How to hire in Hungary through an EOR

All employment contracts in Hungary must be in writing, arranged by you as the employer, and typically in Hungarian. Employees can challenge verbal or missing written contracts within 30 days of starting work, and they'll default to indefinite status if that happens.

Indefinite contracts are the default and the most common for good reason. Fixed-term contracts can get reclassified as indefinite if you chain them without a clear justification, which means back payments and a messier situation than if you'd started with an indefinite contract.

What has to be in the contract

The Hungarian Labour Code sets minimum requirements. You'll need to include your details and the employee's name, address, job title, duties, workplace, start date, pay amount and frequency (in HUF, not foreign currency), working hours, and contract duration if it's fixed-term.

If you're using a probation period, the maximum is 3 months for indefinite contracts, and it must be shorter than the full term for fixed-term ones. You don't have to include one, but if you do, it needs to be in writing. It's also worth including termination terms, benefits, vacation entitlements, and responsibilities to avoid disputes later.

The contract must be in Hungarian, and you need to hand it over on day one. If you skip the written contract, the employee can void it within 30 days.

Contractor vs employee

Misclassification is a common problem in Hungary. Courts look at control: if you're directing someone's hours, tasks, and day-to-day work the way you would an employee, the Labour Code treats them as one. "Assignment contracts" with sole traders who invoice you as forced entrepreneurs are under increasing scrutiny from the tax authority NAV, particularly after recent crackdowns.

If you're found to have misclassified someone, expect reclassification to employee status. You'll owe back taxes, social security contributions (around 27% employer share), paid leave, and overtime. Fines can reach thousands of euros per case, and employees can also claim damages including unfair dismissal pay. NAV audits aggressively where tax avoidance is suspected.

Non-competes are enforceable for up to 2 years after the contract ends, but only if you pay the employee at least one-third of their average salary during the restriction period and it's tied to a legitimate business interest. On IP: employees own their inventions by default unless the contract states otherwise, though you can claim rights with appropriate compensation.

For core roles, indefinite employee contracts are the straightforward choice. If you don't have a Hungarian entity, an EOR can handle local compliance from day one. Fixed-term and part-time contracts work for the right situations, but whatever you use, make sure the reasoning is documented.

Hungarian employees can get up to 30 days of paid annual leave based on age alone, plus extra days for having kids. The legal baseline is solid, but you'll still need to add perks like private health insurance if you want to attract strong candidates.

Time off

Every employee gets a minimum of 20 working days of basic annual leave, accruing pro-rata through the calendar year. On top of that, you add 1 to 10 extra days based on age: 1 day at 25, growing to 10 days at 45 and older. Parents get 2 days for one child under 16, 4 for two children, and 7 for three or more.

You're required to grant 7 days at the employee's request each year, in up to two separate blocks, with 15 days' notice from them. You schedule the rest, but you must include at least 14 consecutive calendar days off, counting weekends and public holidays. For roles starting after October 1, unused leave can carry over to March 31 the following year.

All leave types

Job protection applies to maternity, paternity, and parental leave. Pay for most leave types is calculated on average earnings, including bonuses.

Mandatory benefits

Social security covers health, pension, and unemployment. The total contribution rate is 28.5% of gross salary up to a cap. You contribute 13% (pension 8.5%, health 4.5%, labor market 0.5%, and other). The employee contributes 18.5% (pension 10%, health 7%, labor market 1.5%).

There are no legal requirements for things like meal vouchers or transport passes. Those are common in practice, but they're voluntary, not mandated.

What people actually expect

The legal minimum won't get you far with skilled hires. Most locals expect 25 to 30 total leave days, even if you're starting at the 20-day base. Private health insurance matters too since public coverage is basic and wait times are a real frustration.

Meal vouchers (around HUF 30,000/month) and public transport passes are standard in Budapest and other major cities. Remote work stipends for home office setup typically run 20,000 to 50,000 HUF per year. Laptop allowances and extra pension contributions are also worth considering.

If you offer only the bare minimum, expect hiring to take longer. Strong candidates look for 13th-month pay, flexible hours, and company phone plans. Matching those expectations puts you in a much more competitive position.

Hungary's labor laws lean heavily in favor of employees, particularly around termination. You'll need clear grounds to end someone's employment, the process takes time, and getting it wrong can mean reinstatement orders and compensation claims. Follow the rules and you're protected. Don't, and it gets expensive.

Firing someone

For open-ended contracts, you need a valid, documented reason in one of these categories: the employee's behavior or performance, their skills, their health, or a business reason like restructuring. The reason has to be factual and clearly stated in writing. You can't terminate without one.

Fixed-term contracts are more restricted. You can only terminate by notice if the company is going through liquidation or bankruptcy, the employee doesn't have the required skills, or the relationship has become impossible to maintain due to unavoidable external circumstances.

There's one exception: if the employee is a pensioner, you don't need to give a reason. For everyone else, you need to justify it.

Protected categories are completely off-limits. You can't terminate someone who is pregnant, on maternity leave, on childcare unpaid leave (or before their child's third birthday if they didn't take formal leave), on voluntary military service, or undergoing IVF treatment (for six months). Any termination in these situations is automatically treated as unfair dismissal.

If an employee challenges the termination in court and wins, you'll have to reinstate them and pay compensation for lost earnings. Courts in Hungary treat these cases seriously.

Immediate termination without notice is only possible for serious breaches. The employee must have willfully or through gross negligence violated a substantial obligation, or behaved in a way that makes the employment relationship impossible to continue. The severity of the breach is what matters, not the financial impact. You have 15 days from discovering the breach to act, or you lose the right. For criminal offenses, the statute of limitations applies instead.

Notice periods

The base notice period is 30 days, starting the day after you notify the employee. When you're the one terminating, that period extends based on how long the employee has worked for you. Here's the full breakdown:

During the notice period, you're required to release the employee from work duties for at least half the notice period. That time can be split into no more than two parts, at the employee's discretion, so they have time to look for other work.

For fixed-term contracts, the notice period can't exceed the remaining term of the contract.

Severance

Hungary doesn't have a standard severance formula for regular terminations. Severance is only required in specific situations. If you terminate a fixed-term contract by notice, the employee is entitled to pay for the remaining time on the contract, up to 12 months, or whatever's left if less than a year remains.

For collective redundancies (10 or more employees in smaller firms, 10% of the workforce in medium-sized firms, or 30 or more in larger ones), you must notify the Hungarian Labour Authority 30 days in advance. Individual severance terms may apply depending on your company's policies or any collective bargaining agreements in place, but there's no statutory minimum beyond the fixed-term contract rule.

If a termination is ruled unlawful, the employee can claim compensation for lost earnings and non-material damages if their personal rights were violated. There's no fixed amount; it depends on what the court decides.

Work permits and visas

Hungary is part of the EU, so hiring EU/EEA citizens doesn't require a work permit. For non-EU nationals, you'll need to work through the permit system, and this is where using an EOR can save you a lot of time.

An EOR can sponsor work permits on your behalf. The main visa categories for non-EU workers are:

• Work permit (general): Requires a job offer and evidence that the role couldn't be filled by an EU citizen. Processing typically takes 30 to 60 days.
• Intra-corporate transfer: For employees moving within your company group. Processing is generally faster.
• Digital nomad visa: Hungary offers a digital nomad residence permit for remote workers earning sufficient income. It's valid for one year and renewable.
• Student residence permit: For graduates who want to stay and work. This can transition to a standard work permit.

An EOR takes care of submitting applications, managing documentation, and keeping everything in step with labor office requirements. Without one, you'd need to set up a legal entity in Hungary first, which takes time and costs importantly more.

Other things worth knowing

Collective bargaining agreements: If your industry or company has a CBA in place, its terms override the statutory minimums. Check whether one applies to your sector before you finalize any employment terms.

Data protection: Hungary follows GDPR. Employee data, including performance records, medical information, and background checks, needs to be handled carefully. Unlawful data processing can add liability in termination disputes.

Recent changes: As of January 2023, employees can request written reasons for termination even in cases where the Labor Code doesn't otherwise require it, such as during probation, for executive roles, or for retired employees. If the employee claims the termination is connected to requesting flexible working conditions, you must provide reasons. Documentation has become more important as a result.

Probation periods: The maximum is three months. After that, full labor law protections apply automatically, even if no probation period was formally specified in the contract.