How to Hire Employees in Hungary: Essential Guide for Employers

As one of the oldest countries in Europe, Hungary has an impressive legacy that continues today. With a staggering 99% literacy rate and modern educational methods, this Central European nation is truly at the forefront of educating its citizens globally.

Nestled in the core of Europe and thriving as a member of the European Union since 2004, Hungary charms job hunters and recruiters alike, making it an ideal destination for expanding one’s career or business. Various multinationals have flourished over the past decade, tapping into Hungary’s skilled and educated talent pool. 

To hire in Hungary, employers must comply with the local rules and regulations. Read this guide to understand how to hire employees in Hungary. 

Things to Know Before Hiring in Hungary

Before carrying on with recruitment and selection in Hungary, one needs to know the following crucial things: 

Working hours and overtime

• The standard working hours in Hungary is 8 hours a day and 40 hours a week. 
• Working over specific working hours is considered overtime work and is regulated by the employment contract.
• Overtime hours on weekends and holidays are paid at a rate of 200% and 150% for overtime during weekdays.

Minimum wage

• As per recruitment laws in Hungary, the minimum wage, from January 2023, rose to HUF 232,000 per month. 
• A minimum monthly salary of HUF 296,400 is required for positions that call for advanced training or higher qualifications.

Probationary and notice periods

• The recruitment process in Hungarian companies entails an optional probationary period of three months. 
• Employees can enjoy the security of a permanent contract while enjoying the flexibility of a 30-day termination notice period. 
• If the employer carries out the termination, the notice period can be extended per the length of the service period. 
• Businesses dismissing employees may grant them a “garden leave” equivalent to half the notice period. The employee will not be required to perform work-related responsibilities during this time but will still be paid for their missed work.

Non-compete agreements and IP protection

• When hiring Hungarian employees, employers should be aware that non-compete agreements are enforced for up to 24 months from contract termination. 
• Employers are required to provide a minimum compensation to the employee. The amount must be more than one-third of the base wage for the entire period.

Holidays

• Hungary has a total of 22 holidays. Employers looking to hire staff in Hungary should note that the dates are subject to change as per official announcements. 
• The list of holidays is as follows:

1. 1. New Year’s Day
   2. 1848 Revolution Memorial Day
   3. March Equinox
   4. Good Friday
   5. Easter Sunday
   6. Easter Monday
   7. Labor Day / May Day
   8. Mother’s Day
   9. Whit Sunday
   10. Whit Monday
   11. Father’s Day
   12. June Solstice
   13. Hungary National Day
   14. September Equinox
   15. 1956 Revolution Memorial Day
   16. All Saints’ Day
   17. Saint Nicholas Day
   18. December Solstice
   19. Christmas Eve
   20. Second Day of Christmas
   21. New Year’s Eve

Paid vacation 

• In Hungary, employees are entitled to at least 20 paid vacation days every year.
• In Hungary, the annual leave entitlement of an employee increases as follows:

Sick leave

According to the Hungarian Employment Act, 

• Employees in Hungary have a right to 15 days of paid sick time each year, which their employer reimburses at a rate of 70% of their pay.
• Depending on their length of service, employees receive between 50% and 60% of their salary starting on the sixteenth day of leave.
• Employers pay a third of the cost, with the National Health Insurance Fund covering the other two-thirds.

Maternity & paternity leave

Someone looking to hire employees in Hungary should be aware of the following rules:

• In Hungary, employees have a right to 24 weeks of maternity leave. They are eligible for a Pregnancy and Confinement Benefit (CSED) for the first six months at a rate equal to 70% of their pay. This is funded by Hungary’s National Health Insurance Fund (NEAK).
• Also, employees have the right to five days of paid paternity leave, which must be utilized two months after the child’s birth.
• Depending on how many kids an employee has, they are eligible for up to seven additional days off annually.

Social Security

• The gross payments made to the employee constitute the social security contribution base. 
• In 2023, the employer contribution rate, or “social tax,” is 13%. 
• The social security contribution rate for the workforce is 18.5%. 
• However, the total amount of the social security contribution requirement can be reduced by 15% of the unused portion of the child tax base allowance.

Employer tax

• Employers looking to employ Hungarian staff should know the country’s tax laws. 
• In addition to paying an employee’s wage, an employer must contribute 17% to social security. 
• This includes the 1.5% contribution to the vocational training fund and the 15.5% social contribution tax.

Termination of employment

• In Hungary, both the employer and the employee must give a written notice of termination that includes a good reason for the dismissal. 
• Employers must provide at least a 30-day notice before terminating an employee’s employment; however, employees with more than three years of service may be given notice for up to 90 days. 
• It is possible to dismiss someone summarily, but that must be done within 15 working days of discovering the grounds for doing so by the employer.
• The amount of severance pay varies according to the length of the employment.

The Cost of Hiring an Employee in Hungary

Employers must consider various expenses when employing staff in Hungary, including recruitment fees in Hungary, job advertisements, and other aspects of the hiring process.

A full-cycle recruitment process in Hungary involves the following costs:

Recruitment

• The recruitment fees in Hungary include administrative duties such as position promotion, interview coordination, contract development, comprehensive orientation training, and so on. 
• The average hiring cost ranges around 493,000 HUF, including housing, transportation, and related work benefits.

Pre-employment background checks

• Despite not being required by state or federal legislation, background checks entail looking into many areas of a candidate’s past. 
• Most companies do at least one background check before hiring employees in Hungary.

Salary and employee benefits

One of the main components to form the majority of the hiring cost is salary and worker advantages. Many businesses have made it essential to provide basic perks like:

• 10,000 HUF per month Food Voucher
• School Vouchers
• Local transport season ticket
• Pension Fund Additions

Training

• To hire employees in Hungary, companies also have to finance the training costs to settle them in their new job roles.

What Does a Company Need to Hire Employees in Hungary? 

A business must form a legal entity in Hungary before beginning the hiring process there. Additionally, a subsidiary, partnership, private or public corporation, or joint venture are all options one might consider before employing Hungarian staff.

The following are the prerequisites to establishing a Hungarian subsidiary:

• A local office
• A legal address registered as the company subsidiary
• A current bank account with a local Hungarian bank
• Tax registration
• Federal Insurance
• Social Security adherence
• Public Health Insurance
• Private Health Insurance (optional)

Various Options for Hiring Employees in Hungary

An employer can conduct recruitment and selection in Hungary through

An internal hiring process: 

An employer must establish a presence in Hungary before hiring individuals. This process can be expensive for companies.

EORs:

Partnering with an Employer of Record (EOR) may be advantageous if a company wants to engage Hungarian employees without having a physical corporate presence.

The Steps to Hiring in Hungary

To recruit Hungarian employees, the following are the steps that a company might follow to carry out a seamless hiring process:

Formulate the position:

• The first step is pinpointing the role and responsibilities one might envision for their ideal candidate. This crucial insight will guide them in assessing the required skills, experience, and educational background, ultimately shaping their expected salary.

Post job ads: 

• As the next step of the hiring process in Hungary, one can use reliable job portals to advertise their job posts. 
• Mention all the requirements and required educational qualifications beforehand to receive suitable applications. 

Evaluate and screen applications: 

• Evaluate the submitted job applications. 
• Take the process to the next level through a riveting face-to-face interview where one can expertly assess their skills and knowledge.

Offer letter and employment contract: 

• Once a suitable candidate is finalized, provide them with an employment contract. 
• According to the Hungarian labor act, the employment contract must be signed at least one day before onboarding the new employee. 
• The start day of employment, whether the next day or months away, and the gross wage you have agreed upon should be included in the labor contract.

Arrange for payroll: 

• With various employer and employee contributions to navigate, payroll administration extends beyond monetary transactions. It includes daily attendance, vacation time, and sick leave documentation.

Employee onboarding: 

• To ensure a smooth and expert onboarding process, companies must create a thorough employee code of conduct, plan interesting training sessions, create a well-structured employment agreement, and provide thorough offer letters.

Let Multiplier Be Your EOR Platform in Hungary

It might be challenging to understand the complex laws of other countries, which is why many businesses select an EOR platform to guarantee a seamless and legal hiring process internationally. Multiplier is a market-leading EOR with local business operations in more than 150 nations.

As your esteemed EOR, we provide a smooth onboarding process for the person you select, give legal employment contracts and standards, and expertly manage rewards and benefits.

Have a successful relationship with your Hungarian workforce without the complications of working with people from other countries and without the need to establish a presence there right away.