Employ Candidates Compliantly in Hungary

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  1. Overview: Hungary
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Hungary

If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Hungary Guide below will help you understand the nuances of labor legislation in the country.

Companies hire international workforce for various reasons but in most cases they are:

  • entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
  • hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.

Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.

If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Hungary, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize 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 own legal entities there.

We are experts in global workforce employment in , 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.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor 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 satisfies all local tax, social security, and immigration requirements in Hungary.

See the guide below for a general overview of labor rules and regulations in Hungary or contact us if you need to employ workers in Hungary or would like to get more details.

Hiring and Firing Workforce in Hungary Guide

Surely, there are many different reasons why one should consider Hungary as a fertile ground for business investment: strategic position in the centre of Europe, friendliness, openness and incentive (financial/tax) to investment, well-developed infrastructure, skillful labor force, etc. Likewise, there are a few formalities that are required to enjoy the advantages of doing business in the country and these include familiarizing and complying with the labor laws of the country, as well as attracting, employing and retaining 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 workable solution that can help you work through the long involved processes of doing business in Hungary.

Here are a few fundamental things to know about employment in Hungary.

All contracts of employment must without negotiation be concluded in writing. An employment contract may be given on a fixed-term basis or on an indefinite term. Whatever the case, a contract must include the basic terms of an employment relationship, which include the job title, needed qualification and responsibilities, start date of employment, normal working hours, probation period, base wage agreed by both parties, payment date, leave entitlements, terms of notice and applicable collective agreement. Fixed-term contracts are those contracts with up to 5 years duration (including the period of extension). Indefinite contract are open contracts with more than 5 years duration.

Minimum statutory employment rights

# Hours of work
The statutory working time in Hungary is 5 days per week and 40 hours per week or 6 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 complete day off on Sundays. An employer may ask his employee to work up to 2 hours extended hours for up to a period of 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
The statutory maximum period an employee can be tried is 3 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 given period was less than 3 months.

# Annual leave
Though there are about 12 holidays in the country, employees are entitled to a paid day off in just four of the 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 who have up to 10 years of service with the company are entitled to be given an extra day of paid leave per year for each 2 years of service. Employees who have 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
An employer has to be informed in writing about a pregnancy; thereafter pregnant women have workplace protection.

Women have 24 weeks 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 percent of her previous salary; this support is called Pregnancy and Confinement Benefit (Terhességi-gyermekágyi segély – TGYÁS).

For the next eighteen months, until the child’s second birthday, a Child Care Fee (Gyermekgondozási díj – GYED) is available. 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, although 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 paternity leave, to be taken in the first two months following the birth.

# Sick leave
All employees have the right to receive 15 days of absence of sick leave paid by their employers at 70% of salary.

After 15 days, if needed, the employee may receive sickness benefit which is funded jointly by the employer and the Health Insurance Fund. This amounts to up to 60 percent of their salary, depending on how long they have contributed to the Health Insurance Fund, but is capped at double the minimum wage.

# Overtime
An important restriction on overtime work is that an employee cannot be ordered to work more than 250 hours per year overtime. When working overtime on a workday, employees are entitled to 50% extra pay on their overtime hours. This can be exchanged for extra time off, but only if agreed beforehand. The extra time off must be at least 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 in the night hours (10 p.m. and 6 a.m.) must be remunerated at a premium rate of 15%. Shift workers must be compensated at a 30% supplement.

# State minimum salary
Effective from 1 January 2018, the minimum wage is 137,860 HUF (€440; $530) per month for unskilled labor, 180,600 HUF (€576; $695) per month for skilled labor.. Employees must be remunerated not less than once a month.

# Employment termination
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 at all. Termination with notice requires that a minimum of 30 days of notice period be given 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 a 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 PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any requirement to set up a legal entity first or thereafter.

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