Navigating Hungary's complex labor market is a significant challenge for businesses seeking to expand while remaining compliant with local laws. An employer of record (EOR) provides a streamlined solution, enabling you to hire employees in Hungary without establishing a local legal entity. Using SaaS EOR services can significantly simplify the hiring process by providing comprehensive support for business expansion. An EOR acts as the legal employer, managing payroll, benefits, taxes, and HR compliance while you direct your employee's day-to-day work.

As a global EOR expert, G-P manages payroll, employment contract best practices, statutory and market norm benefits, and other administrative services. You'll have peace of mind knowing your Hungarian hiring and employment is handled by a team of dedicated experts. G-P provides the resources companies need to quickly hire global talent in 180+ countries.

Hiring in Hungary

The Hungarian Labour Code provides strong protections for employees, with specific rules governing employment contracts, termination, and benefits. Navigating these regulations requires local expertise to ensure compliance and avoid potential penalties. An employer of record (EOR) in Hungary provides a streamlined solution, enabling you to hire talent compliantly without establishing a local legal entity.

When negotiating employment terms with a professional in Hungary, it is useful to keep the following statutory and market-norm considerations in mind.

Simplify hiring in Hungary with an employer of record

An employer of record simplifies international expansion by managing the complexities of local employment laws, payroll, and HR, allowing you to focus on your core business. Here’s how an EOR can benefit your hiring in Hungary:

  • Ensured compliance: Navigate Hungary’s stringent labor laws, including employment contracts, termination rules, and benefits, with expert guidance.

  • Rapid market entry: Hire employees in Hungary quickly without the need to establish a local legal entity, significantly accelerating your expansion timeline.

  • Streamlined payroll and taxes: An EOR handles all aspects of payroll, including social security contributions, personal income tax, and other statutory deductions, ensuring accuracy and compliance.

  • Comprehensive HR support: From drafting compliant employment contracts in Hungarian Forint (HUF) to managing leave entitlements and sick pay, an EOR provides full HR administrative support.

  • Risk mitigation: Reduce your exposure to legal and financial risks associated with non-compliance in a foreign market.

  • Access to local expertise: Benefit from in-depth knowledge of Hungarian employment practices, including market-norm benefits and termination requirements.

Employment contracts in Hungary

In Hungary, employment contracts are indefinite by default. Fixed-term contracts are permissible but cannot exceed a total of 5 years, including extensions. It is a legal requirement to provide a written employment contract in Hungarian. The contract must specify the employee's base salary and job title at a minimum, but best practice is to also include comprehensive terms covering compensation, benefits, duties, working hours, and termination requirements.

An offer letter and employment contract should always state the salary and any compensation amounts in Hungarian Forint (HUF).

An EOR in Hungary helps businesses with compliant employment contracts by providing comprehensive HR administrative support, including drafting compliant employment contracts. This ensures that the contracts adhere to Hungary's stringent labor laws, which require written employment contracts in Hungarian specifying the employee's base salary and job title at a minimum. By leveraging an EOR's local expertise, businesses can navigate these regulations and avoid potential penalties.

Working hours and overtime in Hungary

A standard workweek is 40 hours, typically 8 hours per day, 5 days a week. The annual limit for overtime is 250 hours, which can be increased to 300 hours under a collective bargaining agreement. Overtime worked on a regular workday is compensated with a 50% wage supplement. For overtime performed on a weekly rest day or public holiday, the supplement is 100%. Alternatively, an employee may receive paid time off in lieu of the supplement.

An EOR in Hungary assists companies with working hour compliance by managing the complexities of public holidays, annual leave, sick leave, and parental leave in accordance with the Hungarian Labour Code. This includes ensuring accurate payment for public holidays, correctly calculating and tracking increasing annual leave entitlements based on age and number of children, managing the 15-day employer-paid sick leave period and subsequent state benefits, and overseeing the various family leave provisions like maternity, paternity, and parental leave benefits and entitlements. By handling these administrative tasks, an EOR ensures that businesses remain compliant with local regulations, preventing potential penalties and allowing them to focus on their core operations.

Public holidays in Hungary

Hungary observes 11 public holidays where employees are entitled to a paid day off:

  • New Year's Day (January 1)

  • 1848 Revolution Day (March 15)

  • Good Friday

  • Easter Monday

  • Labor Day (May 1)

  • Whit Monday (Pentecost Monday)

  • St. Stephen's Day (August 20)

  • 1956 Revolution Day (October 23)

  • All Saints' Day (November 1)

  • Christmas Day (December 25)

  • Second Day of Christmas (December 26)

Annual leave in Hungary

Employees are entitled to a minimum of 20 days of basic annual leave. This allowance increases with age, reaching a maximum of 30 days:

  • Base entitlement: 20 days

  • From age 25: 21 days

  • From age 45: 30 days (accruing by 1 additional day every 2-3 years between ages 25 and 45)

Parents receive supplementary leave days for children under 16:

  • 1 child: 2 additional days

  • 2 children: 4 additional days

  • More than 2 children: 7 additional days

Parents of a child with special needs receive an additional 2 days of leave per child.

Sick leave in Hungary

Employees are entitled to 15 days of sick leave per year paid by the employer at 70% of their absence fee. After the 15th day, the employee receives a sickness benefit (táppénz) from the state health insurance fund. This benefit is generally 50%-60% of the employee's average pay (subject to a cap), with the cost shared between the state and the employer.

Family leave in Hungary

Hungary provides several types of family leave:

  • Maternity leave in Hungary (CSED): Pregnant employees are entitled to 24 weeks of continuous leave, which can begin up to 4 weeks before the estimated due date. The maternity benefit is 100% of the employee's gross daily salary and is exempt from personal income tax.

  • Paternity leave in Hungary: Fathers are entitled to 10 working days of leave, to be taken in up to two installments within the first 2 months of birth or adoption. The first 5 days are paid at 100% of the absence fee, and the subsequent 5 days are paid at 40%.

  • Parental leave benefit in Hungary (GYED): After maternity leave ends, one parent can receive a parental leave benefit until the child turns 2. The benefit is 70% of their prior earnings, capped at 70% of twice the national minimum wage.

  • Parental leave in Hungary: In addition to the above, each parent is entitled to 44 working days of parental leave until their child's 3rd birthday, provided they have at least 1 year of service. This leave is compensated at 10% of the absence fee.

Health insurance and supplementary benefits in Hungary

Hungary has a public healthcare system funded through social security contributions, which provides medical coverage to all residents. While the public system is comprehensive, offering private health insurance is a common supplementary benefit used by employers to attract and retain top talent.

An EOR in Hungary can assist businesses with health insurance and supplementary benefits by helping them offer private health insurance, a common perk used to attract and retain top talent. While Hungary provides public healthcare through social security contributions, an EOR's expertise ensures that these supplementary benefits are managed efficiently and in compliance with local practices.

Termination and severance in Hungary

A probationary period may be included in the employment contract. The maximum statutory length is 3 months, which can only be extended to 6 months under a collective agreement.

The minimum notice period for termination by either party is 30 days. The employer's notice period increases with the employee's length of service:

  • After 3 years: 35 days

  • After 5 years: 45 days

  • After 8 years: 50 days

  • After 10 years: 55 days

  • After 15 years: 60 days

  • After 18 years: 70 days

  • After 20 years: 90 days

Employees are entitled to statutory severance pay if terminated by the employer for operational reasons or reasons related to the employee's ability. The entitlement begins after 3 years of employment:

  • 3-4 years of employment: 1 month's pay

  • 5-9 years of employment: 2 months' pay

  • 10-14 years of employment: 3 months' pay

  • 15-19 years of employment: 4 months' pay

  • 20-24 years of employment: 5 months' pay

  • 25+ years of employment: 6 months' pay

Severance pay is increased by an additional 1-3 months if the employee is terminated within 5 years of reaching retirement age.

Taxes and social security in Hungary

Navigating payroll in Hungary involves managing the following key contributions:

  • Personal Income Tax in Hungary (SZJA): A flat rate of 15% is deducted from the employee's gross salary.

  • Social Security Contribution in Hungary (Employee): Employees contribute a single, consolidated 18.5% of their gross salary.

  • Social Contribution Tax in Hungary (Employer): Employers contribute 13% of the employee's gross salary.

Choosing the right EOR in Hungary

When selecting an employer of record in Hungary, consider the following key factors to ensure a compliant and efficient global expansion:

  • Compliance expertise: The EOR should possess in-depth knowledge of Hungarian labor laws, including the Labour Code (Act I of 2012) and local tax regulations. This ensures that all employment practices, from contracts to termination, are compliant.

  • Comprehensive service offering: A robust EOR partner should manage all aspects of employment, including payroll processing, tax remittances, benefits administration, leave management, and offboarding procedures.

  • Local market understanding: Look for an EOR with a strong local presence or proven experience in Hungary, as this often indicates a better understanding of market norms and cultural nuances that can impact employee relations.

  • Scalability and flexibility: The EOR should be able to accommodate your hiring needs, whether you'rehiring a single employee or a global team, and adapt to potential changes in your global expansion strategy.

  • Technology and integration: A modern, AI-powered platform that simplifies onboarding, management, and payment of employees, and integrates with existing HCM, PEO, or payroll systems, can significantly streamline operations.

  • Transparency and communication: Choose an EOR that offers clear communication channels, transparent pricing, and regular updates on compliance changes.

  • Reputation and references: Research the EOR's reputation,client testimonials, and industry recognition to ensure they have a track record of reliability and success.

  • Data security and compliance. Ensure your EOR follows strictdata security protocols like GDPR. This is critical for protecting sensitive employee information and maintaining compliance.

Why G-P EOR for global hiring in Hungary?

G-P EOR is the recognized leader in global employment, ranked No. 1 in every industry analyst report. G-P’s global employment platform delivers everything companies of all sizes need to manage the full employee lifecycle with its trusted Global HR Agent, G-P Gia, and AI-powered Employer of Record (EOR) and Contractor products. G-P supports teams in 180+ countries with more than a decade of global employment experience, the largest team of in-country HR, legal, and compliance experts, and its unmatched proprietary knowledge base.

G-P is also thepreferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.

Request a proposal today to start hiring in Hungary today.