HUNGARY LAW AND PRACTICE Contributed by: Pál Szabó, Barnabás Simon, Eszter Katona, Ádám Simon, Mihály Harcos, Karim Laribi, Gábor Kutai and István Szalay-Csala, Bird & Bir d
10. Employment and Labour 10.1 Employment and Labour Framework Hungary has a rather employer friendly legislative framework in the EU which contributes to marketing the Hungarian labour force as well-trained, relatively cheap and flexible, thereby trying to bolster Hungary’s competitiveness. This approach is somewhat counter - balanced by the Hungarian labour courts that tend to be more lenient with employees. The most important labour law rules are set out in Act I of 2012 on the Labour Code (the “Hungarian Labour Code”), which is applicable if the employee habitually works in Hungary. The basic terms of employment must be agreed in a written employment agreement. In addition, it is typical that various internal policies of the employer also apply to the employees’ employment (eg, code of conduct, bonus policy and remote working policy). Besides standard employment relationships, there are certain special forms of employment such as tempo - rary agency work, telework, fixed-term employment and employment of executives. Hungarian health and safety (H&S) regulations pre - scribe various obligations for the employers, including providing information on H&S to employees, securing a healthy and safe work environment and conducting risk assessments. Employees are entitled to represent themselves via trade unions or works councils. Trade unions and employers may conclude collective bargaining agree - ments. Except for some specific industry sectors, employees rarely take advantage of these opportuni - ties. Employees are also protected in many ways by the Hungarian Labour Code, which includes setting out a mandatory notice period of minimum 30 days for termination of employment, granting a minimum of 20 working days annual leave and several other types of special leave, granting the right to request modifica - tions to certain terms of the employment relationship
and limiting overtime to 250 hours per year (with cer - tain exceptions). Employment of third-country nationals (ie, except EU/ EEA citizens) is typically subject to a work permit or
residence permit for employment. 10.2 Employee Compensation
The most common form of compensation is cash coupled with certain other employee benefits (see below). Employee equity compensation is less com - monly applied; however, with the appearance of an increasing number of start-up companies, employee stock ownership (ESOP) arrangements are spreading fast. This is also facilitated by the various legislative changes around ESOP enabling tax efficient equity compensation to founders and key employees, while the introduction of a regulated employee participa - tion scheme (MRP) and the possibility of incentivising employees through the ownership of shares of the employer (or members of its group) have gained popu - larity among Hungary’s blue-chip companies. Base salary must be specified in a written employment agreement. In 2025, the statutory minimum gross base salary for a full-time employee was HUF290,800 (approximately EUR750) per month and HUF348,800 (approximately EUR900) per month for employees working in positions requiring at least a secondary school graduation certificate. As a general rule, the employer must deduct and pay social security contri - bution at 18.5% and personal income tax at 15% from the gross salary of the employees, and the employer must also pay social security tax at 13% (all calculated based on the gross base salary of the employee). The most common non-mandatory employee benefits are company car, recreational vouchers, supplemen - tary pension scheme and private healthcare services. Various incentive and bonus schemes are common means of motivation and retention of key employees. In the case of certain transactions, eg, asset deals, typically, the transfer of undertakings (TUPE transfer) occurs and affected employees transfer to the new employer by virtue of law. In this case, the transferee
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