Table of Contents

Hungary

Table of Contents

Currency

Hungarian Forint (HUF)

Payroll Frequency

Monthly

Employer Taxes

13%

About Hungary

Nestled amidst Ukraine, Romania, Serbia, Slovakia, Austria, Croatia, and Slovenia, Hungary emerges as a modern nation characterized by a unique urban landscape. Notably, Hungary stands apart from the proliferation of skyscrapers, a distinction attributed to a specific architectural regulation. This regulation enforces a height constraint of 96 meters on buildings within the country, resulting in the absence of towering structures. Noteworthy exceptions to this constraint are the Hungarian Parliament building and St. Stephen’s Basilica, which both attain the prescribed 96-meter height. The 96-meter limitation primarily pertains to non-industrial structures, as constructions intended for industrial utility may exceed this stipulated parameter.

Employment Relationship

• Permanent Employment

According to the Labor Code of Hungary, if the parties to an employment contract do not define the term of the employment relationship, or they define it as an “indefinite,” the contract is concluded for an indefinite duration. These employment term possibilities are available for Hungarian and foreign (EU/Non-EU) nationals. Employees are not obliged to justify the termination of their employment for an indefinite period. They can terminate the contract by giving notice.

• Fixed-Term or Specific-Purpose Contracts

In Hungary, the period of fixed-term employment is determined according to the calendar or by other appropriate means. A fixed-term employment relationship may not exceed 5 years. The 5-year limitation encompasses any renewals of the employment contract, and the beginning of another fixed-term employment relationship concluded within 6 months of the termination of the previous one.  Employees must give justified reasons to terminate a fixed-term contract.

• Temporary Employment Contratcs

Per the Labor Code, temporary employment refers to temporary agency work, which describes a situation where an employee is hired out by a temporary-work agency to a user enterprise for remunerated temporary work, and there is an employment relationship between the worker and the temporary-work agency. The employer’s rights are exercised jointly by the temporary-work agency and by the user enterprise. The duration of an assignment cannot exceed 5 years, including any period of extended assignment and reassignment within 6 months from the time of termination of the previous employment, irrespective of whether the assignment was made by the same or by a different temporary-work agency.

Probationary Period

Per the Labor Code of Hungary, the parties of an employment contract can agree to a probationary period of up to 3 months from the date of commencement of the employment relationship. In the event where a shorter probationary period has been stipulated, the parties can extend it once, as long as it does not exceed 3 months. If the employment contract falls under a collective agreement, probationary period can last up to 6 months. During probationary period, the right of termination without notice can be exercised without reasons by either party.

Working Hours

In Hungary, the daily working time in full-time jobs is eight hours, but based on an agreement between the parties, it may be increased to a maximum of 12 hours for employees working in standby jobs, or who are relatives of the employer or the owner. The scheduled daily working time of an employee may not be under four hours, with the exception of part-time work, and may not exceed 12 hours (24 hours in the case of standby jobs). The weekly working time may not exceed 48 hours (72 hours in the case of standby jobs). In case of remote work, the contracting parties must expressly agree on remote working in their employment contracts. Remote employees work no more than one-third of the total working days in a year in their employers' premises. Employers exercise their control right remotely by using a computer technology device. Employers must provide remote employees with all the information they provide to other employees.   

Holidays / PTO

• Statutory Holidays

The Labor Code lists the following public holidays: New Year's Day – January 1 National Day of Hungary – March 15 Good Friday – date subject to change annually Easter Monday – date subject to change annually Labor Day – May 1 Whit Monday – date subject to change annually State Foundation Day – August 20 National Day – October 23 All Saint's Day – November 1 Christmas Day – December 25 Second Day of Christmas – December 26

• Paid Annual Leave

In Hungary, employees are entitled to paid annual leave based on the time spent at work, comprising vested vacation time and extra vacation time. The amount of vested vacation time is 20 working days. Extra vacation time amount depends on employees' age and the number of children. Seven working days of the vested vacation time in a given year must be allocated in up to two parts, for the time requested by the employee (except the first 3 months of the employment relationship). Leave shall be granted in such a way that an employee is released from their obligation to work and be available at least 14 consecutive days per calendar year. Employees must notify their employers about their intention to take annual leave at least 15 days in advance. Leave can be granted by the employer until March 31 of the year following the year when it was due if the employment began on or after October 1. 

• Sick Leave

In Hungary, employees are entitled to 15 working days of sick leave per calendar year for the duration of time during which the employee is incapacitated to work. Leave due to pregnancy complications and work-related accidents is separate and not included in the sick leave day bank. The employer pays the sick leave benefit for the first 15 working days (60% or 50% of the average daily earnings, taking into account the maximum amount of the sick pay per day). Employees must be registered with social insurance to be eligible for this benefit. If an employee is sick for long-term, social insurance covers benefits after the first 15 days for a maximum of 1 year. The amount of sick pay for a day cannot exceed one-thirtieth of twice the minimum wage, therefore based on the minimum wage of HUF 266,800 (Hungarian forints) effective from December 1, 2023, the daily amount of sick pay cannot exceed HUF 17,786.67. 

• Maternity Leave

In Hungary, mothers are entitled to 24 weeks of maternity leave. Female employees can take 168 calendar days (24 weeks) of paid maternity leave of which maximum 4 weeks can be taken before the child's expected date of birth. The starting date for entitlement to the childcare allowance can be any day in the four weeks preceding the expected date of childbirth, but at the latest on the day of childbirth. The remaining weeks must be used after the birth of the child. This period also applies to mothers who have custody of a child for adoption. If the child receives treatment in an institute for premature infants, the unused portion of the maternity leave may be used after the child has been released from the institute up to the end of the first year following birth. The duration of maternity leave is recognized as time spent at work for social insurance qualification purposes. Maternity benefits are paid in the form of infant care allowance for the duration of maternity leave. The benefit is paid at the rate of 100% of the insured's daily average gross earnings (minimum wage is used in the absence of earnings) in the last 180 days before the expected date of childbirth. Employees must have at least 365 days of coverage in the last 2 years to be eligible for this benefit.

• Paternity Leave

The Hungarian Labor Code stipulates that, upon the birth of his child, a father is entitled to 10 days of time off until the end of the second month from the date of birth or adoption. This leave also applies if the child is stillborn or dies. Employees are also entitled to unpaid leave to take care of young children (until the child reaches the age of 3 years).

Termination of Employment

• Notice Period

In Hungary, employment relationships can be terminated by either employers or employees, and notice is required. Employees may terminate an indefinite employment contract at any time without giving grounds for termination. However, for fixed-term employment contracts, grounds must be given, and termination is allowed only for justified reasons. The notice period begins on the day following the date when dismissal is communicated. The notice period must be at least 30 days, but, in the case of dismissal by the employer, it may increase by up to 60 days, depending on the employee's length of service. 

• Severance Benefits

Employees are entitled to severance pay if they have been working for at least three years for the employer, and the employment relationship is terminated by the employer or upon dissolution of the employer without succession. Severance payment may vary between one and six months of pay, depending on work seniority. The amount of severance pay increases if the employee is within five years of becoming eligible for a pension. Employees are not entitled to severance pay if: They are recognized as a pensioner at the time when the notice of dismissal is delivered or when the employer is terminated without succession. They are dismissed for behavioral reasons, or on grounds other than health reasons.