Hungarian legislation follows both European legislation and international trends in the field of labour law while showing characteristics inherent in national regulation.
Employment relations in Hungary are governed by the Act I of 2012 on Labour Code and other labour law legislation, collective bargaining agreements and individual employment contracts. In the context of labour disputes in Hungary, courts generally protect employees’ rights by interpreting the provisions of the Labour Code, collective bargaining agreements and employment contracts often in favor of the employees. Overall, litigation trends reflect a decrease in the number of lawsuit initiated by blue-collar employees, while more and more white-collar employees, particularly executives and key-employees, are initiating labour disputes against their employers before courts in Hungary.
Download our 2022 guide on labour law and employment in Hungary for more information about local requirements, or read more below:
Employment relationship in Hungary may be concluded for:
Fixed term employment
The period of fixed-term employment in Hungary shall be determined according to the calendar or by other appropriate means. The duration of a fixed-term employment relationship may not exceed five years, including the duration of an extended relationship and that of another fixed-term employment relationship concluded within six months of the termination of the previous fixed-term employment relationship.
A fixed-term employment relationship may be extended, or another fixed-term employment relationship may be concluded within six months from the time of termination of the previous one upon the employer’s legitimate interests. The agreement may not infringe upon the employee’s legitimate interest.
Indefinite period (permanent employment)
According to the intention of the parties, if they do not define the term of the employment relationship or they define it as “indefinite period”, the contract is concluded for an indefinite period of time.
Employment contract minimums
If the parties fail to define the place of work, then the place where the employee regularly performs his work shall qualify as the place of work. The term of the employment relationship shall be defined in the employment contract. Failing this, the employment relationship is concluded for an indefinite duration. In the absence of an agreement to the contrary, all employment relations are concluded on general principle for full-time daily employment.
The term of the employment relationship shall be defined in the employment contract. Failing this, the employment relationship is concluded for an indefinite duration.
In the absence of an agreement to the contrary, all employment relations are concluded on general principle for full-time daily employment.
Besides the essential and mandatory elements discussed above, the parties may set any other term they wish to provide for in the employment contract. The only thing the parties need to be aware of: such term may not be in violation of statutory labour law.
As a general rule, the employment contract may derogate from the provisions of Part Two and from employment regulations to the benefit of the employee.
In the case of executive employees, the parties are to agree on the terms of employment and there are less minimum terms to observe and apply of the Labour Code.
In the Hungarian employment contract, the parties may stipulate a probation period of not more than three months from the date of commencement of the employment relationship. In the event that a shorter probationary period has been stipulated, the parties may extend the probation period once. In either case, the duration of the probation period may not exceed three months.
In either case, the duration of the probation period may not exceed three months.
Probation period could be stipulated in case of fixed term employment and also in case of permanent employment.
Stipulation of probation period shall be included in the employment contract.Employment contract preparation available just a click away in our eShop.
Termination of the employment
Cases of termination of employment depend on the intention of the parties. An employment relationship in Hungary may be terminated in three ways:
Termination by notice
An employment relationship may be terminated by the employee and the employer by notice. If so, agreed by the parties, the employment relationship may not be terminated by notice for a period of up to one year from the date of commencement of the employment relationship.
Employers must justify their dismissals in writing. The reasons must be clearly specified, authentic and substantial. Reasons of termination by notice may be in connection with the employer’s behaviour in relation to the employment relationship, with the employee’s ability or in connection with the employer’s operations.
The employer shall be permitted to terminate a fixed-term employment relationship by notice:
- if undergoing liquidation or bankruptcy proceedings; or
- for reasons related to the employee’s ability; or
- if maintaining the employment relationship is no longer possible due to unavoidable external reasons.
Restrictions – the employer may not terminate the employment relationship by notice:
- during pregnancy;
- during maternity leave;
- during a leave of absence taken without pay for caring for a child;
- during any period of actual voluntary reserve military service; and
- in the case of women, while receiving treatment related to a human reproduction procedure, for up to six months from the beginning of such treatment.
Where employment is terminated by the employer, the thirty-day notice period shall be extended:
- by five days after three years;
- by fifteen days after five years;
- by twenty days after eight years;
- by twenty-five days after ten years;
- by thirty days after fifteen years;
- by forty days after eighteen years;
- by sixty days after twenty years of employment at the employer.
By agreement of the parties the notice periods referred before may be extended by up to six months. The period of notice for the termination of a fixed-term employment relationship by notice may not go beyond the fixed term.
Termination by mutual consent
The termination by mutual consent is not regulated by expressed Hungarian Labour Code provisions. Termination by mutual consent allows to the employer and employee to agree freely but in agreement with each other on the conditions of termination.
Dismissal without notice
Employer or employee may terminate an employment relationship without notice if the other party:
- wilfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship; or
- otherwise engages in conduct that would render the employment relationship impossible.
The right of termination without notice may be exercised within a period of fifteen days of gaining knowledge of the grounds therefor, in any case within not more than one year of the occurrence of such grounds, or in the event of a criminal offense up to the statute of limitation for criminal liability.
If the right of termination without notice is exercised by a body, the date of gaining knowledge shall be the date when the body, acting as the body exercising employer’s rights, is informed regarding the grounds for termination without notice.
In case of termination without notice, the justification is obligatory for the employer or the employee as well. The right of termination without notice may be exercised, without giving reasons:
- by either party during the probationary period;
- by the employer in connection with fixed-term employment relationships.
In case of termination under point b), employee shall be entitled to absentee pay due for twelve months, or if the time remaining from the fixed period is less than one year, for the remaining time period.
Social contributions and income tax
Employers in Hungary are required to pay the following taxes and contributions on the gross salaries of their employees:
Contribution Employee Employer Social contribution tax – 13 % Personal income tax 15 % – Social security contribution 18.5 % – TOTAL 33.5 % 13 %
Working time and vacation
The daily working time in full-time jobs is eight hours (regular daily working time). Work shall be scheduled for five days a week. The daily working time can be increased or reduced.
Based on an agreement between the parties, the daily working time in full-time jobs may be increased to not more than twelve hours daily for employees: working in stand-by jobs, and who are relatives of the employer or the owner (extended daily working time).
Employees in Hungary shall be entitled to have two rest days in a given week.
In case of an irregular work schedule the weekly rest days may be scheduled irregularly as well. Instead of weekly rest days, employee shall be given at least forty-eight hours uninterrupted weekly rest period.
In case of full-time employment, two hundred and fifty hours of overtime work is permitted in a calendar year. Working overtime shall be in writing, if requested by the employee.
Overtime work’ shall mean work performed:
- outside regular working hours;
- over and above the hours covered within the framework of working time banking;
- over and above the weekly working time covered by the payroll period, where applicable; and
- the duration of on-call duty.
The amount of vested vacation time shall be twenty working days. Workers shall be entitled to extra vacation time from 1 to 10 days depend on the age of the employee according to the Labour Code. Parents also entitled to vacation after children (2 days after one, 4 days after two children, 7 days as a maximum per calendar year).
Employees shall be entitled to fifteen working days of sick leave per calendar year for the duration of time during which the employee is incapacitated to work.
With the exception of the first three months of the employment relationship, employers shall allocate seven working days of the vacation time in a given year in not more than two parts, at the time requested by the employee. The employee shall notify the employer of such request at least fifteen days in advance.
Unless otherwise agreed, vacation shall be allocated to contain at least fourteen consecutive days once in a calendar year, where the employee is exempted from the requirement of availability and from work duty.
Unpaid leave can be defined as quasi extraordinary vacation without pay, which is an opportunity, but also there are compulsory cases according to the Hungarian Labour Code.
Employees shall convey the request for leave of absence without pay in writing, at least fifteen days in advance.
The employee is eligible for unpaid leave
- for the purpose of taking care of children – until the child is 3 years old
- over 3 years of age, for the purpose of take personal care of a child until the 10 years of age, under the term of childcare allowance, allowance support the childcare
- for the purpose of taking care of his/her adopted child for a period of three years from the initial date of placement of the child under care, or for a period of six months for a child over three years of age, and such leave shall be allocated at the times requested by the employee.
- for the duration of receiving child-care benefits
- for the period of effective volunteer reservist military service
In addition to the above, unpaid leave is also possible by mutual agreement of the employer and employee, however it is not regulated by the Hungarian Labour Code. Employees shall convey the request for leave of absence without pay in writing, at least fifteen days in advance. The leave of absence without pay shall end at the time the employee has indicated, at the earliest on the thirtieth day from the date of delivery of the legal statement for the termination of leave.
Most common employee benefits
The benefits can be systematised by many ways in Hungary, many kinds of benefit have catering purposes, purpose of welfare, or social purpose.
It is also common to give cost contribution by the employer to the employee for example work clothes contribution.
The benefits given by the employer may be:
- optional (the benefits can be chosen by the employer from list of benefits within frames of a determined amount) – optional system called “Cafeteria system”
Most common benefits in Hungary
Temporary work – general aspects
Fixed term employment
Part-time work, call for work
Part-time workers employed under employment contract in jobs for up to six hours a day shall work at times deemed necessary to best accommodate the function of their jobs. In this case, the duration of the working time limit may not exceed four months.
Simplified employment and occasional work
Number of employees in present form of employment is strictly regulated by the Labour Code. Present form of employment between employer and employee shall not exceed 120 days, even if the parties entered into more than one employment relationship.
Temporary agency work
Present employment means when an employee is hired out by a temporary-work agency to a user enterprise for remunerated temporary work, provided there is an employment relationship between the worker and the temporary-work agency (placement).
The duration of assignment may not exceed five years, including any period of extended assignment and re-assignment within a period of six months from the time of termination of his/her previous employment.
Posting of employees
Employers shall be entitled to temporarily reassign their employees to jobs and workplaces other than what is contained in the employment contracts, or to another employer.
The duration of employment in present employment form may not exceed a total of forty-four working days or three hundred and fifty-two scheduled hours during a calendar year. This shall proportionately apply if the employment relationship commenced during the year, if it was entered into for a fixed term or in the case of irregular daily working time and part-time work. The employee affected shall be informed of the expected duration of work in derogation from the employment contract.
In some cases, stated in the Hungarian Labour Code employee may not be transferred to work at another location without the employee’s consent.Struggling with A1 applications? Order their preparation from our eShop.
Overview of applicable legislation
- Act I of 2012 on the Labour Code;
- Act LXXX of 2019 on Vocational Training
- Act CXXII of 2019 on the Entitlements to Social Security Benefits and on Funding These Services;
- Act LXXXI of 1997 on Social Security Pension Benefits;
- Act LXXXII of 1997 on Private Pensions and Private Pension Funds;
- Act LXXXIII of 1997 on the Services of the Compulsory Health Insurance System;
- Act CXVII of 1995 on Personal Income Tax,
- Act LXXV of 2010 on Simplified employment and occasional work relationships