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Labour law in Hungary

The followings are the key statutory elements of an employment relationship. The related conditions need to be fulfilled throughout the whole employment relationship.

Salary

The Hungarian minimum wage in 2017 is gross HUF 127,500, for positions requiring high school diploma or higher education is gross HUF 161,000. The base salary indicated in the employment contract cannot be less than the above amounts. In addition, wage supplements need to be provided to the employee in case of overtime work, night shifts, working on Sundays and banking holidays and for stand-by duty.

Paid leave

Employees are entitled to 20 working days of vacation which is extended in accordance with their age. One extra day is allocated first at the age of 25 and the maximum is 10 extra vacation days from the age of 45. Extra days are also provided to young employees (under 18), to employees with disabilities, fathers after the birth of their child. The employer shall cover the first 15 working days of the sick leave, afterwards the costs are shared with the state social security. Expecting mothers are entitled to 24 weeks of maternity leave, after which they may take unpaid vacation until their child is 3 years old.

Working time scheduling

Certain positions or operations may not be adequately fulfilled in the standard 8 hours Monday-to-Friday working schedule. Employers have the opportunity to set a larger time frame (e.g. 2 months) during which they may schedule the daily working time and the rest periods unevenly (e.g. 4 hours on Monday, 12 hours on Tuesday and 8 hours on Wednesday). In average, the 8 hours daily working time needs to be fulfilled but this way the employer has some flexibility of manpower allocation. During scheduling, the employer should also take into account the statutory minimum daily and weekly resting time.

Liability in employment

Employees causing damage by breaching employment obligations are obliged to compensate such damages, however, aside from breaches caused wilfully or by gross negligence, the compensation may amount to maximum 4 months’ wage. More rigorous rules apply to the liability of employees handling or keeping money or other valuable assets and of employees responsible for stock.

The employers are generally obliged to fully compensate the employees for any damages they may suffer in connection with their employment. The basis of the compensation is the loss of income.

Redundancies

The termination of an employment relationship may be executed in the following ways.

  • The parties may agree on the termination (mutual consent) in which case no statutory notice period or severance payment applies (in practice at least the statutory amount is usually provided as an exit bonus).

  • The employer is entitled to terminate the employment by unilateral written dismissal which shall be based on a justifiable, true and valid reasons. The justification shall clearly indicate the reasons for the termination. The reasons for termination may be connected to (i) the employee’s ability, (ii) the employee’s behaviour during the employment relationship, or (iii) the employer’s operation. In case of a dismissal, a notice period of at least 30 days (increased up to 60 days by the years spent with the employer) applies and the employee is entitled to severance payment (1-6 months wage). Severance payment is due after at least 3 years of employment with the employer.

  • The employee is also entitled to give notice to the employer but in this case the notice period is fixed in 30 days and no severance payment is due to the employee.

  • In case of gross violation of employment obligations, either party may terminate the employment relationship with immediate effect.

Special rules apply in case of mass redundancies, dismissal of pregnant women, mothers caring for their child until the age of 3 and employees nearing retirement age.

The above is a non-exhaustive description of the relevant Hungarian legal provisions. The above summary should not be considered as legal advice and should not be relied upon when making business decisions. Before resolving on investment in Hungary, we recommend that you contact our law firm for detailed, tailor-made legal advice.