Payroll Information

It is important for employers in Hungary to ensure they are compliant with all employment laws and regulations, as violations can result in significant financial penalties and legal consequences.

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Payroll Cycle

In Hungary, the standard payroll cycle is monthly, and employees are paid on the last working day of the month. However, it is also common for some employers to pay on a bi-weekly or bi-monthly basis.

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Employment Law

The employment law in Hungary is governed by the Labor Code, which sets out the rules and regulations for the employer-employee relationship. Under the Labor Code, employers are required to provide written employment contracts to their employees, which should include the terms and conditions of employment, such as salary, working hours, and benefits.

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Employment Contract

Employment contracts in Hungary must be in writing and should include the following information:

• Names and addresses of the employer and employee
• Date of commencement of the employment
• Job title and description of the work to be performed
• Place of work and working hours
• Salary and other benefits
• Duration of the employment (if a fixed-term contract)
• Notice periods for termination of the contract
• Pension and health insurance contributions
• Holiday entitlements

It is also important to note that in Hungary, employment contracts can be either indefinite or fixed-term. Indefinite contracts have no set end date, while fixed-term contracts are for a specific period of time, which is typically up to 2 years. If the employment is terminated by the employer during the fixed-term contract, they must provide a valid reason for the termination.

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Probation Period / Trial Period

In Hungary, the probation period can be a maximum of 3 months, during which time either party can terminate the employment without notice. If the employment continues beyond the probation period, the employer must provide a valid reason for any future termination.

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Working Hours

The standard working hours in Hungary are 8 hours per day and 40 hours per week. However, there are some exceptions depending on the industry or sector. For example, in certain industries, such as healthcare, hospitality, and security, the maximum weekly working hours are 48. Overtime may be required in some cases, which is subject to additional pay or time off in lieu.

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Overtime

Overtime work in Hungary is any work exceeding the standard working hours, up to a maximum of 250 hours per year. Overtime work is subject to additional pay or time off in lieu, which must be at least 50% of the standard hourly rate. Employers must keep a record of the overtime hours worked by each employee.

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Bonus

In Hungary, bonuses are typically paid as part of the employee's annual salary or as a one-time payment. Bonuses may be based on various factors, such as the employee's performance, the company's financial results, or other factors agreed upon by the employer and employee.

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Termination

Termination of employment in Hungary can be initiated by either the employer or the employee. Termination may be due to various reasons, such as the expiration of a fixed-term contract, poor performance, redundancy, or other valid reasons. In most cases, notice periods must be observed, which vary depending on the length of service and the reason for termination.

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Notice Period

The notice period for termination of employment in Hungary varies depending on the length of service and the reason for termination. For indefinite contracts, the notice period ranges from 30 to 180 days, depending on the length of service. For fixed-term contracts, notice periods are determined by the length of the remaining contract period, up to a maximum of 30 days.

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Redundancy / Severance Pay

In Hungary, redundancy can occur due to various reasons, such as economic difficulties, technological changes, or other valid reasons. Employers must follow specific procedures for redundancy, which include consulting with employee representatives and providing adequate notice periods and severance pay.

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Maternity Leave

In Hungary, female employees are entitled to a total of 24 weeks of maternity leave, which can be taken up to two weeks before the expected date of birth. During the maternity leave period, employees receive 70% of their salary, which is paid by the employer. Female employees are also entitled to a breastfeeding break of 2hours per day until the child reaches the age of one.

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Paternity Leave

In Hungary, male employees are entitled to a total of 10 days of paternity leave, which must be taken within 30 days of the child's birth. During the paternity leave period, employees receive 100% of their salary, which is paid by the employer.

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Parental Leave

In Hungary, employees who have a child under the age of three are entitled to take parental leave. The duration of parental leave can range from 3 to 36 months, depending on the employee's preference. During the parental leave period, employees receive a monthly allowance from the government.

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Vacation and Annual Leave (paid time off)

In Hungary, employees are entitled to a minimum of 20 days of annual leave per year, which can increase based on their length of service. Employers may also provide additional annual leave, which is typically negotiated as part of the employment contract.

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Sick Leave

In Hungary, employees who are unable to work due to illness or injury are entitled to sick leave. The duration of sick leave depends on the length of service and the reason for the absence, and is paid by the employer. During the first 15 days of sick leave, the employee receives 70% of their salary, while in the remaining period, the employee receives 60% of their salary

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Other Leave

In addition to the above, employees in Hungary are entitled to several other types of leave, such as study leave, unpaid leave, and bereavement leave. These types of leave are typically agreed upon by the employer and employee and are subject to certain conditions.

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Other Benefits

In addition to the above, employers in Hungary may also provide various other benefits, such as health insurance, pension plans, meal vouchers, and transportation allowances. These benefits are typically negotiated as part of the employment contract.

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Holiday

There are 13 national holidays in Hungary, including New Year's Day, Easter Monday, Labor Day, Whit Monday, National Day, Christmas, and Boxing Day. If a national holiday falls on a weekend, the following Monday is considered a public holiday.

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Taxation

It is essential for employers and employees in Hungary to comply with all tax laws and regulations. Failure to comply can result in significant financial penalties and legal consequences. Additionally, it is advisable to consult with a tax professional to ensure compliance with all applicable laws and regulations.

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Personal Income Tax

In Hungary, the personal income tax rate is progressive, ranging from 15% to 32%. The tax rates and brackets for 2023 are as follows:

• Up to HUF 500,000: 15%
• Between HUF 500,001 and HUF 1,500,000: 20%
• Between HUF 1,500,001 and HUF 2,500,000: 25%
• Above HUF 2,500,000: 32%

In addition to the personal income tax, employees in Hungary are also subject to social security contributions.

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Social Security

Employers in Hungary are required to contribute to several social security funds on behalf of their employees, including the pension fund, health insurance fund, and employment fund. The employer's contribution rate for these funds is 18.5% of the employee's gross salary.

Employees in Hungary are also required to contribute to the social security system, with a total contribution rate of 18.5%. The employee's contribution is calculated as 10% of their gross salary for the pension fund, 7.5% for the health insurance fund, and 1% for the employment fund.

It is worth noting that there are certain tax deductions and allowances available in Hungary, such as the personal tax credit, which is HUF 2,800 per month, and the family tax credit, which is HUF 62,500 per child per month. These deductions and allowances can help reduce an individual's overall tax liability.

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Visas and Foreign Workers

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General Information

Requirements

To obtain a work visa in Hungary, non-EU citizens must meet several requirements, including having a valid job offer from a Hungarian employer, holding the necessary qualifications for the position, and demonstrating proficiency in the Hungarian language. The employer must also obtain a work permit from the Hungarian authorities on behalf of the employee.

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Application Process

The application process for a work visa in Hungary typically involves several steps. The employer must first obtain a work permit from the Hungarian authorities, which requires submitting various documents, such as the employment contract, proof of the employee's qualifications, and evidence of the employer's financial stability. Once the work permit is obtained, the employee can apply for a work visa at the Hungarian embassy or consulate in their home country. The visa application typically requires submitting several documents, such as the work permit, passport, and proof of travel insurance.

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Taxation

Foreign nationals working in Hungary are subject to the same tax laws and regulations as Hungarian citizens. This includes personal income tax and social security contributions. The personal income tax rate for foreign nationals is progressive, ranging from 15% to 32%. Foreign nationals working in Hungary are also required to make social security contributions, with a total contribution rate of 18.5%. The employer's contribution rate is 18.5% of the employee's gross salary, while the employee's contribution rate is 18.5% of their gross salary.

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It is important for employers and employees to ensure compliance with all applicable laws and regulations related to work visas and taxation in Hungary. Failure to comply can result in significant financial penalties and legal consequences. Additionally, it is advisable to consult with a legal or tax professional to ensure compliance and to understand any additional requirements or considerations specific to the individual's situation.

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