Hungary Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Hungary might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Hungary including local benefits.
What Compensation Laws exist in Hungary?
In Hungary, compensation laws are set by the Labor Code and national legislation, but the types of compensation can vary according to the sector the employees are in, regulations of applicable collective agreements, and the internal regulations of the company.
For example, there is no 13th month payment in Hungary, but companies can choose to pay a yearly bonus – other employee bonuses are also negotiated between the employer or employer when the contract is being drawn up and signed.
There are, however, other benefits/compensation that are guaranteed by national legislation:
- National Minimum Wage: There are two types of in Hungary: the basic minimum wage, and the guaranteed minimum wage (for secondary qualifications and higher). Employees in Hungary must receive at least these amounts for their work. Both were recently increased in 2021 to HUF 167,400 and HUF 219,000, respectively.
- Social Security Contributions: Employees in Hungary are entitled to social security benefits. Social security contributions are paid monthly through contributions by the employee and the employer (employee contributions are withheld by the employer), and include insurance for state pensions, unemployment, and health insurance.
- Notice Periods: Notice periods in Hungary are mandatory and vary according to the termination type.
- Termination and Severance: Employees are entitled to severance pay after having served for 3 years or more in employment and is granted expect in cases of termination due to misconduct. Termination can be of either the employee’s or the employer’s will. The standard notice is one month but may also depend on the grounds of dismissal.
- Work Hours and Breaks: Employees are entitled to paid breaks, which are between 30-60 minutes in an average workday.
- Sick Leave: All employees in Hungary are entitled to sick leave and compensation, which is paid by both the employer and social security funds.
- Holiday/Vacation Leave: Employees are entitled to annual leave, as well as leave on public holidays. Annual leave starts at 20 days and increases according to an employee’s age.
- Maternity Leave: Employees are entitled to 24 weeks of maternity leave but are also allowed to take up to 3 years off and receive maternity benefits by the National Health Insurance Fund (NEAK). For the first six months, mothers are entitled to a Pregnancy and Confinement Benefit (CSED) at a rate of 70% of their salary.
- Paternity Leave: Fathers are entitled to 5 days’ leave in the first two months of the child’s birth. Any income and taxes related to this period is reimbursed by the Hungarian State Treasury.
- Parental Leave: After the maternity leave is over, one parent is entitled to parental leave up until the child reaches the age of 2 years old, as well entitled to a Child Care Fee (GYED) at a rate of 70% of the salary that can go up to double the minimum wage.
Social Security in Hungary
Employees in Hungary are entitled to social security benefits. Social security contributions are paid monthly to the Tax and Customs Administration and the National Health Insurance Fund through contributions by the employee (18.5%) and the employer (17%). Employee contributions are withheld by the employer and paid to the relevant authorities on the employees’ behalf.
Social security contributions include insurance for state pensions, unemployment, and health insurance.
- Employer’s Contributions: Social Security (15.5%), Vocational Training Fund (1.5%)
- Employee’s Contributions: Pensions (10%), Health Insurance (7%), Unemployment (1.5%)
Foreign nationals are not subject to the Hungarian social security systems if their assignment does not exceed 2 years, which applied to both the individuals’ part of the social security contributions and the social tax payable by the employer.
Statutory Employer Costs in Hungary
Statutory Costs in Hungary include meeting the standard employee wages, income tax, and social taxes.
Employers must meet the minimum wage (basic or guaranteed, depending on the employee’s qualifications), and ensure that the necessary payments from their wages to the local authorities are made on time, which include:
- Income Tax – income tax is to be withheld from the employee every month and paid by the employer monthly to the local tax authorities.
- Social security – social security payments are to be made by both the employer and the employee monthly.