of the Hungarian Labour Code governing employment relationships continue to apply to remote work arrangements.
Employers in Hungary have a responsibility to ensure that remote working environments meet applicable health and safety standards.
This includes assessing the employee’s home workspace and conducting a risk assessment covering factors such as ergonomics, lighting, ventilation, prolonged sitting and repetitive strain. Where necessary, employers should also provide appropriate equipment or ergonomic furniture.
Employees working remotely should receive guidance and training on health and safety, including:
Health and safety training should be adapted to the specific risks associated with working from home.
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.
Native Teams helps you employ and pay your team in Hungary directly through owned entities and infrastructure.
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