Employer of Record (EOR) in Hungary

Employment Laws and Regulations in Hungary

Employment Contracts

Hungarian employment law requires a written contract for all employment relationships, either indefinite or fixed-term. The contract must specify the job title, place of work, start date, salary, probation period (if applicable), notice periods, and any conditions specific to the role. The Labor Code permits probation periods of up to 3 months for standard roles; collective bargaining agreements (CBA) can extend this to 6 months, though this is uncommon outside manufacturing and transportation.

During probation, either party may terminate employment immediately without cause or advance notice.

Working Hours and Overtime

The Hungarian Labor Code establishes a standard 40-hour workweek, typically structured as 8 hours per day over 5 days (Monday through Friday). Overtime is limited to 250 hours per calendar year by default, though a collective bargaining agreement can increase this to 300 hours, and individual written consent between employer and employee can permit up to 450 hours annually. Overtime compensation varies by day and timing: weekday overtime is paid at 150% of base salary, weekend work at 200%, and public holidays at 200%.

Night work (between 10 PM and 6 AM) includes a 15% premium in addition to the base hourly rate. Standby duty on employer premises is compensated at 40% of salary, while standby at home is 20%. Employers must guarantee at least 11 hours of rest between consecutive shifts.

Minimum Wage

Hungary enforces a unified national minimum wage with two tiers as of 1 January 2026. The standard minimum wage is HUF 322,800 per month gross (approximately EUR 837), while the guaranteed minimum for skilled workers is HUF 373,200 per month gross (approximately EUR 968). These figures are set by Decree 426/2025 and apply to all employment sectors.

Employees earning the standard minimum wage face a total statutory deduction of 33.5%, comprising 15% income tax and 18.5% in social security contributions, leaving a net take-home of approximately HUF 215,070 (EUR 558).

Probation Period

The maximum probation period in Hungary is 3 months for standard roles, as specified in the Labor Code. A collective bargaining agreement can extend this to 6 months, though this is rare outside heavy manufacturing and transportation sectors. During the probation period, the employer may terminate the employment relationship without cause and without advance notice; the employee likewise may resign immediately.

After probation ends, standard notice periods apply, beginning at 30 days for employees with less than 3 years of tenure and scaling up to 90 days for employees with 20 or more years of service.

Leave Entitlements

Annual Leave

All employees in Hungary receive a minimum of 20 calendar days of paid annual leave per year. This base entitlement increases by 1 day for each completed year of age above 25 (up to a maximum additional 10 days for employees aged 45 and older), meaning an employee aged 40 receives 25 days total. Additional leave is granted based on dependents: 2 extra days for one child, 4 additional days total for two children, and 7 additional days total for three or more children.

Unused annual leave cannot be carried forward to the next year except where an employer-initiated termination prevents full use; in that case, unused leave is paid out as a lump sum at the employee’s average daily wage.

Sick Leave

Employees are entitled to 15 days of sick leave per calendar year at 70% of their average daily wage, paid by the employer. After 15 days, the state social security system provides sick benefits at 60% of average daily wage for days 16 through 30, and 50% thereafter. Maternity-related sick leave (napjainkban) is separate and does not count against the 15-day employer-paid limit.

Maternity Leave

Hungarian maternity leave consists of three separate benefit periods. The first is CSED (Csed, Csecsemőgondozási díj), paid maternity benefit, which provides 70% of the mother’s average daily wage for 24 weeks (approximately 6 months) following childbirth. Next is GYED (Gyermekgondozási díj), parental childcare benefit, which continues at 70% of average daily wage up to a monthly maximum (typically capped around HUF 700,000) until the child turns 2 years old.

Finally, GYES (Gyermekgondozást segítő ellátás), childcare allowance, provides a flat monthly amount of HUF 28,500 per child until age 3. Mothers with three or more children receive a full income tax exemption on wage income, and may extend GYES beyond age 3 in some circumstances.

Paternity Leave

Fathers are entitled to 10 days of paternity leave following the birth of a child. The first 5 days are paid at 100% of average daily wage by the employer, while the remaining 5 days are paid at 40%. Paternity leave must be used within 6 months of the child’s birth.

Fathers may also use 44 working days of parental leave before the child’s third birthday, subject to the same conditions as mothers.

Other Statutory Leave

Employees are entitled to additional leave for specific circumstances. These include leave for the care of a seriously ill family member, leave for attendance at a child’s school or kindergarten activities, and special leave for retirement preparation (up to 5 days) for employees approaching the statutory retirement age. Union officials receive additional time off for union activities as prescribed by the relevant collective bargaining agreement.

Leave entitlements and statutory requirements under Hungarian labor law create a complex framework requiring careful administration by any employer. The following table summarizes the main categories and entitlements:

Statutory Employee Benefits

Hungarian employment law requires employers to provide specific statutory benefits. These include mandatory enrollment in the national health insurance system, mandatory pension contributions (10% employee, employer portion varies), and mandatory participation in the labor market fund (1.5% of payroll). Additionally, employers must cover the employee’s share of healthcare costs not covered by insurance, provide workplace safety training and equipment, and maintain accident insurance for all workers.

Some industries and collective bargaining agreements mandate additional benefits such as meal vouchers, transportation allowances, or clothing for hazardous work.

Recent Regulatory Updates (2026)

As of January 2026, Hungary has implemented several regulatory changes affecting EOR operations. The minimum wage increased by 11% to HUF 322,800 per month, while the guaranteed minimum for skilled workers rose 7% to HUF 373,200. The government doubled the family tax allowance, increasing the benefit to HUF 20,000 per month for one child, HUF 80,000 total for two children, and HUF 198,000 total for three or more children.

Decree 426/2025 clarified overtime calculation methods and standby compensation rates, while the under-25 income tax exemption remains in place for employees earning up to the average national wage (HUF 693,740 per month). Work permit regulations under Decree 450/2024 continue to restrict third-country hiring to specific approved countries: Armenia, Georgia, and the Philippines, with conditions tied to readmission agreements.

Work Permits and Visas in Hungary

Work Permit Requirements

Who Needs a Work Permit

Citizens of the European Union, European Economic Area (EEA), and Switzerland do not require a work permit to be employed in Hungary. This includes all EU member states and countries such as Iceland, Liechtenstein, and Norway. Third-country nationals, defined as citizens of countries outside the EU, EEA, and Switzerland, generally require a work permit unless they qualify for a specific exemption or alternative immigration pathway.

Since January 2025, Hungary has severely restricted third-country hiring to specific approved countries: Armenia, Georgia, and the Philippines. Hiring from other countries requires high-level government approval and is practically unavailable for most businesses.

Eligibility and Required Documents

Third-country nationals seeking a work permit in Hungary must meet several requirements. The employer must demonstrate that no suitable EU/EEA workers are available for the position (labor market test), the salary must meet minimum thresholds set by the government, and the candidate must not pose a security or public health risk. Required documents include a completed work permit application form, a valid passport, employment contract signed by both employer and candidate, proof of qualifications if the role requires them, and documentation of the employer’s business registration and tax compliance.

Some applicants must also provide medical test results, police clearance certificates, and proof of housing in Hungary. The employer bears the cost of the work permit application, which typically ranges from EUR 100 to 300.

Processing Time and Validity

Work permit applications in Hungary are processed by the Immigration and Asylum Authority (BÁH), typically requiring 30 to 60 days for approval. Once granted, a work permit is valid for the specified period (usually 1 to 3 years) and may restrict the holder to a specific employer, position, and location. Extensions are available but require re-application and renewal of supporting documents.

Many EOR providers coordinate the work permit process on behalf of their clients, though the ultimate approval authority remains the Hungarian government.

Renewal Process

Work permits must be renewed before expiration. The renewal process mirrors the initial application: the employer submits an updated application form, the employee provides a valid passport, employment contract, and proof of continued employment. If the employee has changed employers or role, a new work permit is required rather than a simple renewal.

The Immigration and Asylum Authority aims to process renewals within 30 to 45 days, though delays can occur during peak seasons.

Common Visa Types

Hungary offers several visa and immigration options for workers and their families. The Standard D visa is the most common, issued for employment, study, or self-employment purposes and valid for up to 1 year with renewal possibilities. The EU Blue Card is available for highly skilled workers, requiring a salary threshold of HUF 1,001,048 per month (approximately EUR 2,600) for most professions.

Long-term residence permits are available for investors, entrepreneurs, and persons of independent means. The following table summarizes key visa and work authorization options:

How an EOR Handles Work Permits

When an EOR hires a third-country national in Hungary, they manage the entire work permit process. The EOR verifies the candidate’s nationality and eligibility based on current government restrictions, prepares the work permit application with all required documentation, submits the application to the Immigration and Asylum Authority on behalf of the employer, and monitors processing until approval. The EOR informs the employer of any additional documentation requests and coordinates with the candidate to provide updated or missing information.

Once the work permit is approved, the EOR registers the employee in the national employment system and initiates payroll processing. For EU/EEA/Swiss citizens, no work permit is required; the EOR simply verifies citizenship and proceeds with onboarding.

Payroll, Taxes, and Social Security in Hungary

Employer Contributions

Employers in Hungary are required to contribute to multiple social and vocational systems as part of the payroll tax framework. The Social Contribution Tax (Szochó) is 13% of gross payroll and funds healthcare, pension, and unemployment benefits. The Vocational Training Contribution (FAPK) is an additional 1.5% of payroll and funds vocational education programs.

For most employers, the combined employer contribution rate is therefore 14.5% of gross payroll. These contributions are separate from employee withholding and are the employer’s direct obligation to the tax authority. A monthly payroll of HUF 1,000,000 would incur employer contributions of HUF 145,000.

The following table breaks down employer contribution obligations:

Employee Contributions

Hungarian employees are subject to a unified social security contribution called TB járulék, which totals 18.5% of gross salary and is withheld by the employer. This contribution is divided among four components: the Pension Fund (10%), which provides old-age, disability, and survivor benefits; the Healthcare Services Fund (4%), which covers hospital and outpatient medical care; the Healthcare Cash Benefits Fund (3%), which covers sick leave and maternity benefits; and the Labor Market Fund (1.5%), which supports unemployment benefits and labor market programs. Employees earning the minimum wage (HUF 322,800) face total withholding of 33.5%, comprising 15% income tax and 18.5% in social contributions, resulting in a net monthly income of approximately HUF 215,070.

The table below details employee contribution components:

Income Tax

Hungary applies a flat personal income tax rate of 15% on employment earnings. This rate is deducted from the employee’s gross salary and remitted monthly by the employer to the tax authority. However, several categories of employees benefit from tax incentives.

Employees under age 25 are fully exempt from income tax on wages up to the national average monthly salary (HUF 693,740 in 2026), provided they work in Hungary. Mothers with three or more children receive a full income tax exemption on wage income, subject to conditions. The government doubled the family tax allowance in 2026: one child provides HUF 20,000 per month in tax relief, two children provide HUF 80,000 total per month, and three or more children provide HUF 198,000 total per month.

These allowances are claimed via the annual personal income tax return and are typically implemented through reduced monthly withholding. The table below shows the income tax brackets and applicable rates:

Payroll Cycle

Payroll in Hungary is processed on a monthly basis, typically on the last business day of the month or on a fixed date agreed between employer and employee. The employer calculates gross salary, deducts the 18.5% social security contribution and 15% income tax (minus any applicable allowances), remits the employer contribution (14.5%) and withheld taxes to the tax authority by the 10th of the following month, and transfers the net salary to the employee’s bank account on the agreed pay date. Monthly payroll processing and tax reconciliation are mandatory; any late payment of withheld taxes results in penalties and interest.

Most EOR providers automate payroll calculation using specialized software that applies the correct rates, tracks allowances, and generates compliance reports for the tax authority.

13th Month Salary and Bonus Pay

Hungary does not mandate a 13th month salary or year-end bonus. However, many employers offer a 13th month payment as a custom benefit or as part of a collective bargaining agreement, particularly in manufacturing, banking, and public sectors. When offered, the 13th month salary is subject to the same income tax and social security withholding as regular monthly pay.

Bonuses and performance incentives are treated as employment income and are also subject to 15% income tax and 18.5% social security contributions unless explicitly structured as non-taxable benefits (which is rare and requires specific conditions). An EOR can facilitate 13th month payments or bonuses if the contract or agreement specifies them, treating them as additional taxable income in the month paid.

Cost of Hiring Through an EOR in Hungary

EOR Service Fees

EOR service fees in Hungary typically range from $300 to $600 USD per employee per month, depending on the provider’s scale, service level, and the complexity of the hire. A basic EOR fee at the lower end ($300 to $350) includes standard payroll processing, tax withholding, social security contributions, and monthly compliance reporting. Mid-tier providers ($400 to $500) add services such as dedicated HR support, leave administration, employment contract management, and immigration assistance for third-country employees.

Premium EOR providers ($500 to $600) offer enhanced support including employee benefits coordination, compliance audits, executive reporting, and personalized guidance on complex labor code questions. These fees are separate from payroll costs and are typically invoiced directly to the hiring company.

Total Employment Cost Breakdown

To understand the total cost of hiring through an EOR in Hungary, consider a hypothetical example of hiring a professional at a gross monthly salary of $5,000 USD (approximately HUF 1,900,000). The following table breaks down all costs borne by the employer:

When budgeting to hire through an EOR in Hungary, account for the gross salary, the 14.5% employer contribution, and the EOR service fee. For a $5,000 monthly salary, the total cost to your company is approximately $6,175 per month. This represents significant savings compared to establishing a local subsidiary, which would require hiring a local accountant, a human resources manager, and maintaining local legal counsel, with annual costs easily exceeding $20,000 to $30,000.

Ready to hire your first employee in Hungary? Contact our team to discuss your hiring needs and receive a personalized cost estimate.

Benefits of Using an EOR in Hungary

Hiring through an EOR in Hungary gives growing companies clear practical advantages:

• Instant local employment capacity: Launch hiring within days without forming a legal entity, conducting complex registration, or waiting for government approvals. Your first employee can begin work within a week of offer acceptance.

• Compliance and risk mitigation: The EOR handles all labor law compliance, tax filings, social security administration, and statutory reporting. Your company avoids penalties for late tax payments, incorrect withholding, or violation of leave entitlements, and maintains a buffer against labor disputes.

• Access to employment expertise: EOR providers employ local employment law specialists who understand minute details of the Labor Code, recent regulatory changes, and administrative procedures. This expertise matters most when dealing with maternity benefits, severance calculations, probation periods, and termination procedures.

• Reduced administrative overhead: Payroll processing, benefits administration, leave tracking, and HR compliance are fully managed by the EOR. Your team focuses on hiring, onboarding, and performance management rather than spreadsheets and regulatory forms.

• Predictable, scalable costs: EOR fees are typically per-employee and fixed monthly, allowing accurate budget forecasting. There are no surprise legal bills, no hiring of local staff, and no incremental overhead as your team grows from 1 to 5 to 20 employees.

• Immigration support: For third-country hires, the EOR manages work permit applications, visa coordination, and ongoing immigration compliance. This matters more than ever given Hungary’s recent restrictions on non-EU hiring.

• Multi-country flexibility: If your company plans to expand into other European countries, many EOR providers operate in 10+ countries simultaneously, allowing you to scale regionally without fragmenting your HR systems and contracts.

Ready to simplify hiring in Hungary? Get in touch to explore how an EOR can accelerate your growth.

Termination and Offboarding in Hungary

Notice Periods

Hungarian labor law ties notice periods to tenure, creating an escalating structure that protects long-service employees. Employees with less than 3 years of tenure are subject to a 30-day notice period. For employees with 3 to 5 years of tenure, the notice period increases by 5 days to 35 days total.

The structure continues to increase in 5 to 20 day increments, reaching 90 days (60 days above the initial 30) for employees with 20 or more years of tenure. These notice periods apply when either the employer or the employee terminates employment (excluding termination for gross misconduct or during probation). The employer may propose a longer notice period in the employment contract, but may not shorten it below the statutory minimum.

The following table outlines the complete notice period structure:

Severance Pay

Calculation Method

Severance pay in Hungary is triggered when an employer initiates termination with proper notice (not during probation or for gross misconduct). The employee must have completed at least 3 years of continuous service to qualify for severance. Severance is calculated based on tenure and the employee’s average daily wage during the 3 months preceding termination.

For an employee with 3 to 5 years of tenure, severance equals 1 month of average daily wages (calculated as average daily wage times 30 days). For 5 to 10 years, severance is 2 months of average daily wages. The formula continues up to 6 months of severance for employees with 25 or more years of service.

Caps and Exceptions

Severance is paid in addition to wages during the notice period. An employee with 5 years of tenure earning HUF 1,000,000 per month (approximately USD 2,600) would receive 2 months of severance (HUF 2,000,000) plus wages during the 45-day notice period. Severance does not apply to terminations for gross misconduct (willful violation of contract, criminal conduct, theft, violence), nor to terminations initiated by the employee.

However, employees within 5 years of the statutory retirement age receive additional severance of 1 to 3 months as a social protection measure. The following table details severance by tenure:

Grounds for Termination

Employers may terminate employment on the following grounds: the employee’s conduct constitutes a material breach of contract (repeated absence without notice, theft, violence), the employer’s circumstances change permanently (business closure, division, or technological obsolescence of the role), the employee becomes unable to perform the job (serious illness, disability, loss of required license), or mutual agreement between employer and employee. Termination must be communicated in writing, with the notice period beginning the day after written notice is received by the employee. During the notice period, the employee remains on payroll at full salary and may use accrued leave.

Upon termination, the employer must provide a written reference (Munkaügyi igazolás) confirming employment dates, position, and reason for termination (if applicable).

EOR vs. Other Hiring Models in Hungary

EOR vs. Local Entity

Establishing a local Hungarian subsidiary requires company registration, appointment of a managing director, opening a corporate bank account, and compliance with ongoing statutory filing and audit requirements. The table below compares EOR hiring with establishing a subsidiary:

EOR vs. Contractors

Hiring independent contractors rather than employees through an EOR offers cost savings but introduces compliance and operational risks. The following table outlines key differences:

EOR vs. PEO

A Professional Employer Organization (PEO) is similar to an EOR but typically operates in specific countries and may require a capital investment or equity stake by the client company. The following table compares EOR and PEO models in Hungary:

Public Holidays in Hungary

Hungary observes 11 statutory public holidays per calendar year. All employees are entitled to paid time off on these days; if an employee works on a public holiday, the employer must pay 200% of the employee’s normal salary for those hours in addition to providing a compensatory day off within 60 days. Holidays falling on a weekend are not automatically observed on the following Monday; employers and employees must agree on compensation or rescheduling.

How to Get Started with an EOR in Hungary

Getting started with an EOR in Hungary takes just a few days. Here is how the process works:

• First, define your hiring needs: Identify the role, required skills, and expected salary range. Consult the EOR provider about market rates for your position in Hungary to ensure competitiveness.

• Second, contact your EOR provider: Submit a hiring request with basic information about the role, candidate profile, and desired start date. The EOR will confirm their ability to hire in Hungary and provide a service fee estimate.

• Third, conduct candidate selection: Your company leads recruitment, interviews, and offer negotiation. The EOR does not recruit but may provide guidance on local candidate expectations and salary norms.

• Fourth, sign the employment contract: The EOR drafts an employment contract compliant with the Hungarian Labor Code, including probation, notice periods, and leave entitlements. Both the employer and candidate review and sign.

• Fifth, register and process payroll: The EOR registers the employee with the tax authority (NAV) and social security system, sets up bank transfers, and processes the first payroll on the agreed start date.

Within 5 to 10 business days of offer acceptance, your new employee will be on the payroll, tax compliant, and ready to contribute to your team. Contact us to discuss your Hungary hiring plans and get started today.

Where companies hiring in Hungary expand next

Teams hiring in Hungary commonly expand across Central and Eastern Europe, where competitive labor costs and EU market access anchor regional growth. After building a team in Hungary, employers often look to Slovakia for aligned compensation ranges and delivery speed, then a team in Poland for matching cost-to-quality tier. Operations in the Czech Republic follows with similar cost profile and comparable hiring speed, and Romania typically closes the regional footprint via parallel labor-cost tier and talent supply.