How to Employ in Hungary: A Guide for International Businesses

Hungary is an attractive destination for businesses looking to expand into Central Europe. With its strategic location, skilled workforce, and competitive labor costs, Hungary offers many opportunities for companies seeking to hire local talent. However, Hungarian labor laws are highly regulated, requiring compliance with strict employment, tax, and social security obligations.

For companies that want to hire employees in Hungary without setting up a legal entity, Employer of Record (EOR) services provided by Brain Source International offer a cost-effective and compliant solution.

This guide outlines the key aspects of employing workers in Hungary and how Brain Source International simplifies the process through its EOR services.

Understanding Employment Laws in Hungary

Hungarian labor regulations are primarily governed by:

The Hungarian Labor Code (Act I of 2012) – Regulates all employment contracts, wages, benefits, and termination rules.
Collective Agreements – Industry-specific agreements that provide additional protections for workers.
The Hungarian Constitution & EU Directives – Ensuring employee rights and protections in line with EU labor standards.

Employment Contracts in Hungary

Employers in Hungary must provide a written employment contract that outlines:

  • Job title and duties
  • Salary and benefits
  • Working hours and leave entitlements
  • Probation period (maximum 3 months)
  • Notice period and termination terms

2.1 Types of Employment Contracts

Indefinite-Term Contracts (Most Common)

  • Default contract type in Hungary.
  • Provides strong employee protections against termination.

Fixed-Term Contracts

  • Can be used for temporary employment.
  • Maximum duration: 5 years (including renewals).

Part-Time and Remote Work Contracts

  • Employees receive pro-rated benefits based on working hours.
  • Must comply with teleworking regulations in Hungary.

Independent Contractor Agreements (Freelancers & Consultants)

  • Strictly monitored to prevent misclassification.
  • Employers cannot exercise direct control over the freelancer’s work.

Key Consideration: Misclassifying employees as freelancers or contractors can result in legal penalties and back payment of social security contributions.

Payroll, Taxes, and Social Security Contributions

Hungarian payroll regulations require accurate salary payments and tax withholdings.

Minimum Wage & Salary Expectations

  • Minimum wage (2025 estimate):
    • Gross minimum wage: HUF 266,800 per month (€700)
    • Skilled worker minimum wage: HUF 326,000 per month (€855)
  • Average salary: ~HUF 500,000 (€1,300) per month.

Employer Payroll Contributions (2025)

Employers in Hungary must contribute to social security and other mandatory funds:

  • Social security contributions: 13% of gross salary
  • Vocational training contribution: 1.5% of gross salary
  • Total employer contributions: ~14.5%

Employee Payroll Contributions

Employees contribute 18.5% of their salary to social security, covering:

  • Pension insurance (10%)
  • Health insurance (7%)
  • Unemployment insurance (1.5%)

Key Compliance Requirement: Employers must register employees with the Hungarian Tax Authority and Social Security Office before employment starts.

Employee Benefits in Hungary

Hungary offers strong worker protections and mandatory benefits that employers must provide.

Working Hours and Overtime

  • Standard workweek: 40 hours (8 hours/day).
  • Overtime pay: 150%-200% of normal salary.
  • Flexible work arrangements: Allowed but must be specified in the contract.

Paid Leave and Public Holidays

  • Annual leave: 20 days minimum, increasing with age.
  • Public holidays: 11 national holidays.

Sick Leave

  • Employees receive 70% of their salary while on sick leave.
  • Employers cover the first 15 days; social security covers the rest.

Parental Leave

  • Maternity leave: 24 weeks paid leave (70% of salary).
  • Paternity leave: 10 days of paid leave.
  • Parental leave: Up to 3 years (partially paid).

Severance Pay & Termination

  • Employees with at least 3 years of service are entitled to severance pay.
  • Severance payments range from 1 to 6 months’ salary, depending on tenure.
  • Unlawful dismissal can result in significant legal penalties for employers.

Key Risk for Employers: Termination must be justified and follow strict legal procedures.

How Brain Source International Helps You Hire in Hungary

Hiring in Hungary requires deep knowledge of local labor laws, tax regulations, and compliance requirements. Brain Source International provides Employer of Record (EOR) services in Hungary, allowing companies to hire employees in Hungary without setting up a local entity.

What Brain Source International Offers

  • Compliant employment contracts – Fully aligned with Hungarian labor laws.
  • Payroll & tax management – Handling salary payments, deductions, and social security contributions.
  • Social security & benefits administration – Managing healthcare, pensions, and leave entitlements.
  • Legal compliance & risk mitigation – Ensuring adherence to local labor laws and termination procedures.
  • HR & employee support – Assisting with work permits, onboarding, and contract renewals.

Why Choose Brain Source International?

  • Local expertise – Deep knowledge of Hungarian employment regulations.
  • Fast market entry – Hire employees in Hungary without opening a local company.
  • Full compliance assurance – Avoid legal risks and penalties.
  • Cost-effective employment solutions – Reduce administrative burdens and operational costs.

Conclusion

Hungary offers great opportunities for businesses, but navigating employment laws, payroll taxes, and compliance can be complex. Brain Source International provides Employer of Record (EOR) services to help businesses hire employees in Hungary legally and efficiently.

Need help hiring in Hungary? Contact Brain Source International today and start building your workforce hassle-free!