Employer of Record in Hungary

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Hungary if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Hungary below, to avoid any compliance issues.

Employment Contract Requirements

When hiring in Hungary, an employment contract must be created at the end of the employment agreement. This written document should contain, at a minimum, the following details:

• Identification of both parties (employer's personal details included)
• Specific workplace(s)
• Outline the job position, including duties and responsibilities
• Clearly state the basic salary and any additional compensation or benefit

Onboarding Process

We can help you get a new employee started in Hungary quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Minimum Wage in Hungary

As of January 1, 2025, Hungary's minimum wage rates are as follows:

• Standard Minimum Wage (for unskilled workers): HUF 290,800 per month
• Guaranteed Minimum Wage (for skilled workers with at least secondary education): HUF 348,800 per month

These rates reflect a 9% increase for the standard minimum wage and a 7% increase for the guaranteed minimum wage. Hungary's minimum wage system is reviewed annually through negotiations between employers' and employees' organizations within the National Interest Reconciliation Council (VKF). The government sets the minimum wage based on these negotiations, considering factors such as inflation, economic conditions, and employment levels.

Probation Period in Hungary

In Hungary, the standard probation period is a maximum of three months. If the agreed probation period is shorter than three months, it can be extended once, but the total probation period cannot exceed three months.

In Hungary, the regular workweek spans 40 hours, usually distributed as 8 hours per day across a five-day schedule. Employees in Hungary are entitled to two rest days in a given week. If the scheduled daily working time exceeds 6 hours the employee shall be entitled to a minimum 20-minute break from work. Furthermore, if the scheduled daily working time exceeds 9 hours the employee shall be entitled to an additional minimum of 25-minute break from work.

Overtime in Hungary is regulated by employment contracts or collective agreements. If an employee is asked to work beyond the regular hours or on weekends/public holidays, the weekly limit is 48 hours or 72 hours if the employee is required to be on call. The maximum limit on overtime is 250 hours per calendar year, which may be extended to 300 hours through a collective agreement. An additional 150 hours of overtime is allowed if individually agreed upon with the employee, with a total maximum of 450 hours per year. Overtime work beyond the standard 40-hour week should be paid at 150% of the basic salary rate. During weekends and public holidays, overtime is compensated at 200% of the basic salary rate.

Global expansion shouldn't mean losing time to paperwork or dealing with complicated, country-specific HR systems. An Employer of Record helps you keep your focus on talent by handling the operational side of employment in Hungary. That includes onboarding, contract management, payroll processing, and statutory compliance, all aligned with local laws and best practices. The EOR guarantees that employees are legally employed and properly supported from day one.

This streamlined setup allows you to prioritize recruiting the best people and integrating them into your company culture. Your team stays lean, and you avoid getting caught up in the details of local processes or shifting regulations. For founders, global hiring managers, or HR teams working across borders, an EOR multiplies your impact, reducing admin time, preventing errors, and helping ensure that new hires have a smooth experience from the get-go.

Employers operating in Hungary must navigate a structured payroll tax system that includes Personal Income Tax, Social Security Contributions, and the Vocational Training Contribution. These taxes must be accurately calculated and submitted on a monthly basis, typically by the 12th of the following month, with strict penalties for non-compliance.

Employers are responsible for both withholding employee contributions and making their own payments on top of gross wages. Understanding local filing requirements, contribution rates, and due dates is critical to maintaining compliance. Utilizing payroll management software can help employers in Hungary consolidate payroll data, reduce manual errors, and ensure timely, accurate tax submissions in line with legal requirements.

Hiring in Hungary means taking on local payroll obligations, which often include unique tax rates, contribution rules, and strict documentation. If you're not familiar with the system, or don't have a local entity, it’s easy to make mistakes. That’s where an Employer of Record ccomes in. The EOR manages payroll for your team on your behalf, ensuring every process is accurate, timely, and legally compliant.

Key Ways an EOR Supports Payroll in Hungary:

• Full Legal Compliance: Ensures all payments, deductions, and filings meet country-specific requirements.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Statutory Benefit Contributions: Pays into required social programs and manages country-mandated benefits.
• Employee Documentation: Generates compliant contracts and manages hiring and termination paperwork.
• Local Currency Payouts: Delivers salaries in local currency, avoiding delays or exchange rate issues for employees.

In Hungary, work permits and visas are crucial for employers hiring international workers. The process requires submitting applications, providing employment contracts, and ensuring that employees meet eligibility criteria. The main visa types include the EU Blue Card, designed for highly skilled non-EU workers with a validity of up to four years, and the Guest Worker Permit for specific nationalities.

Other options include the Seasonal Employment Visa for short-term agricultural or tourism work and the ICT Permit for intra-corporate transfers within multinational companies. As of January 2025, Employment Purpose Residence Permits and Guest Worker Residence Permits are now only available to foreign nationals from countries listed in a formal annex, with Armenia, Georgia and the Philippines currently listed.

The processing time for work permits generally takes 6 to 12 weeks, with government filing fees ranging from HUF 30,000–60,000 (USD 80–160) per application. Employers must stay compliant with Hungarian labor laws and assist with visa sponsorship to ensure smooth onboarding for foreign employees.

Mandatory Leave Entitlement in Hungary

The annual leave entitlement in Hungary is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Hungary

There are 11 officially recognized national holidays in Hungary listed below:

Paid Time Off in Hungary

Every employee is entitled to 20 days of paid vacation yearly, increasing to a maximum of 30 days for employees aged over 45. Additional details relating to annual leave in Hungary include:

• Employees with children under 16 receive extra vacation days based on the number of children: two days for one child, four days for two children, and seven days for three children.
• If a child has disabilities, an additional two days are given. Both parents can ask for this extra vacation time.

Maternity Leave In Hungary

Eligible employees are entitled to 24 weeks of paid maternity leave. Additionally, employees can take up to three years of leave and receive maternity benefits. The following details are applicable:

• For the first six months, mothers are entitled to Pregnancy and Confinement Benefit (CSED) at a rate of 70.00% of the salary.
• For the next eighteen months until the childs second birthday, mothers are entitled to a Child Care Fee (Gyermekgondozási díj " GYED) at a rate of 70.00% of the salary up to a maximum of double the minimum wage.
• A benefit called Child Home Care Allowance (Gyermekgondozási segély " GYES) is also available for parents or grandparents taking care of a child up to the age of three.
• The benefits are paid by the National Health Insurance Fund of Hungary (NEAK).

Paternity Leave In Hungary

A father is eligible for 10 days of paid paternity leave, or 12 days in the case of multiple/complicated births, to be taken within the two months following the child's birth.

Sick Leave In Hungary

Employees receive paid sick days according to the following:

• 15 paid sick days annually when unable to work. The employer covers 70% of their salary during this period.
• Beyond 15 days, the payment ranges from 60% of the employee's average income in the preceding 180-day period, with a specific daily cap (50% if the employee has been insured for less than 730 days or if employee is staying in the hospital). This is covered by the state social security system.

Parental Leave In Hungary

Both fathers and mothers are now individually granted 44 working days of paid parental leave. Parental leave can be utilised until the child reaches 3 years of age, given that the employee has completed a minimum of one consecutive year of employment.

Bereavement Leave

Bereavement Leave is not a statutory right in Hungary but can be offered by employer.

When hiring across multiple countries, maintaining consistency in how you deliver employee benefits quickly gets tricky. Each country, including Hungary, has its own legal rules, cultural norms, and contribution systems. An Employer of Record helps you strike the right balance between global structure and local compliance. They take over the complexity of delivering benefits that are aligned with Hungary’s legal requirements and competitive with local market expectations.

From ensuring statutory benefits are in place to managing local onboarding timelines and enrollment systems, the EOR provides a seamless experience for both employer and employee. This makes it easier to grow your team across borders without reinventing your benefits process in each new location. You stay in control of your overall benefits strategy, while the EOR takes care of executing it in a way that works legally and culturally in Hungary. It’s a smarter way to scale benefits globally without losing local relevance.

Termination Process in Hungary

In Hungary, either party can terminate employment by providing written notice and - if initiated by the employer - reasoning must also be provided. The notice becomes effective upon communication to the concerned party. Employment may be terminated for the following reasons:

• Redundancy from restructuring or staff reduction
• Misconduct or unacceptable behavior
• Poor work performance

Notice Period in Hungary

In Hungary, the standard notice period is 30 days. In cases where the employer initiates the termination of employment, the initial 30-day notice period must be extended by a specific number of days, determined by the employee's years of service:

• After three years of service: five additional days notice is required
• After five years of service: 15 additional days notice is required
• After eight years of service: 20 additional days notice is required
• After ten years of service: 25 additional days notice is required
• After fifteen years of service: 30 additional days notice is required
• After eighteen years of service: 40 additional days notice is required
• After twenty years of service: 60 additional days notice is required
• No notice is required whilst on probation.

Severance in Hungary

After three years of service, employees get severance pay based on service length and age, ranging from 1-6 months salary. Fixed-term contracts dont require severance pay.

• After three years of service: one month's salary
• After five years of service: two months' salary
• After ten years of service: three months' salary
• After fifteen years of service: four months' salary
• After twenty years of service: five months' salary
• After twenty-five years of service: six months' salary