Hiring Talent And Managing Payroll In Hungary

Agreements

• Indefinite or open-ended contract -A contract with no fixed end date is called an indefinite contract. It is mutually agreed upon and can be terminated by both parties. An employee can terminate the contract without stating a specific reason. The employer has to say a valid reason for termination. This type of contract hires permanent employees and full-time workers.
• Definite or fixed-term contract - A contract that ends on a fixed date is called a fixed-term contract. It is agreed upon for specific types of work and a fixed time. The term of a definite contract must not exceed 5 years in Hungary. It can be renewed for another 6 months on the mutual agreement of both parties. A new contract can be made within 6 months of the ending of the previous contract.

Onboarding Process

• The company will collaborate with its HR team if there is a job vacancy. A job description is prepared, which has details about the job.
• Once the appropriate description is prepared, it is uploaded on the company's official sites and other platforms.
• The employer may choose to publish the vacancy in local newspapers and magazines.
• Candidates submit their applications by verifying their eligibility criteria.
• The HR team shortlists candidates on the given criteria and rounds of assessments.
• Final shortlisted candidates can negotiate with the employer regarding the job. Once both parties reach an agreement, the candidate is hired.

Minimum Wage

• The guaranteed minimum wage for professional workers is HUF 260,000.
• The minimum wage in Hungary for non-professionals or other types of workers is around HUF 200,000.

Payroll Cycle

Annual Bonus

Health Benefits

• Every employee is entitled to health benefits in Hungary. The employer is responsible for providing healthy working conditions.
• The employee must declare health conditions

Working Hours and Overtime

• Work hours:The daily work hours in Hungary are fixed at 8 hours per day. It makes 40 hours of regular work per week. The standard working week is from Monday to Friday.
• Break: An employee is entitled to 20 minutes of unpaid break for 6 hours of work. If the work time exceeds 6 hours, the employee must get 25 minutes break. Every employee is given 2 days of continuous break per week.
• Overtime: The overtime in Hungary must not exceed 4 hours per day. The total overtime must be lower than 8 hours per week. The employer is obliged to pay 50% of the salary for overtime on weekdays. 100% salary is paid for overtime on weekends and holidays.

Social Security

• An employer contributes 13% to the social security fund. This tax is calculated on a flat-tax rate system.
• An employee has to contribute 18.5% of the salary to the social security fund. It is split into three different security funds.

Taxes for Employees

• Income tax - 15%.
• Pension Contribution - 10%
• Health Insurance - 7%
• Unemployment Contribution - 1.5%

Termination

• The labor laws protect employees from unreasonable terminations in Hungary.
• An employer must provide a valid reason for the termination of an employee.
• An employer can not terminate any employee on sick leave, maternity or paternity leave, or any other valid absence.
• The employer must provide written notice 30 days before termination. The valid reason for termination must be in the notice.

Severance Pay

Employees or Contractors

• A person who works for a company and gets paid is called an employee.
• An organization or company that hires employees is the employer.
• There are two types of recognized employment in Hungary - employees and self-employed.
• A penalty is imposed if an employer is found guilty of an employee's misclassification.
• The employer has to pay all legal benefits to such a misclassified employee.
• The employer has to pay all taxes and other contributions on behalf of the employee.

Final Words