Hungary HR Information

Updated on: 2025/08/05 15:25 (UTC)

Overview

The main source of employment law in Hungary is the Labor Code, which came into force in 1992 and was significantly revised in 2012. Another important source of law is the Constitution of Hungary, which protects the basic rights of employers and employees.

Hiring

Employment Contracts

It is the employer’s obligation to prepare a written employment contract, and if it does not, the employee is entitled to challenge the validity of the employment contract within 30 days from the first day of work.

The employment contract must include:

• the basic salary of the employee and
• the scope of work.

The employment contract can include further provisions and details, such as:

• probation period,
• place of work,
• whether the employment is for a fixed or indefinite term,
• the main obligations of the parties,
• any additional elements of the salary,
• the number and order of working hours,
• restrictive covenants and conflict of interest provisions and
• terms and conditions regarding termination of employment.

The employment contract does not need to be written in Hungarian.

Under the Labor Code, a probation period can only be stipulated in the employment contract when the parties enter into the agreement.

A probation period agreed between employer and employee cannot exceed three months, and a trial period agreed in a collective bargaining agreement cannot exceed six months.

If the stipulated probation period does not reach the maximum, it may be extended once up to the maximum duration. During the probation period, either party may terminate the employment relationship without cause and with immediate effect.

Restrictions on Hiring

The minimum working age is 16. An exception applies to young persons under 16 employed in cultural, artistic, sports, or advertising activities.

Recordkeeping

Employers are required to keep records of:

• the duration of regular working time and overtime,
• the duration of stand-by duty, and
• periods of leave.

Background Checks

Employer requests for information during the hiring process cannot violate the applicant’s personal rights and must relate to an essential question of employment.

The employer is only entitled to inquire about an applicant’s criminal record if the employment involves confidential financial management positions, and even in such cases the request must be addressed to the employee. The employer is not allowed to contact police authorities or criminal register offices. The employer may request an official certificate of good standing from the employee to prove absence of criminal record.

The employer is entitled to request information regarding an applicant’s education and can require the employee to provide evidence of educational achievement but can contact an educational institution directly only with the written approval of the applicant.

An employee may request an evaluation from a previous employer within one year of termination, which will provide information on the work the employee performed and an evaluation of his or her performance. The former employee may provide this evaluation to a prospective employer in applying for another job. The prospective employer may not contact an applicant’s previous employers without the applicant’s advance written consent.

Noncompetition Agreements

Post-termination noncompetition agreements are generally entered into with executive employees or mid-level employees with access to proprietary information. An agreement is legally enforceable only if it is limited in geographic scope, length (no more than two years), and the sorts of work prohibited; does not unreasonably restrict a former employee’s ability to make a living; and provides reasonable compensation (at least one-third of the former employee’s pre-termination salary).

Reference Citations

Employment Contracts: Labor Code, Act I of 2012, (as amended), §§ 42-50

Restrictions on Hiring: Labor Code, Act I of 2012, (as amended), § 34

Recordkeeping: Labor Code, Act I of 2012, (as amended), § 134

Background Checks: Labor Code, Act I of 2012, (as amended), §§ 9-10

Noncompetition Agreements: Labor Code, Act I of 2012, (as amended), § 207

Immigration and Work Permits

In General

Foreign employees need to regularize their residence and employment documentation before they start work, and citizens of non European Economic Area countries must obtain a residence and work permit.

The immigration authority can order the expulsion or exclusion of a third-country national if it finds that the person has no right of residence in Hungary or was engaged in any gainful employment in the absence of a work permit.

Visas and Work Permits

Employers cannot employ a person who illegally resides in Hungary, so foreign employees need to regularize their residence and employment documentation before they start work. Citizens of non European Economic Area countries must obtain a residence and work permit.

Hungarian law generally divides foreigners into two categories: the so-called EEA (European Economic Area) citizens and citizens from third countries. EEA citizens do not need a work permit to work in Hungary, but the employer must report to the competent authority the employment of an EEA citizen on a no-name basis, and the EEA citizen must register his or her stay with the immigration authority if this exceeds a three-month period.

Citizens from third countries must obtain a residence and work permit. In certain cases it is possible to request a residence permit issued under the single application procedure in which case there is no need to request a separate work permit. The obligation to obtain a visa to enter Hungary depends on the nationality of the foreigner. U.S. nationals, for example, do not require a visa to enter Hungary.

Penalties

There are numerous penalties prescribed for violating the rules on entry and work of foreigners in Hungary. Both the foreign employee and his/her employer can be found liable for violations of the law.

For employing an employee without a work permit, there is an automatic fine equal to four times the amount paid the employee from the commencement of employment but not less than eight times the national minimum wage. The immigration authority can order the expulsion or exclusion of a third-country national if it finds that the person has no right of residence in Hungary or was engaged in any gainful employment in the absence of a work permit. The immigration authority may also impose an administrative fine of 500,000 forints on the employer if it does not comply with its statutory obligations regarding employing a third-country national.

Digital Nomad Visa. Foreign nationals seeking to work remotely in the Hungary for a company that does not have a presence in the country can apply for a residence permit for digital nomads. The visa is valid for two years.

Forms

Visa application form.

Reference Citations

Visas and Work Permits: Office of Immigration and Nationality

Nondiscrimination

In General

The Equal Treatment Act prohibits direct or indirect discrimination in hiring or in the terms of employment based on sex, disability, race or color, national or ethnic origin, religion, political or other opinion, maternity (pregnancy) or paternity, sexual orientation, age, employee body, employment for a definite period or on a part-time basis, nationality, mother tongue, health condition, social background, property, marital status, gender identity, or other aspects, features, or characteristics by reason of which an employee might be subjected to discriminatory treatment.

The Labor Code provides that the principle of equal treatment must be strictly observed in connection with employment relations, and Act CXXV of 2003 (the Equal Treatment Act) requires the promotion of equal treatment and equality. The Constitution of Hungary and Act V of 2013 in the Hungarian Civil Code provide additional protections against discrimination.

Employees must be treated equally with regard to all aspects of an employment relationship. This includes:

• the conditions of employment,
• remuneration,
• hiring,
• promotion,
• access to vocational training,
• participation in employee organizations and
• disciplinary and other liabilities.

It is not considered a breach of equal treatment to hire only individuals who hold particular religious or other ideological convictions or are of a particular ethnic origin if the hiring employer is an organization promoting those convictions or that ethnicity.

If the National Authority for Equal Opportunities discovers discriminatory behavior, it may require the offending employer to:

• end the discriminatory practice,
• prohibit the practice,
• publicly disclose its resolution of the practice and
• pay an administrative fine of up to 6,000,000 forints.

An employee who has been discriminated against may file suit against the offending employer. If the court rules in the employee’s favor, it can:

• publicize the discriminatory conduct,
• demand that the discriminatory conduct end and that the perpetrator be restrained from further discriminatory acts,
• demand that restitution be made and public disclosure issued,
• demand that the effects of the discriminatory conduct be reversed and
• subject the employer to nonpecuniary damages.

The employer is obligated to observe the principle of equal treatment in connection with all employment relations. If the employer breaches this obligation, it must compensate the victim for damages incurred.

If the labor court determines that the employer is engaged in discrimination when terminating an employee, the employee may request reinstatement to his or her original position.

EU Pay Transparency Directive: As a member state of the European Union, Hungary has until June 2026 to transpose the minimum requirements of the EU Pay Transparency Directive into its national law or amend any current pay equity laws to conform with the directive, which aims to promote pay equity between men and women. The directive introduces requirements on gender pay gap reporting, salary history bans during the hiring process, and wage disclosure in job vacancy listings. The national law may go beyond the minimum requirements of the directive, but the law may not directly conflict with the directive requirements.

Reference Citations

Nondiscrimination: Equal Treatment and Promotion of Equal Opportunities, Act CXXV of 2003, §§ 21-22

Employee Privacy

Employee Data

On May 25, 2018, the General Data Protection Regulation (GDPR) superseded the Data Protection Directive as the primary law governing data privacy in the EU. The GDPR establishes minimum requirements for the processing of employee data and allows EU member nations to introduce more restrictive local legislation. Stricter requirements can also be established in collective bargaining agreements or work contracts. For more information, see the In Focus: International Privacy Laws.

Employee Monitoring and Surveillance

Under the Labor Code, employers can monitor the behavior of their workers as long as the surveillance pertains to the employment relationship. The means and methods used to monitor workers cannot be at the expense of human dignity. Signs must be posted to inform employees of the existence of surveillance and of their privacy rights.

Employers must be transparent with regard to the handling of employee data (i.e., the person who will be processing the data, the purpose of the processing, the manner of the processing, and the rights of the employee with respect to the processing of personal data).

Under the GDPR, employers can monitor employees only if there is a lawful basis for doing so. Lawful bases can include preventing employee misconduct, deterring crime, and ensuring compliance with health and safety procedures. Employees must be given prior notice, and any data that is collected must be used and kept only to fulfill its original purpose.

Reference Citations

Employee Data: General Data Protection Regulation, 2016

Employee Monitoring and Surveillance: General Data Protection Regulation, 2016; Labor Code, Act I of 2012 (as amended), § 11

Compensation

Hours of Work

Eight hours a day, five days a week is considered full-time employment. The employer and the employee can agree to increase full-time employment to as many as 12 hours daily (60 hours a week) for employees working on call or who are close relatives of the employer or the owner.

If the scheduled daily working time or overtime exceeds six hours, the employee is entitled to a minimum 20-minute uninterrupted break from work. If the duration of work exceeds nine hours, an additional 25-minute break must be given the employee.

Employees must be allowed at least 11 hours’ uninterrupted rest after the conclusion of daily work and before the beginning of the next day’s work. If the employee works split shifts, continuous shifts, multiple shifts, or in seasonal or on-call duty positions, the daily rest period must be at least eight hours.

Minimum Wage

Effective Jan. 1, 2023, Hungary’s minimum wage is 232,000 forints per month for employees whose jobs do not require specific skills, and 296,400 forints per month for employees employed in positions requiring a secondary school diploma or an advanced vocational training or college qualification. Effective Jan. 1, 2022 through Dec. 31, 2022, the minimum wage is 200,000 forints per month for employees whose jobs do not require specific skills, and 260,000 forints per month for employees employed in positions requiring a secondary school diploma or an advanced vocational training or college qualification.

Employees must be paid a 50-percent allowance in addition to regular wages for working on Sundays in certain circumstances.

Employees must be paid a 15-percent allowance for working at night if the work exceeds one hour (performed between 10:00 p.m. and 6:00 a.m.) provided that the employee is not entitled to shift allowance.

If scheduled work time frequently changes, the employee is entitled to a shift allowance of 30 percent for work performed between 6:00 p.m. and 6:00 a.m.

In addition to the contractual base salary, employees are entitled to additional remuneration:

• For on-call and standby duty, a wage corresponding to 20 percent and 40 percent, respectively, of the basic wage must be paid. If the duration of actual work performed cannot be measured, the rate is 50 percent for standby duty.
• For normal work performed on a national holiday, employees must be paid a 100-percent allowance in addition to the payment due for normal work.

Overtime

Employees are entitled to a 50 percent wage allowance for overtime work (if no compensatory paid time off is provided), 100 percent for overtime work on a rest day (or 50 percent if another rest day is provided) in addition to normal salary.

For overtime work on national holidays, employees are entitled to a 100 percent allowance in addition to the payment due for normal work.

Employers can require employees to work up to 400 hours of overtime per year. Employers also can take up to three years to settle payments of accrued overtime and may agree on overtime arrangements directly with workers without having to include unions in the negotiations.

Wage Payment

Wages must be paid by the 10th of the month following the month in which they were earned. If the payday falls on a rest day or an official legal holiday, the wages are paid on the last preceding work day.

Deductions from the employee’s salary may generally only be made on the basis of a legal provision or executive decision or with the employee’s consent. The employer may, however, deduct the amount of any advance payment provided to the employee.

Under the Labor Code, the employer must reimburse necessary and reasonable expenses incurred by an employee in the course of work and any other expenses approved in advance by the employer.

Under Governmental Decree 39/2010, the employer must reimburse, in certain circumstances, 86 percent of the cost of an employee’s commute to work using public transportation. The employer must reimburse the costs of an employee using his or her own car to commute to work if:

• there is no public transportation between the employee’s residence and work place,
• the employee cannot use public transportation or could use it only with long waiting due to the employee’s working time or
• the employee cannot use public transportation due to a physical disability.

Mandatory Bonuses

Bonuses are at the discretion of the employer.

Reference Citations

Hours of Work: Labor Code, Act I of 2012, (as amended), §§ 92, 103

Minimum Wage: Labor Code, Act I of 2012, (as amended), §§ 139-142

Overtime: Labor Code, Act I of 2012, (as amended), §§ 107-109, 143; Bill T/3628/ on Overtime, 2018 (Hungarian)

Wage Payment: Labor Code, Act I of 2012, (as amended), §§ 157-158, 161

Benefits

Vacation

Employees receive basic and additional annual leave for each calendar year of employment. The basic annual leave entitlement is 20 working days. The annual leave entitlement of employees is increased with additional days depending on the age (not the seniority) of the employee with up to 10 additional working days.

Employees in special circumstances receive additional leave as follows:

• employees under 18 are entitled to five extra days of vacation each year;
• parents are entitled to extra vacation time depending on the number of children under the age of 16: two days a year for one child, four days a year for two children and seven days a year for more than two children and an additional two days per child if the child is disabled;
• employees permanently working underground or spending at least three hours a day on a job exposed to ionizing radiation are entitled to five extra days of vacation each year and
• employees receiving disabled or blind benefits and employees with at least 50 percent disability are entitled to five additional days of vacation each year.

A collective bargaining agreement or an employment contract may provide additional leave days.

Holidays

Under the Labor Code, the following 10 national holidays are observed:

• 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

Employees may be required to work on national holidays only if they are employed seasonally, the employer operates on a continuous basis or the nature of the business makes it necessary for the employer to be open on national holidays (if the service provided is required on that particular day by local tradition or commonly accepted social custom or is necessary to protect human life, health or property). In addition, employees providing services abroad (for example, shared service centers) or posted abroad on days not qualifying as public holidays in the recipient country may be instructed to work on Hungarian national holidays.

Employees can only be instructed to work overtime on national holidays if they can otherwise be required to work on that day or to prevent or mitigate imminent danger of accident, natural disaster or danger to life or health.

Holidays are observed on their calendar date. They are not moved if they fall on a weekend or a Tuesday, Wednesday or Thursday. Work performed on a holiday must be remunerated at 200 percent of normal pay.

Maternity Leave

A pregnant employee is entitled to 24 weeks of maternity leave, commencing four weeks prior to childbirth.

The maternity leave terminates:

• if the child is stillborn,
• on the 15th day after the death if the child dies during the maternity leave or
• the next day following the day when the child is transferred to a welfare institution.

In the circumstances stipulated above, the duration of the maternity leave cannot be less than six weeks following the birth.

Mothers are entitled to one hour’s leave twice per day (or two hours’ twice per day in the case of twins) during the first six months of breast-feeding and thereafter one hour per day (two hours in the case of twins) until the end of the ninth month after the birth.

An employee is entitled to unpaid leave:

• until a child reaches age 3 to provide care at home or
• until a child reaches age 10 during the period of eligibility for the child-care allowance, provided the employee cares for the child at home.

Paternity Leave

Upon the birth of his child, a father is entitled to five working days’ compensated leave—in case of twins, seven working days’ leave—within two months following the date of birth on days he requests.

An employee is entitled to unpaid leave:

• until a child reaches age 3 to provide care at home or
• until a child reaches age 10 during the period of eligibility for the child-care allowance, provided the employee cares for the child at home.

Sick Leave

An employee is entitled to 15 working days of leave per calendar year for times when the employee is incapable of working due to illness, not including industrial accidents, illnesses specified by social insurance provisions, and the incapacity to work due to endangered pregnancy. Incapacity must be certified by a physician.

During sick leave, the employee receives 70 percent of his or her absence fee (total compensation including base salary and other allowances) paid by the employer for the 15-day sick leave. If the employee is still incapable of working after 15 days, sick pay is covered partly by social security and partly by the employer, but only for a period of up to one year. After this date, invalidity benefits may be granted.

Other Leave

Employees are relieved from the obligation to work in the following circumstances:

• for the duration of performing civic duties;
• upon the death of a close relative, for at least two working days per occurrence;
• if the employee is incapable of working due to illness;
• for the duration of compulsory medical examinations (including pregnancy tests);
• for the duration of service as a volunteer firefighter;
• for the duration of absence to donate blood (minimum four hours);
• if the employee is unable to appear at work for personal or family reasons or due to circumstances beyond his or her control;
• for the duration of classes if employees are pursuing elementary school studies or for the duration of training if participating by agreement with the employer;
• if the law so requires;
• with the employer’s consent and
• for the duration of treatment related to a human reproduction procedure.

An employee is entitled to unpaid leave:

• for any extended (more than 30 days) nursing or home care of a close relative up to a maximum of two years provided the employee personally provides the care; and
• for the duration of voluntary reserve military service.

Pensions and Social Security

The legal retirement age is:

• age 65 as of 2022 with at least 20 years of coverage;
• 62 with at least 20 years of contributions if born before Jan. 1, 1952;
• any age for women with at least 40 years of coverage (child raising periods are taken into account) including at least 32 years of work (for women who have raised five or more children, the number of required years of work is reduced by one year for each child to a maximum reduction of seven years).

Early retirement benefits are available for certain individuals, including those employed in arduous or unhealthy conditions.

In addition to pension benefits, employees are entitled to:

• health services,
• cash benefits (infant child-care allowance, child-care allowance, sick pay),
• accident benefits (emergency medical services, sick pay for accident-related injuries, accident-related disability pension),
• benefits for changed working capacity (rehabilitation benefit, disability benefit) and
• relatives’ benefits (widow’s, orphan’s, parent’s and accident-related relative’s pensions).

Workers’ Compensation

Workers’ compensation insurance covers accidents related to work performed during the insured’s employment or on his or her way to or from work. Industrial illness is illness that results from specific dangers of the insured’s employment.

Workers’ compensation insurance is financed through the social insurance system. The social insurance contribution rate for most employers is 24 percent of employee wages. For employees, the contribution rate ranges from 3 percent to 10 percent of wages depending on the amount of earnings.

Reference Citations

Vacation: Labor Code, Act I of 2012 (as amended), §§ 115-120

Holidays: Labor Code, Act I of 2012 (as amended), §§ 101-102, 140

Maternity Leave: Labor Code, Act I of 2012 (as amended), §§ 127-131

Paternity Leave: Labor Code, Act I of 2012 (as amended), §§ 118, 128

Sick Leave: Labor Code, Act I of 2012 (as amended), §§ 118, 146

Other Leave: Labor Code, Act I of 2012 (as amended), § 55

Pensions and Social Security: Social Security Act, LXXX of 1997, § 16 (Hungarian)

Workers’ Compensation: Social Security Law, LXXX of 1997, § 5 (Hungarian)

Labor Relations

In General

It requires at least 10 members to establish a trade union, and to conclude a collective bargaining agreement, the union must have a membership of at least 10 percent of the workforce. Works councils can be elected if at least 51 employees work for an employer.

Labor disputes are generally resolved through the labor courts, although mediation may be stipulated in a collective bargaining or employment agreement. Strikes are allowed if mediation fails.

An employer must consult with its works council prior to making a decision on (among other things) reorganization, training, new work methods, or performance requirements, and the works council has the right to be informed about the employer’s financial circumstances.

In cases where ownership of a business is transferred, the successor employer becomes responsible for its predecessor’s rights, privileges, and duties towards the employees under the collective agreement.

Right to Organize

The Labor Code provides the basic framework for relations between employers and employees and their representative bodies including trade unions, works councils and employer representative bodies.

Under the law, a trade union is an employee organization whose primary function is the support and protection of employee interests in the employment relationship.

To establish a trade union, at least 10 founding members are required to draft the charter and elect the managing and representative board. The union must be registered with the competent courts. The authority of the union depends on the level of its support among employees.

The most important rights a trade union may exercise are:

• negotiation of a collective bargaining agreement,
• consultation with an employer on its measures and
• receipt of information on any employment issues affecting the economic and social interests of the employees.

Collective bargaining agreements may be concluded between the employer, several employers or the representative organization of the employers on one side and the trade union or several trade unions on the other side. In order to conclude a collective bargaining agreement, the trade union must have a membership of at least 10 percent of the workforce based on the average number of employees in the past six months. The collective agreement must be registered with the National Ministry of Resources.

A collective bargaining agreement may govern:

• the rights and obligations imposed by the employment relationship,
• the method of exercising and fulfilling these rights and obligations and
• the relationship of the parties to the agreement.

Works Councils

The primary function of the works council is to ensure the representation of the employees in the operation of the employer.

Works councils are elected if at least 51 employees work for an employer or at an employer’s independent site. In operations of from 15 to 50 employees, workers’ representatives (or shop stewards) act as intermediaries with employers. If employees fail to elect either a works council or a workers’ representative, the employer has no legal obligation to initiate the election itself.

The works council and the workers’ representative enjoy the following rights:

• Right to co-determine: The employer and the works council must jointly decide the use of welfare funds.
• Right to express its opinion: Employers must request the works council’s opinion 15 days prior to adopting a decision or plans affecting a large group of employees involving (among other things):

a decision related to data protection,

reorganization,

employee training,

occupational rehabilitation of disabled persons and

the introduction of new work organization methods and performance requirements.

• Right to be notified: Employers must notify (every six months) the works council regarding fundamental issues affecting the employer’s:

economic situation,

trends in wages and salaries,

utilization of work time,

working conditions and

headcounts with positions.

• Right to information: The works council has the right to information necessary to fulfill its responsibilities.

In companies or groups of companies that operate on the level of the European Community, a European Works Council must be established in order to strengthen the employees’ right to notification and consultation.

Dispute Resolution

Labor disputes are generally resolved with actions in the competent labor courts operating in every county of Hungary as the court of first instance. In the collective bargaining or employment agreement, the parties can stipulate the operation of a mediator in case of any collective labor disputes. In such case, mediation must be attempted prior to any action before the labor court.

Effective Jan. 1 2020, the current administrative court system will be replaced by a newly established Supreme Administrative Court. All administrative legal actions, including those of employees working in the public sector, will be heard in the new court system. Private sector employment disputes will be handled by general regional courts.

Strikes and Lockouts

To ensure their economic and social interests, employees enjoy the right to strike.

Successorship Clauses

In cases where a business is transferred, the successor employer becomes responsible for its predecessor’s rights, privileges and duties towards the employees under the collective agreement.

Reference Citations

Right to Organize: Labor Code, Act I of 2012 (as amended), §§ 230-234

Works Councils: Labor Code, Act I of 2012 (as amended), §§ 235-239

Dispute Resolution: Labor Code, Act I of 2012 (as amended), §§ 291-293

Successorship Clauses: Labor Code, Act I of 2012 (as amended), § 228

Safety, Health and Security

In General

The Labor Safety Act details minimum safety criteria for buildings, working assets, and other working conditions to ensure employees’ health and security and requires that employees receive safety training. Employees must be allowed to elect a labor safety representative or committee.

Medical examination of employees is required to ensure they are suited for particular work, and the employer may under certain circumstances conduct drug or alcohol tests.

Workplace Safety and Health

The Labor Safety Act details minimum safety criteria for buildings, working assets and other working conditions to ensure employees’ health and security and requires that employees receive safety training. The act mandates stricter safety measures in cases of dangerous working processes and technologies and in the employment of youth, disabled individuals and pregnant women. In addition, employees must be allowed to elect a labor safety representative or committee.

According to the Labor Code and the Decree of the Social Welfare Minister No. 33/1998, medical examination of employees is required to ensure they are suited for particular work. An employer can only force an employee to take a pregnancy test, however, if the work cannot be performed by pregnant women due to health and safety rules.

Compliance inspections can be conducted by the Work Safety Authority, which can levy penalties from 50,000 to 10,000,000 forints for violations. A work safety representative has to be elected at companies employing more than 50 employees.

Drug and Alcohol Use

According to the Labor Code, an employee must appear in an appropriate condition for work. The employer may conduct an alcohol test but must not breach the personal rights of the employee, and drug testing is only permitted in very limited cases.

Under the Protection of Nonsmokers and Consumption and Distribution of Tobacco Products Act, smoking is forbidden in Hungarian workplaces except for designated areas. In compliance with applicable legislation of the European Union, smoking is completely prohibited in enclosed working places including restaurants and bars. In the collective bargaining agreement or upon the request of the employees, smoking can be forbidden in the entire workplace.

Smoking in a prohibited area is subject to a fine of 20,000 to 50,000 forints. If the employer does not fulfill its obligation of selecting a smoking area, it may face a penalty of 100,000 to 2,500,000 forints. Smokers may not, however, be discriminated against in hiring and promotion.

Reference Citations

Workplace Safety and Health: Occupational Safety and Health Act, No. 93 of 1993, §§ 19-22, 49

Drug and Alcohol Use: Labor Code, Act I of 2012 (as amended), § 52; Protection of Nonsmokers and Consumption and Distribution of Tobacco Products, Act XLII of 1999, § 2

Termination

Termination by Employer

Any employment contract, whether for a definite or an indefinite period of time, may be terminated with immediate effect if the other party breaches its material employment obligation willfully or through gross negligence or otherwise demonstrates behavior making continuation of employment impossible (committing a felony, for example).

The right to terminate with summary notice must be exercised within 15 days of the day on which the other party becomes aware of the reason for the termination and within one year of the actual occurrence of such reason.

The party terminating employment with summary notice must provide a written explanation.

An employment contract for an indefinite period may be terminated by written notice. The employer must justify the dismissal unless the employee is:

• an executive level employee or
• a pensioner.

Justification for termination must relate to:

• the employee’s inability to carry out his or her work,
• the employee’s behavior, or
• the requirements of the employer’s operation.

Notice of termination must be in writing and provide the employee with information regarding the manner and deadline by which he or she can seek a legal remedy against unlawful termination. A statement of claim alleging unlawful termination must be filed within 30 days of termination to the competent labor court.

The notice period must be at least 30 days, can be longer if stipulated in the contract but cannot exceed six months except in the case of senior executive employees.

If dismissed with regular notice delivered by the employer, the employee must be exempted from performing work for at least half the notice period. The allocation of half of the exempt period is to be decided by the employee.

An employment relationship for a definite period may be terminated by the employer with regular notice if it enters liquidation procedure or bankruptcy, if the employee fails to meet the employer’s performance expectations or for any other external reason that makes continuation of the employment relationship impossible.

An employment contract for a definite period can also be terminated with immediate effect by the employer at its convenience, but the employee must be paid an amount equal to 12 months’ absence fee (total compensation including base salary and other allowances) or, if the outstanding term of the employment is less than 12 months, for such outstanding period.

Employment may be terminated with immediate effect during the trial period, either by the employee or by the employer, with no reason provided.

In addition, any employment may be terminated by an agreement based on the mutual consent of the employer and the employee.

According to the Labor Code, employment ceases to exist by virtue of law upon:

• the employee’s death,
• the dissolution of the employer without legal successor,
• the expiration of a definite-term contract or
• the transfer of the employee to an employer to whom the provisions on public servants or public officials are applicable.

It is unlawful for any employer to dismiss an employee with regular notice during:

• pregnancy,
• maternity leave,
• unpaid leave for nursing or caring for a child until the child reaches the age of 3,
• treatment related to a human reproduction procedure not exceeding six months or
• the duration of voluntary reserve military service.

Senior executive employees do not enjoy protection against dismissal during unpaid childcare leave or voluntary military service.

For the affected employees (except for senior executive employees), the notice period begins only after the end of:

• incapacity to work due to illness (not to exceed one year following expiration of sick leave),
• sick leave taken for the purpose of caring for a sick child or
• unpaid leave for the purpose of nursing a relative at home.

If the labor court rules that an employer terminated an employment relationship unlawfully, the former employee may be awarded:

• compensation for lost earnings up to 12 months’ absence fee (total compensation including base salary and other allowances),
• compensation for damages,
• severance payment if the employment was not terminated with regular notice and
• in certain cases (e.g., discrimination), reinstatement to his or her original position.

Whistleblowing. On May 25, 2023, the Hungarian parliament adopted a whistleblower statute to transpose the EU Directive on Whistleblowing into national law. Private-sector employers with 50 workers or more must establish an internal reporting channel and procedure for whistleblowing related to breaches of government laws and regulations.

Termination by Employee

An employee is not required to provide any justification for terminating employment with regular notice unless the employment is for a fixed term.

The notice period is 30 days, can be longer if stipulated in the contract, but cannot exceed six months.

Any employment may be terminated by an agreement based on the mutual consent of the employer and the employee.

The employment contract, whether for a definite or an indefinite period, may be terminated with immediate effect during the trial period, either by the employee or by the employer, with no reason provided.

An employee who terminates employment unlawfully must pay the employer an amount equal to the absence fee (total compensation including base salary and other allowances) for the notice period. A fixed-term employee who terminates employment unlawfully must pay the employer an amount equal to the absence fee due for the remaining period of the definite term, but not more than three months’ absence fee. The employer is entitled to claim damages in excess of these amounts in court but not more than the employee’s twelve months’ absence fee.

Plant Closings and Mass Layoffs

There are special rules regarding the termination at one time of large numbers of employees. These rules apply if within a 30-day period:

• an employer with 21 to 99 employees dismisses at least 10 employees,
• an employer with 100 to 299 employees dismisses at least 10 percent of the employees, or
• an employer with at least 300 employees dismisses at least 30 employees for a reason relating to its operation.

Before deciding on a mass redundancy, an employer must consult with the works council if one exists. The consultation must cover the reasons for the mass dismissal, possible ways of preventing it or of limiting the number of employees affected, and means of mitigating its effect on terminated workers.

Seven days prior to the commencement of the consultation, the employer must inform the works council in writing about:

• the reasons for the planned mass dismissal;
• the number of employees affected, broken down according to their positions;
• the average number of employees in the employer’s service over the previous six months;
• the planned scheduling of the mass dismissal;
• the selection criteria for employees to be dismissed and
• the provision of benefits for the dismissed employees different from those specified by law or in the collective agreement and how such benefits will be calculated.

If the employer decides to proceed with the mass dismissal, it must inform affected employees and the labor authority at least 30 days prior to formally notifying employees of their termination.

The termination is deemed null and void if the employer does not comply with the information obligation.

Payment on Termination

In the case of termination with regular notice by the employer or in the case of its dissolution without legal successor, redundancy payments must be made to employees who have worked at least three years for the employer.

The severance payment is calculated based on length of service as follows:

• one month for up to three years of employment,
• two months for up to five years,
• three months for up to 10 years,
• four months for up to 15 years,
• five months for up to 20 years, and
• six months for up to 25 years.

The employee is entitled to receive an additional payment of up to three months’ absence fee if employment is terminated within five years of eligibility for retirement pension.

An employee who is deemed to be “retired” under the Labor Code at the time of termination of employment is not entitled to a redundancy payment.

In case of a dismissal for nonperformance or for a disciplinary reason, the employee is not entitled to receive a redundancy payment. The employee is not entitled to receive a severance payment, regardless of the length of service, if he or she delivers the regular notice.

Employers are free to offer more generous severance benefits.

Unemployment Insurance

Unemployment benefits are calculated as 65 percent of average previous income but must be at least 90 percent of the minimum pension the beneficiary would be entitled to and not more than twice that amount. Benefits are paid for a maximum 270 days.

Benefits are financed by employee and employer contributions to the Labor Market Fund.

Reference Citations

Termination by Employer: Labor Code, Act I of 2012, (as amended), §§ 63-70

Termination by Employee: Labor Code, Act I of 2012, (as amended), § 67

Plant Closings and Mass Layoffs: Labor Code, Act I of 2012, (as amended), § 71-76

Payment on Termination: Labor Code, Act I of 2012, (as amended), § 77

Personal Taxes

Residency Requirements

A resident for tax purposes is any individual who lives in Hungary for 183 days or more in a calendar year.

Taxable Income

Hungarian residents pay personal income tax on their worldwide income. Nonresidents pay tax only on income derived from sources within Hungary. Tax is calculated at a flat rate on aggregate income and certain types of separately taxed income.

Employment income includes wages; compensation for public benefit employment; remuneration or honorarium; any sums received as bonuses, fuel allowance, or expense reimbursement; and any taxable insurance premiums paid by others underlying activities other than self-employment.

Tax Rates

Income is taxed at a flat rate of 15 percent.

Hungarian employers are required to pay 22 percent of an employee’s gross salary as a social contribution tax. There is no salary cap or limitation applicable to this contribution. An employer may have to make contributions for a foreign employee employed in Hungary in certain instances.

Employers are required to contribute to social security at a rate of 17.5 percent of an employee’s salary, which covers pension contributions, health insurance contributions, and unemployment insurance contributions.

Employees are required to contribute 10 percent of their salary to pension, 7 percent to health insurance and 1.5 percent to unemployment insurance.

The filing date for personal returns is May 20.

Effective starting Jan. 1, 2020, Hungarian mothers with at least four children are exempt from paying personal income tax on employment income. A mother’s number of children in this context is the total number of children she raised for whom she is either the biological mother or adoptive mother.

Reference Citations

Taxable Income: Personal Income Tax Law, (as amended), §§ 63-70

Web References

In Hungarian unless otherwise noted.

Law and Regulation

Labor Code

Occupational Safety and Health Act

Social Security Act