Hungary

Overview

The economy in Hungary has been growing steadily over the past few years due to robust exports and soaring domestic demand. The GDP of the country is $258.4 billion, per capita income is $26,222 along with 2.9% growth rate.

Many critical reforms have been implemented in Hungary in several areas. Licensing procedures in the country have been streamlined, which is further aided by freedom in trading and investment. It reflects in the foreign direct investment (FDI) inflow in the country, which is $1.3 billion.

Currency: Hungarian Forint

Principal language: Hungarian

Government: Parliamentary Representative Democratic Republic

Capital City: Budapest

Major Cities: Debrecen, Miskolc, Szeged, Pécs

Employment Contracts

Under the Labor Code in Hungary, an employment contract must be in writing.

Employers are responsible for creating a written employment contract, and if it not incorporated, employees can challenge the validity of the contract within 30 days from the first day of commencing work.

An employment contract comprises:

  • the remuneration of an employee
  • the job description
  • the place of work
  • probation period, if any
  • the duration of the employment contract - fixed or indefinite term
  • the hours of work
  • the provisions related to conflict of interest and restrictive covenants, and
  • terms and conditions of termination of employment.

When an employer and employee agree to a probation period, the duration cannot be more than 3 months. Also, a trial period agreed in a collective bargaining agreement cannot be more than 6 months.

Work/Time Regulations

Standard work schedule comprises 8 hours per day and 40 hours per week. Work time should not exceed 12 hours per day and 48 hours per week.

If the daily work schedule goes beyond 6 hours, employees are entitled to a minimum of 20 minutes break. If the duration of work is more than 9 hours, the employer must allow an additional 25-minute break to employees.

Employees must get a minimum of 11 hours' rest period after completing daily work and before commencing the next day's work. In the cases of continuous shifts, split shifts, multiple shifts or in seasonal work, workers must get a minimum of 8 hours rest period.

Overtime
Employees are entitled to 50% premium of their regular wages for overtime work, and 100% for working on a rest day.

If employees work overtime on national holidays, they are entitled to a 100% premium besides regular wages

Depending on the requirement, employees may need to perform up to 250 hours of overtime work in a year, which may go up to 30 hours based on the collective agreements.

Leave

Holidays
The Labor Code in Hungary specifies the following 10 national holidays:

  • Jan. 1: New Year's Day
  • May 1: Labor Day
  • Whit Monday
  • Aug. 20: Hungary National Day
  • Aug. 21: Public Holiday
  • Oct. 23: 1956 Revolution Memorial Day
  • Nov. 1: All Saints' Day
  • Dec. 24: Public Holiday
  • Dec. 25-26: Christmas

Workers who are employed for seasonal work may be required to work on national holidays if the nature of business makes it necessary for the employer to be open on national holidays. Holidays are not moved if they fall on a weekend or a Tuesday, Wednesday or Thursday.

Annual Leave
Employees are entitled to 20 days of annual leave. The number of leave may increase with depending on the age of employees (not the seniority) up to 10 additional days.

Also, employees may get additional leaves in certain circumstances mentioned below:

  • employees below 18 years are entitled to 5 extra days of leave annually
  • parents are entitled to additional leave depending on the number of children under the age of 16
  • employees working in hazardous conditions for at least 3 hours a day or permanently working underground are entitled to 5 additional days leave annually, and
  • employees receiving blind or disability benefits and those with at least 50% disability are entitled to 5 additional days leave annually.

Maternity Leave
Women employees are entitled to 24 weeks of maternity leave, which begins 4 weeks before the childbirth.

Mothers are entitled to 1 hour of leave twice a day (or 2 hours twice a day in the case of twins) during the first 6 months and subsequently 1 hour per day until the 9 month post-childbirth.

Employees are entitled to unpaid leave to provide care:

  • until a child is 3 years old
  • until a child reaches 10 years during the period when the employee is eligible for the child-care allowance.

Paternity Leave
Fathers are entitled to 5 days of compensated leave within 2 months following the childbirth on the days they request. In the cases of twins, fathers are entitled to 7 days' leave.

Employees can get unpaid leave to provide care until:

  • a child becomes 3 years old, or
  • a child becomes 10 years old during the eligibility period of the child-care allowance.

Sick Leave
Employees are entitled to 15 days’ leave in a calendar year if they are unable to work due to sickness, excluding workplace injuries, types of illnesses mentioned in the social insurance provisions and inability to work due to endangered pregnancy.

During the sick leave, employees receive 70% of their absence fee (total compensation including base salary plus other allowances) for the 15-day sick leave. If those employees are still not able to work after 15 days, partly the social security and partly the employer cover the compensation.

Benefits

Pension Plan
Employees get pension benefits after reaching the legal retirement age of:

  • 62 years and 6 months, which will go up by 6 months annually until reaching 65 years in 2022
  • 62 years with a minimum contribution of 20 years if born before Jan. 1, 1952
  • any age for women employees with a minimum 40 years of coverage with at least 32 years of work, or
  • 60 years if employed for a minimum of 10 years for men and 8 years for women who work in hazardous conditions.

Also, a partial pension is available at 62 years if employees complete 15 years of service.

Besides pension benefits, employees are also entitled to:

  • cash benefits in the forms of child-care allowance and sick pay
  • health services
  • accident benefits for accident-related injuries, emergency medical services, and sick pay for accident-related disability
  • rehabilitation benefit

Workers' Compensation
Employees get coverage for accidents through workers' compensation insurance while working onsite or on the way to or from work.

Workers' compensation is funded through the social insurance system. The rate of contribution for social insurance is usually 24% of employees’ wages. Employees can contribute between 3 and 10% of wages depending on their income.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Hungary and hire their employees without having to establish a branch office or subsidiary in Hungary.

  • Your candidate is hired via our Hungary PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Hungary laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

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  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.