Employment Laws in Hungary 2024

Contractual Agreements

Like in many other countries, employment in Hungary typically begins with a contractual agreement. Therefore, understanding the various types of employment contracts and their implications is essential for both employees and employers operating within the Hungarian labor market.

Types of Employment Contracts in Hungary

Hungarian labor law recognizes several types of employment contracts, each tailored to specific employment scenarios. These contracts set the terms and conditions of employment and play a pivotal role in shaping the employment relationship. Here are the primary types of employment contracts you should be aware of:

• Indefinite-term Employment Contracts: These contracts continue until terminated by either party with proper notice and are the most common contracts in Hungary, offering job security to employees. Let's talk about an example to understand this term more efficiently. 
  Imagine hiring a marketing manager at a Budapest-based advertising agency. The company signs an indefinite-term employment contract that outlines the roles, responsibilities, and compensation. This contract provides the manager with job security, as it means they can continue working for the agency as long as both parties agree and follow the contractual notice period for termination.

• Fixed-term Employment Contracts: As the name suggests, these contracts have a predetermined end date. They are often used for seasonal or project-based work. Renewal is possible, but strict regulations apply.
  For instance, a local ice cream parlor hires Jane as a server for the summer season, which typically runs from June to August, to handle the increased customer demand. Jane signed a fixed-term employment contract that specifies her start date as June 1st and her end date as August 31st. This contract allows for a one-time renewal if the parlor requires additional help due to unexpectedly high demand or staff shortages.

• Temporary Agency Work Contracts: In Hungary, the Hungarian Labor Code outlines specific rights and protections for temporary agency workers. These contracts enable businesses to meet their temporary workforce needs.

For example, a manufacturing company in Debrecen experiences a sudden increase in production demand due to a large order. They engage a staffing agency to provide temporary assembly line workers to meet this demand. These workers are employed under temporary agency work contracts, which allow the company to scale up its workforce quickly. The Hungarian Labor Code ensures that these temporary workers receive fair treatment, including equal pay and working conditions compared to regular employees.

Obligations and Rights for Both Parties

Hungary's employment contracts establish the working relationship between employers and employees. They also specify essential terms such as job roles, working hours, salary, and benefits. Both parties have specific obligations and rights that must be respected throughout employment.

Employers are responsible for:

• Providing a safe working environment.
• Complying with labor laws and regulations.
• Paying salaries and benefits as stipulated in the contract.
• Offering opportunities for professional development.

Employees, on the other hand, must:

• Perform their job duties diligently and professionally.
• Follow company policies and procedures.
• Notify the employer in case of illness or absence.
• Respect confidentiality and intellectual property agreements.

Working Hours and Overtime

Both workers and employers in Hungary must be aware of the laws governing working hours and overtime. These guidelines guarantee an equitable division of the workload, safeguard workers from being overworked and offer a framework for remuneration when workers work longer than usual.

Regular Working Hours

The standard working week in Hungary typically consists of 40 hours, spread over five days. While the usual practice is eight hours per day, some variations may occur, such as working 12-hour shifts over four days, followed by a longer break. These schedules are subject to negotiation and the specific industry.

Overtime Regulations and Compensation

Hungarian labor law clearly defines overtime rules and compensation. Employees are entitled to receive additional compensation for overtime work, usually in the form of higher hourly wages or extra time off. The specific rules for overtime pay and limits are established through collective agreements or individual employment contracts.

That is, 250 hours of overtime work can be ordered in a given calendar year for full-time workers. The total time spent on on-call duty, including planned daily working hours and any overtime performed on the first day, cannot exceed twenty-four hours.

According to Act I of Labor Code (2012), a 100% salary supplement must be given when overtime work is ordered on the scheduled weekly rest day (weekly rest period). If the employer gives an additional weekly rest day (weekly rest period), the wage supplement is 50%.

Minimum Wage and Compensation

Hungary's minimum wage and compensation rates are key components of the country's labor regulations. They ensure fair remuneration for workers and set the economic foundation for both employees and employers. Understanding these rates and the factors that affect them is essential for anyone involved in the Hungarian labor market.

The Minimum Wage Rate in 2024

The minimum wage in Hungary is subject to annual revisions, which the government typically announces. As of 2024, the minimum wage rates are as follows:

• For full-time employees aged 25 and over, monthly HUF 200,000 ($536.43).
• For full-time employees aged 18 to 25: monthly HUF 150,000 ($402.32).

For 2024, a 15% increase in the minimum wage and a 10% increase in the guaranteed minimum wage should be planned for employees working full-time These figures are based on a standard workweek of 40 hours and apply to gross wages before deductions. Remember that changes in the minimum wage can occur due to factors such as inflation, economic conditions, or government policies. 

Factors Affecting Wage Determination

Several factors can influence wage determination in Hungary. These include the type of employment, industry, employee qualifications, and collective bargaining agreements. Employers must ensure that wages comply with the legal minimum and any additional benefits or bonuses promised in the employment contract.

Employee Benefits and Social Security

To protect employee welfare and guarantee their financial stability, Hungary's labor laws include provisions for social security and employee benefits. These provisions cover statutory benefits, extra perks and benefits, and social security contribution responsibilities. 

Statutory Benefits

Statutory benefits refer to labor benefits that are implemented and required by the government. Hungarian employees are entitled to various statutory benefits, including:

• Sickness Benefits: Employees unable to work due to illness or injury are entitled to sick pay, covering a portion of their salary.
• Maternity and Paternity Leave: New parents can take maternity and paternity leave with financial support from the government. 
• Childcare Benefits: Families with children may receive financial assistance to cover childcare costs.

Additional Perks and Benefits

In addition to statutory benefits, many Hungarian employers offer extra perks and benefits to attract and retain talent. These may include:

• Healthcare: Private healthcare plans or subsidies for medical expenses.
• Pension Plans: Contributions to retirement savings plans.
• Transportation: Subsidies or company transportation for commuting.
• Flexible Work Arrangements: Options for remote work or flexible schedules.

Social Security Contributions and Requirements

Both employers and employees must make social security contributions in Hungary. These contributions fund various social benefits, including healthcare, pensions, and unemployment benefits. The specific rates and requirements may vary, so staying informed and compliant with current regulations is essential. In 2023, employers' social security contribution rate will be 13%, and employees' will be 18.5%.

Vacations and Paid Time Off

To encourage work-life balance, guarantee employee well-being, and offer chances for relaxation and enjoyment, vacations and paid time off are crucial elements of Hungary's labor regulations. Both employees and employers working in the Hungarian labor market must know the rights and laws governing yearly leave, public holidays, and exceptional leaves.

Annual Leave Entitlement

Employees in Hungary are entitled to paid annual leave based on their length of service. The minimum annual leave allowance typically starts at 20 days, gradually increasing with years of employment. Employers must ensure that employees have the opportunity to take their annual leave and plan accordingly.

Public Holidays and Special Leaves

Hungary recognizes several public holidays throughout the year. On these days, employees are generally entitled to a paid day off. Additionally, employees may request special leaves for personal reasons, such as marriage or childbirth, with proper notice and documentation.

Here’s a list of Hungarian public holidays:

• January 1: New Year’s Day
• March 15: Revolution Day
• Good Friday
• Easter Monday
• May 1: Labor Day
• Pentecost Monday (varies)
• August 20: St Stephen’s Day
• October 23: Republic Day
• November 1: All Saints’ Day
• December 24: Public Holiday
• December 25­: Christmas
• December 26: Second Day of Christmas

Termination and Severance

Hungary has labor laws that safeguard the rights of employers and employees, which also control termination and severance processes. A financial compensation package provided by an employer to an employee upon termination of employment is known as severance pay. Let's explore it in more detail.

Grounds for Termination

Terminating an employment contract in Hungary can only occur under specific circumstances. Common grounds for termination include:

• Termination by Mutual Agreement: Both parties agree to end the employment relationship.
• Termination with Notice: Employers can terminate employees with proper notice, which varies based on the length of service.
• Termination without Notice: In exceptional cases, immediate termination without notice may be justified, such as gross misconduct by the employee.

Notice Period and Severance Pay

Notice Period:

The length of the notice period is determined by the length of the employment relationship, as specified in the Hungarian Labor Code. Longer notice periods are typically required for employees with more extended service. For Example, an employee with less than one year of service may have a notice period of 15 days, while an employee with 10 years of service may have a notice period of 90 days.

During the notice period, both the employer and employee are expected to fulfill their obligations until the termination date. The employee continues to work, and the employer continues to pay the salary.

Severance Pay:

Hungary strictly regulates severance pay, as it does with the majority of other areas of employment. The Labor Code specifies both its terms and the amount to be paid. Of course, other restrictions can be stipulated in the labor contract, but they cannot be more stringent than the legislation itself.

Severance compensation, for example, is usually given after at least three years of continuous work. Severance pay can be specified in the labor contract after two years but cannot be withheld until the fourth year.

Discrimination and Equal Opportunity

Hungary's labor laws and regulations are based on the core principles of eliminating discrimination and promoting equal opportunity. To promote inclusive and fair workplaces, it is crucial to understand these components of labor legislation.

Prohibitions Against Workplace Discrimination

Hungarian labor law strictly prohibits discrimination in the workplace. Employers must ensure equal opportunities and treatment regardless of an individual's gender, age, race, religion, disability, or sexual orientation. Victims of discrimination have legal recourse, and employers found guilty may face fines and other penalties.

Health and Safety Regulations

Hungary places a strong emphasis on workplace safety and health. Employers are responsible for providing their employees with a safe and healthy working environment. This includes ensuring compliance with safety regulations, providing necessary protective equipment, and conducting regular risk assessments.

Stay Compliant with Local Employment Laws in Hungary with Skuad

Complying with Hungary's labor laws is essential for employers. These laws provide the framework for fair and respectful workplaces, ensuring that the rights and responsibilities of all parties are protected. However, ensuring compliance while hiring and onboarding abroad can be challenging. 

With Skuad as your Employer of Record in Hungary, you can hire, onboard, pay and manage your team with 100% compliance. 

Speak to our experts to learn more about how Skud can help you expand your presence in Hungary seamlessly and with full compliance to local employment laws. 

FAQs

What are the labor rules in Hungary?

Hungary has a comprehensive set of labor rules and regulations that govern employment relationships in the country. These rules cover various aspects, including contractual agreements, working hours, wages, employee benefits, termination procedures, etc.

What are the legal working hours in Hungary?

In Hungary, the legal working hours generally amount to 40 hours per week, spread over five days. However, specific working hours can vary depending on the industry and the employment contract.

What is the workplace culture in Hungary?

A mix of traditional values and modern business practices influences the workplace culture in Hungary. Hungarians value professionalism, punctuality, and a strong work ethic. 

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