- Overview: Hungary
- Global HR Compliance
- Global PEO and Payroll
- Work permit for hiring expats via PEO
- Contractor vs. Employee: which is better?
- Expand without a Company Set Up
Global HR Compliance in Hungary
If you’re thinking of hiring international workers in Hungary, then be sure to read our helpful Hiring and Firing Workforce in Hungary Guide.
When companies expand internationally, they often face unique challenges. These challenges can include accessing the best talent pools, understanding their obligations under multiple local labor laws, taxation, and accounting standards, reducing their exposure to foreign employment and compliance risks, and controlling costs.
Scaling a business can be extremely challenging, but with the right planning and strategy, companies can overcome these challenges and grow their businesses into new global arenas. To overcome these obstacles, companies must look for alternative streamlined global employment solutions such as Global PEO (Professional Employer Organization) or a Global EOR (Employer of Record) to streamline the hiring processes.
How a Global PEO or EOR Partner Help Enhance HR Compliance in Hungary
Consider using Acumen’s global employment and HR compliance solution to reduce compliance risk. Our solution is designed to make hiring employees in Hungary and globally easy for companies like yours. We take the hassle of HR management off your shoulders, handling hiring, payroll, benefits provision, and firing on your behalf. This helps you get started quickly and avoids the need to establish a legal business entity before getting underway.
1. Avoid Independent Contractor Non-compliance and Misclassification Risk
Employment and tax laws vary from country to country. You must comply with all local labour laws if you hire a worker directly. The penalties for non-compliance are steep and can include fines, imprisonment and loss of your business license. In some countries, employers must pay payroll taxes for all employees, regardless of whether they work for the company in-house or remotely.
Labour and tax authorities in Hungary can impose penalties for misclassifying employees as independent contractors, including fines and back taxes. You could risk violating employment and tax laws if you plan to grow your business by hiring international contractors. A global EOR can enhance compliance by hiring contractors on your behalf and following all local in-country labour requirements.
2. No Need to Set Up an Entity in Hungary with a Global EOR
Hungary is one of the fastest-growing economies in Europe and provides excellent opportunities for the growth of foreign businesses. If you’re looking to employ professionals in multiple countries or locations, a Global Employer of Record solution can help. With this type of service, you can easily onboard new employees without the need to incorporate locally, saving on the cost of establishing multiple international subsidiaries. Plus, all your employees are hired in compliance with all necessary visa and immigration requirements.
Acumen International PEO and EOR solutions can help you quickly access the best local and ex-pat talent in Hungary without needing to set up a legal entity in Hungary. It manages end-to-end employment processes in Hungary in compliance with local laws and regulations, giving you peace of mind.
We are experts in global workforce employment, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
3. Payroll, Benefits, Social Contributions Compliance in Hungary
Complicated legal obligations and changes in the law make it difficult for businesses to manage their payroll and tax obligations effectively. A global Employer of Record understands all applicable legal requirements and is liable for any non-compliance, so it is important to choose an advisor who can help you navigate these complex waters.
What Services Can a Global Employer of Record (EOR) and Professional Employment Organisation (PEO) Provide?
Suppose you intend to hire and pay your foreign workforce in full compliance with Hungary’s labor laws and regulations. In that case, the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company specializing in global employment, meaning we can employ your employees in Hungary and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network, so you don’t have to set up your legal entities there.
A Global Employer of Record (EOR) and Professional Employment Organisation (PEO) can handle all human resources-related issues regarding workforce in Hungary. These issues include but are not limited to:
- Payroll management;
- Compliance with local tax rules (file & reporting) of the country where the EOR and PEO company is located;
- Handling employment contracts:
- Background, education, and other checks;
- Onboarding and termination processes, as well as employee’s compensation;
- Arranging visas and work permits for employees;
- Ensuring the working process is organized under local labor laws;
- Processing workers’ medical insurance and other benefits (day-offs, bonuses, and more);
- Process maps, employment guides, and other documentation.
Engage Acumen International Employer of Record to Hire Anywhere Faster
Acumen International works 24/7 and can assist you whenever you need it, regardless of time zones. Our team of English-speaking professionals frees you from working through language nuances. Our goal is to create tailored labour solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce meets Hungary’s local tax, social security, and immigration requirements.
See the guide below for a general overview of labour rules and regulations in Hungary, or contact us if you need to employ workers in Hungary or would like to get more details.
The Ultimate Guide for Global HR Compliance in Hungary
Indeed, there are many reasons one should consider Hungary as a fertile ground for business investment: strategic position in the center of Europe, friendliness, openness, and incentive (financial/tax) to investment, well-developed infrastructure, skillful labor force, etc. Likewise, a few formalities are required to enjoy the advantages of doing business in the country. These include familiarizing and complying with the country’s labor laws and attracting, employing, and retaining an eminently suitable labor force for your business. These, as ever, can be a daunting task!
Acumen International, a global Professional Employer Organization (PEO), has designed a cost-effective and risk-free global employment solution to help you work through the long-involved business processes in Hungary.
Here are a few fundamental things to know about employment in Hungary.
Employment Contracts in Hungary
Employers in Hungary should always ensure that they have a written contract with their employees. The employer can run into trouble with the labor authorities without a contract. Any changes to the contract should be made in writing to avoid any potential complications.
An employment contract can be either a fixed-term or an indefinite term. A fixed-term contract usually lasts up to 5 years, including the extension period. An indefinite contract is open, meaning that it could last longer than 5 years. Regardless of the length of the contract, it must include basic terms such as job title, needed qualifications and responsibilities, the start date of employment, regular working hours, probation period, base wage agreed by both parties, payment date, and leave entitlements.
Minimum Statutory Employment Rights in Hungary
Hours of Work in Hungary
The statutory working time in Hungary is five days per week and 40 hours per week or six days a week and 48 hours per week upon the agreement of both parties. Employees are entitled to have an 11-hour of uninterrupted rest before every shift and a full day off on Sundays. An employer may ask his employee to work up to 2 hours extended hours for up to 4 months, but on the condition that those hours will be compensated for on a pro-rata basis with a reduced workday or extra time off. It is important to note that an employee cannot be compelled to accept this situation, it must be at will.
Probation Period in Hungary
The statutory maximum period an employee can be tried is three months from the first day of starting to work in the company. A probationary period can be extended once (to 3 months) if the initial period was less than 3 months.
Annual Leave in Hungary
Though there are about 12 holidays in the country, employees are entitled to a paid day off on just four holidays: Independence Day, Easter Monday, The Assumption of the Virgin Mary, and Christmas. The rest of the holidays – New Year’s Day, Day of Epiphany, First day of Lent, Good Friday, Whit Monday, Labor Day, and Boxing Day – are optional.
Also, employees who work 5 weekdays are entitled to 20 days of paid vacation annually. Employees who work 6 weekdays have the right to 24 days of paid annual leave. Employees with up to 10 years of service with the company are entitled to an extra day of paid leave per year for every 2 years. Employees with more than 10 years in the company are eligible to take 25 days’ paid leave if they work 5 weekdays or 30 days’ paid leave if they work 6 weekdays.
Parental leave in Hungary
An employer has to be informed in writing about a pregnancy; thereafter, pregnant women have workplace protection.
Women have 24 weeks of maternity leave but are allowed to take up to three years off and receive maternity benefits. For the first six months, a woman receives 70 per cent of her previous salary; this support is called Pregnancy and Confinement Benefit (Terhességi-gyermekágyi segély – TGYÁS).
A Child Care Fee (Gyermekgondozási díj – GYED) is available for the next eighteen months until the child’s second birthday. The amount paid is 70 percent of the previous earnings of the parent taking care of the child; however, it is capped and cannot be higher than 70 percent of twice the minimum daily wage.
A benefit called Child Home Care Allowance (Gyermekgondozási segély – GYES) is available for parents or grandparents taking care of a child up to the age of three. However, this is a much smaller amount. For those who were unemployed when they gave birth, only GYES is payable.
Fathers are entitled to five days of paternity leave, to be taken in the first two months following the birth.
Sick leave in Hungary
All employees have the right to receive 15 days of absence of sick leave paid by their employers at 70% of their salary.
After 15 days, if needed, the employee may receive a sickness benefit funded jointly by the employer and the Health Insurance Fund. This amounts to up to 60 per cent of their salary, depending on how long they have contributed to the Health Insurance Fund, but is capped at the double the minimum wage.
Overtime in Hungary
An important restriction on overtime work is that an employee cannot be ordered to work overtime of more than 250 hours per year. Employees are entitled to 50% extra pay for their overtime hours when working overtime on a workday. This can be exchanged for extra time off, but only if agreed beforehand. The extra time off must be as long as the overtime hours.
Overtime work during the non-working days must be compensated at a premium rate of 50% plus an extra time off or at an overtime rate of 100% (without an extra time off). Employees who work for at least one hour during the night hours (10 p.m. and 6 a.m.) must be remunerated at a premium rate of 15%. Shift workers must be compensated with a 30% supplement.
Minimum Salary in Hungary
Effective from 1 January 2022, the minimum wage in Hungary is HUF200,000.00 (per month for unskilled labor and HUF260,000.00 per month for skilled labor. Employees must be remunerated not less than once a month.
Employment Termination in Hungary
Contract of employment can be ended by a single party of the relationship or by mutual consent of both parties with prior notice or without notice. Termination with notice requires a minimum of 30 days of notice period before the intended day. Depending on an employee’s years of service, an employer can extend a notice period by 5 days for more than 3 years of service; by 15 days for more than 5 years of service; 20 days for more than 8 years; 25 days after 10 years; 30 days after 15 years; 40 days after eighteen years; and by 60 days after twenty years of service. All employees at termination are entitled to severance pay.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Hungary by providing you with our Employer of Record services. Our unique mix of Global PEO and EOR solutions will enable you to jumpstart your global operations immediately, cost-effectively, and compliantly without any requirement to set up a legal entity first or thereafter.