Recruiting Top Talent in Hungary

Hungarian Top Talent

Hiring the right talent in Hungary to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process is complicated when you have no physical presence in Hungary yet. Our PEO and EOR service can be the solution for your company.

Whether you need to find the best portals to locate your new employees in Hungary or need to create a compliant job offer they cannot refuse with extensive experience in Hungary, we can help you find and hire the best match to support your company goals while following the local laws and regulations.

The Recruitment Process in Hungary

A foreign company expanding into Hungary does not require the assistance of a local entity to hire their employees. It is, however, vital to your recruitment efforts to know where you can find the right talent, as well as which local and international employment organizations they can collaborate with to access the right talent pools. Once the right employee is found, the employer must follow thorough staffing and registration procedures. These include:

• Registering with the National Tax and Custom Administration for a tax number and to pay social insurance contributions
• Registering with the National Health Insurance Fund (NEAK)
• Registering employees with the National Employment Services
• Register with the online Company Gate Services for administration services
• Creating employment contracts and translating them to Hungarian
• Applying for employees’ employment invitations and work permits
• Applying for employee’s visas or special expatriation status (if applicable)
• Calculating employees’ monthly salary and creating pay slips
• Researching for any available tax-free allowances or benefits
• Submitting wage tax returns and national insurance forms
• Corresponding with the involved parties (organizations, trade unions, etc.)
• Creating annual accounts, financial administration, and year-end statements
• Creating a payment schedule for wage tax, national and social insurances, and net wages

Legal Checks on Employees in Hungary

When commencing the recruitment process in a foreign country, employers should consider their legal obligations. Hungary must also implement laws of the EU, which require employers to execute equal treatment in the workplace, as well as protect their employees against discrimination based on several characteristics – such as race, nationality, gender, sexual orientation, religion, age, disability, etc.

This law includes background checks, which are only considered fair and legal if they relate directly to a job and are necessary for reaching a decision on recruitment. Following the Data Protection Directive 95/46/EC put in place by the EU, these background checks may only be carried out with the consent of the candidate.

Nevertheless, employers recruiting in Hungary may request the undermentioned checks (following certain conditions):

• Reference and educational checks: Often done in practice, to assess a candidate’s suitability regarding work performance.
• Criminal background checks: checked in relation to certain occupations and are only allowed if it provides certain information with respect to the job position.
• Medical check-ups: is required to be done before the commencement of work.
• Immigration compliance
• Employment history checks

Basic Facts on Hiring in Hungary

• An employer’s questions during an interview are regulated by EU data legislation – they must directly relate to job specifications and requirements.
• Terms and conditions of employment in Hungary are regulated by the Labor Code.
• For onboarding employees, you will need certain documentation: A social security number, a tax identification number, registration card (if member is part of from another EU country), and a resident and work permit (if an employee is a non-EEA national).
• Employers must follow anti-discrimination laws in Hungary throughout the process of recruitment, which prohibits discrimination on the basis of origin, political belief, and worldview, with further legislation preventing discrimination on the basis of racial origin, sex, age, financial status, disability, health status, family status, nationality, sexual orientation, membership of a trade union or other organization representing employee’s interests, and type of employment relationship.
• Collective agreements also play a significant role in employment conditions – trade unions can only conclude collective agreements at the company level if membership exceeds 10% of those employed at the company. This also applies for industry-level agreements. Collective agreements last for two years, although they are sometimes valid for an unlimited period. Agreements on pay increases at company level are usually annual.
• Administration and enforcement of employment requirements are governed by the National Employment Service – which is split into a National Employment Office at the national level, Labor Centers of Government Offices at County Level, and Branch Offices at the local level.
• In Hungary, employment contracts must be established in writing, and must not be contrary to the applicable collective bargaining agreement – unless the employment terms are more favorable for the employee.
• If an employment contract is not provided in writing by the employer within 30 days from the job’s commencement, it can be cited as invalid by the employee.
• The standard contract type is an indefinite contract. 
• Fixed-term contracts are also practiced, but their validity may not exceed 5 years.
• The standard working time is 8 hours a day and 40 hours a week, but this can be altered according to the type of employment contract and work.
• Employers must at least meet the minimum wage for the employee’s salary, but the average monthly salary may differ according to the industry and sector.
• Overtime work cannot exceed maximum of 4 hours daily, and 8 hours weekly. Any employee who works overtime should receive a supplement of no less than 150% of their hourly rate (200% during the weekends and holidays), or fully paid time off for no less than the amount of overtime that has been worked.
• Employees are entitled to at least 11 hours of interrupted rest after the end of daily work and until the beginning of next day’s work. In a week, employees are entitled to 2 rest days.
• Employers are obligated to with-hold and pay employees’ personal income tax and social security contributions monthly.
• The standard notice period for employment termination is one month – however, this may vary according to the employment contract and cannot exceed one year.
• Under the Labor Code, the employment notice can be extended according to the length of the employee’s length of service:
  – 3-5 years: 35 days
  – 5-8 years: 45 days
  – 8-10 years: 50 days 
  – 10-15 years: 55 days 
  – 15-18 years: 60 days 
  – 18-20 years: 70 days 
  – 20+ years: 90 days 

• The probationary period is generally agreed upon between the employer and employee but should not exceed 3 months. According to an applicable collective bargaining agreement, this period may be extended to 6 months. 
• Termination of employment during probation may be done with immediate effect and without justification.