Expand your organization into Hungary - without a Hungarian entity
The Eastern European country of Hungary is developing rapidly and presents countless excellent opportunities for foreign businesses looking to invest and grow there.
If your organization is planning an expansion into Hungary, your progress may be stalled by the complex legal and cultural procedures in the country. If you are unfamiliar with the local customs, procedures, and language, you may hit delays, which could result in costs spiraling and cutting into your profits.
At New Horizons, our experienced expansion team helps businesses expand into Hungary. Our tailored professional employer organization (PEO), employer of record, and payroll services can provide you with all the support you need to efficiently expand your business into Hungary, whether or not you have already established a Hungarian entity.
Additionally, our dedicated in-house recruitment team can find, hire, and onboard your new employees in Hungary, as well as manage any ongoing HR and compliance administration. Our dedicated team will provide everything you need to expand into Hungary as efficiently as possible and could drastically cut your expansion costs.
How can our Hungary PEO simplify your expansion?
New Horizons enables your business to expand its operations into Hungary, without setting up a legal subsidiary.
Hiring in Hungary: Employment law overview
Employment contracts in Hungary
Employers in Hungary are required to provide their employees with a written contract of employment. Most contracts are, and will be expected to be, indefinite-term in duration.
Every contract should be written in the local language of Hungarian, use the local currency of the Hungarian forint, and include all relevant employment terms such as salary/wage, vacation leave allowance, and so on.
Working hours in Hungary
A normal working week for Hungarian employees is 40 hours, with eight hours per day for five days. Any time worked above this should be paid at an overtime rate of at least 150% of normal salary, and workers cannot work more than 250 hours of overtime in a year.
Public holidays in Hungary
New Year’s Day
1848 Revolution Memorial Day
Labor Day / May Day
Hungary National Day
Hungary National Day Holiday
Extra Work Day
1956 Revolution Memorial Day
All Saints’ Day
Saint Nicholas Day
Extra Work Day
Second Day of Christmas
New Year’s Eve
Hungary vacation leave
Workers in Hungary are entitled to a minimum of 20 days of paid vacation leave per year. This increased with the age of the employee:
- Under the age of 25 = 20 days of vacation leave
- 25 years old = 21 days
- 25-30 = One extra day every three years
- 31-45 = One extra day every two years
- 45+ = 30 days
Hungary sick leave
Any employee registered with the country’s social security program can take at least 15 days of sick leave. During this period of absence, they can receive 70% of normal pay, covered by their employer. Beyond the initial 15-day period, the compensation is reduced to around 50-60% (the amount varies depending on specific employment terms and length of service). The employer must cover one-third of this and the government covers the remaining amount.
Parental leave in Hungary
Female workers in Hungary are entitled to 24 weeks of paid maternity leave at 70% of average salary. Male employees are entitled to five days of paternity leave, which must be used in the two months following the child’s birth.
Terminations and severance in Hungary
There is no legally mandated limit to probation periods in Hungary, but periods are almost always kept at a reasonable length i.e. a few months at maximum.
Employees must be provided with a minimum of 30 days of notice upon termination. This minimum period is increased depending on the length of service:
- Three years of employment = Five days extra
- Five years of employment = 15 days extra
- Eight years of employment = 20 days extra
- Ten years of employment = 25 days extra
- 15 years of employment = 30 days extra
- 18 years of employment = 40 days extra
- 20 years of employment = 60 days extra
Employees are also entitled to severance pay if they are terminated in certain circumstances, ranging from one month to six months depending on the length of service, and an added three months if the employee is within five years of retirement.
Taxation in Hungary
Employers in Hungary must contribute around 27% of salaries toward the mandatory social security fund. Employees need to contribute 9.5% and 7.5% for social security and health insurance respectively.
The income tax rate in Hungary is 15%.
Health coverage in Hungary
Hungary has national healthcare, so employees are covered, so employers are not expected to provide private health insurance as a benefit.
Hungary compensations & benefits
Compensation laws in Hungary
The minimum wage in Hungary is €487.10 per month as of mid-2020.
Benefit management in Hungary
Employees in Hungary often expect benefits packages as part of their employment agreements, so you may need to set up a benefits management system when hiring in the country. But setting up and managing a benefits system in Hungary can be complicated, particularly if you are unfamiliar with the country’s unique regulations and procedures.
New Horizons can help to significantly simplify this step of your Hungary expansion by providing benefit management outsourcing. Our team can advise you and handle the setup of your benefits scheme, enabling you to focus on expanding your organization in Hungary.