Employers of Record (EORs) play a vital role in the recruitment of skilled personnel in Hungary. These specialized employment and recruitment experts possess the knowledge and resources to navigate the hiring process efficiently. With their established networks, EORs can identify and attract highly qualified candidates, simplifying the recruitment process for businesses. They also provide valuable guidance on employment agreements and ensure compliance with local labor regulations, reducing legal risks. By partnering with a Hungary-based EOR, companies can tap into their market expertise, benefit from streamlined HR operations, and access the right talent for their growth and success.

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A Hungary EOR/PEO ensures compliance with the country's intricate labor laws, mitigating the risk of non-compliance and associated penalties. Their in-depth knowledge of labor practices and cultural nuances, provides valuable expertise and guidance.

This is because there are many laws and regulations that are unique to Hungary. For example, employees can work overtime for up to 250 hours in a year. Besides such statutory stipulations, employers also need to be aware of collective bargaining agreements which will continuously change wages, working hours, leaves, etc. 

By collaborating with a Hungary EOR/PEO, businesses can effectively navigate the Hungarian market, optimize their HR operations, and ensure adherence to local regulations, fostering growth and achieving success.

The cost of Hungary EOR/PEO services in Hungary may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Hungary EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

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Hungary is a highly sought-after destination for outsourcing IT services in Central and Eastern Europe. The country boasts a substantial pool of approximately 150,000 IT professionals, with an annual influx of around 6,000 graduates joining the IT workforce.

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from hungary

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots' Recrew platform, you can discover amazing talent in Hungary and grow your team effectively.

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The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor or exempts them from certain employment laws and benefits, even if the worker should be classified as an employee and entitled to legal protections, benefits, and rights.

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Utilizing a PEO/EOR in Hungary  helps mitigate the risks associated with misclassification by ensuring compliance with labor laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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Employment contracts

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When entering into an employment agreement in Hungary, it is mandatory to create a written employment contract. This contract should include essential details such as the identification of both parties, workplace(s), job position, duties and responsibilities. Additionally, it should refer to a separate document specifying the employee's detailed job description. The contract should also outline the basic salary, as well as any other compensation or benefits provided.

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Starting from January 2023, employers are required to provide employees with comprehensive information about additional terms of employment, including termination rules, training policy, working hours, and more. This information must be provided on the first day of the employment relationship.

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By default, employment contracts in Hungary are considered to be of unlimited duration. However, fixed-term contracts are permissible as long as their duration does not exceed five years.

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It's important for employers to understand the intricacies of these programs before making a hire. This might sound overwhelming, but it doesn't have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in Hungary. Contact us.

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Overtime

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Employees in Hungary are permitted to work overtime as long as they adhere to the maximum daily limit of 12 working hours. Additionally, employees are not allowed to exceed a total of 48 working hours per week. Over the course of one year, employees can work an additional 250 hours, or up to 300 hours as permitted by certain collective agreements. Overtime work must be compensated with a 50 percent wage supplement.

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Minimum Wage

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As of January 2023, the minimum wage in Hungary increased to HUF 232,000 per month. However, for positions that require specific training or higher qualifications, the minimum monthly remuneration must be at least HUF 296,400.

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Sick Pay

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In Hungary, employers have a legal obligation to offer sick pay to employees who are absent due to illness. The sick pay should amount to 70 percent of the employee's regular wages and is provided for a period of 15 days. After this initial 15-day period, the responsibility for payments is transferred to the Hungarian social security system, which can provide sickness benefits for up to one year.

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Maternity leave

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Maternity leave in Hungary can last for up to 24 weeks, essentially 6 months. During this period, employers must pay 70% of the employee’s monthly salary. This benefit is called the Pregnancy and Confinement Benefit. 

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Paternity leave

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Male employees can avail 10 working days of employer-paid paternity leave upon the birth or the adoption of a child. The father may claim paternity leave within two months of birth or adoption; leave may be divided into two installments.

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Annual leave

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Employees are entitled to a minimum of 20 days of paid time per year. The annual leave increases by age as well. 

Below is a table indicating the number of vacation days employees in Hungary are entitled to.

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Tax and Social Security contribution:

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Employer's Social Security Contributions:

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• 13% of the employee's salary as a contribution to social security.

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Employee's Social Security Contributions:

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• 7% for health insurance
• 10% for pension fund
• 1.5% for unemployment insurance

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Termination Process

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In Hungary, employers are generally required to provide a written reason for terminating an employee. The reason must be clearly stated and based on factual grounds. It is important to note that termination is prohibited when an employee is on specific leaves protected by Hungarian law, such as maternity leave or voluntary reserve military service.

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Notice Period

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Employers in Hungary must provide advance notice of termination, typically ranging from 30 to 90 days. However, for employees on fixed-term contracts, the notice period may not apply if the contract ends on the predetermined date specified in the agreement.

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The base notice period of 30 days can be extended based on the employee's length of service:

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Severance Pay

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Employees are entitled to severance pay after completing 3 years of service. 

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Severance pay in Hungary depends on the employee's tenure and age, ranging from one month's salary to six months' salary. 

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Employment contracts should specify the expectations and procedures regarding severance pay to avoid any misunderstandings. Employees are entitled to severance pay in cases of:

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• Unilateral termination by the employer
• Company closure
• Acquisition scenarios
• Employer is terminated without a successor
• The employee quits after a change in the employer, when staying in employment would have been either impossible for the employee or would have hurt their interests
• The employee is found to willfully breach of contract or gross negligence on the side of the employer

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Probation Periods

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In Hungary, the maximum probation period allowed is three months. Once the probationary period concludes, the employee is considered a full employee and entitled to all the protections provided by Hungarian labor law, even if the employment contract did not specify a probationary period.

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When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

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Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Hungary must have a local legal organization and utilize local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Hungary makes compliance with employment laws demanding.

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With Gloroots' global Employer of Record (EoR) service, you can let Gloroots handle the heavy lifting of payroll, tax, benefits, and compliance, allowing you to concentrate on what matters most: your employees and company growth.

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