Hungarian Employment Contracts

Hungarian Contracts

If a foreign company is looking to hire resident employees as part of their international expansion into Hungary, they must comply with recruitment regulations such as tax, social security contributions and local employment laws. You probably also must collaborate with or adhere to any collective bargaining, trade unions or work council agreements. Our PEO services with various solutions to support your plans, can provide compliant employment contracts for your new employees.

In Hungary, an employment contract must be concluded in writing. Failure to do so will invalidate the contract if the employee raises an objection to this within 30 days after the first day of the commencement of work. There are two types of contracts that are applied in Hungary:

1. Indefinite employment contract – the standard type of employment contract in Hungary, which is used for indefinite employment.
2. Fixed-term employment contract – This is also practiced in Hungary, although this type of contract must be expressly stated in the contract and agreed to by both the employer and the employee. A fixed-term contract cannot exceed 5 years. When employment is subject to a license or permit, the contract can be terminated if authorization has been received from the relevant authorities.

All employee contracts, irrespective of the type, must contain the following statutory conditions:

• the names and particulars of those engaged in the employment
• the employee’s basic salary
• the employee’s role

It is also best to include additional terms such as:

• the place of work
• probation periods
• the required notice periods
• the conditions of the collective agreement or work procedure regulations that apply to the employment relationship
• the start date and duration of the employment relationship (for fixed-term contracts only)

The Labor Code does not require the job description of an employee to be in the contract, as the contract cannot be amended separately. It is thus best practice to prepare a separate document which contains the job descriptions of all employees – the contract should refer to this document, and the relevant section should be handed over to the employee either immediately after the signing or no later than 15 days after the commencement of work.

The provisions of the Labor Code are binding – however, an agreement between both parties or a collective a collective bargaining agreement may deviate from these terms, but only in such cases where deviation provides more favorable terms for the employee.