Hungary Employer of Record - Hiring Guide for 2025

Employer of Record in Hungary

An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of another company. This means the EOR takes on the responsibility for all formal employment tasks, including running payroll, administering employee benefits, handling tax deductions and filings, and ensuring full compliance with local labor laws and regulations. The client company retains control over the employee's day-to-day work and responsibilities, while the EOR manages the administrative and legal burdens of employment.

For companies looking to expand or hire talent in Hungary without establishing a local legal entity, navigating the country's specific employment laws, payroll requirements, and social security contributions can be complex and time-consuming. Utilizing an EOR service provides a streamlined solution, allowing businesses to quickly and compliantly hire employees in Hungary while mitigating the risks associated with foreign market entry and local compliance.

How an EOR Works in Hungary

When you partner with an EOR in Hungary, your chosen employee is formally hired by the EOR's local Hungarian entity. The EOR becomes the legal employer, signing the employment contract with the worker in compliance with Hungarian labor law. The EOR then manages all aspects of the employee's payroll, including calculating and remitting income tax and social security contributions (such as pension, health insurance, and unemployment contributions) to the relevant Hungarian authorities. They also handle mandatory reporting, manage benefits administration, and ensure adherence to local regulations regarding working hours, leave entitlements, and termination procedures. You, as the client company, provide the EOR with the employee's salary and benefit details, and the EOR handles the rest, invoicing you for the total cost of employment.

Benefits of Using an EOR in Hungary

Using an EOR offers significant advantages for companies hiring in Hungary without a local presence. Primarily, it enables rapid market entry; you can hire employees and begin operations much faster than if you had to establish your own subsidiary. An EOR ensures complete compliance with Hungary's specific and often changing labor laws, tax regulations, and social security requirements, significantly reducing the risk of penalties or legal issues. This eliminates the need for your company to understand and manage complex local administrative tasks, freeing up internal resources. It also provides flexibility, allowing you to test the Hungarian market or hire specific talent without the long-term commitment and cost of setting up a legal entity.

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Responsibilities of an Employer of Record

As an Employer of Record in Hungary, Rivermate is responsible for:

Creating and managing the employment contracts
Running the monthly payroll
Providing local and global benefits
Ensuring 100% local compliance
Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

Day-to-day management of the employee
Work assignments
Performance management
Training and development

Recruitment in Hungary

Role	Annual Salary Range (HUF)	Annual Salary Range (EUR)
Software Developer	8,000,000–12,000,000	20,000–30,000
Marketing Manager	6,000,000–10,000,000	15,000–25,000
Financial Analyst	5,000,000–9,000,000	12,500–22,500
Customer Service Agent	3,500,000–6,000,000	8,750–15,000

Taxes in Hungary

In Hungary, employers must fulfill several tax obligations, including paying social security contributions, vocational training, and rehabilitation contributions. For 2025, employer contribution rates are 13% for social security, 1.5% for vocational training, and variable for rehabilitation based on employee count and minimum wage. These are calculated on gross salaries and paid monthly.

Employers are responsible for withholding a flat 15% personal income tax (PIT) from employees' salaries and remitting it to NAV. Employees benefit from deductions such as family allowances, first-time homebuyer benefits, voluntary pension contributions, and other specific expenses, which can reduce taxable income.

Compliance involves timely monthly reporting (by the 12th of the following month), annual tax reconciliation, and providing employees with income statements (M30). Foreign workers and companies must consider double taxation treaties, residency rules, social security agreements, and potential permanent establishment implications to ensure proper tax compliance.

Contribution Type	Rate
Social Security Contribution	13%
Vocational Training Contribution	1.5%
Rehabilitation Contribution	Varies

Leave in Hungary

Hungarian employees are entitled to a minimum of 20 days of paid annual leave, increasing with age up to 30 days for employees over 45. Employers must grant at least seven consecutive days annually, with leave timing generally agreed upon mutually but subject to employer approval. Public holidays in Hungary for 2025 include ten days such as New Year's Day, National Day, Easter Monday, Labour Day, and Christmas, with paid time off typically granted on these days.

Sick leave allows for 15 days per year at 70% of earnings, with additional days potentially covered by the National Health Insurance Fund at around 60%. Parental leave includes 24 weeks of maternity leave (70% pay), 5 days of paternity leave (full pay), and parental leave (GYED) until the child turns two or three, with approximately 70% pay capped at a certain amount. After GYED, parents can access childcare allowance (GYES) until the child's third birthday, which is a fixed lower amount. Other leave types include bereavement, study, and sabbatical leave, with the latter two often depending on employer policies.

Leave Type	Duration/Details	Pay Rate
Annual Leave	20-30 days based on age	Paid
Public Holidays	10 days in 2025	Paid
Sick Leave	15 days at 70%; beyond that, ~60% from NEAK	70% of earnings; NEAK coverage
Maternity Leave	24 weeks (starts 4 weeks pre-delivery)	~70% of previous earnings
Paternity Leave	5 days within 2 months of birth	Full salary
Parental Leave (GYED)	Until child turns 2 or 3	~70% of previous earnings
Childcare Allowance (GYES)	Until age 3	Fixed, lower amount

Benefits in Hungary

Hungary's employee benefits are governed by legal requirements and evolving employee expectations. Employers must provide mandatory benefits such as at least 20 days of paid annual leave, paid public holidays, sick leave, social security contributions covering pensions, healthcare, and unemployment, as well as maternity and paternity leave with income replacement. These benefits ensure basic employee protections and compliance with Hungarian labor law.

In addition to statutory benefits, many employers enhance their packages with optional perks like supplementary health insurance, life insurance, private pension contributions, wellness programs, transportation allowances, meal vouchers, and flexible work arrangements. These supplementary benefits serve as competitive tools to attract and retain talent.

Key data points include:

Benefit	Description	Typical Employer Offerings
Paid Annual Leave	Minimum 20 days, increases with age	Standard across sectors
Public Holidays	Several public holidays with paid time off	Mandatory
Sick Leave	Paid sick leave with partial salary coverage	Standard benefit
Social Security Contributions	Cover pensions, healthcare, unemployment	Employer contributions vary
Maternity/Paternity Leave	Income-replaced leave for parents	Mandatory benefits
Private Health Insurance	Additional coverage beyond public system	Common in larger firms
Pension Contributions	State and voluntary private schemes	Frequently supplemented by employers

Understanding these mandatory and optional benefits allows employers to develop competitive packages tailored to industry and company size, supporting talent attraction and retention in Hungary.

Workers Rights in Hungary

Hungary's labor laws prioritize employee protection through clear contracts, fair treatment, and safe working conditions, governed primarily by the Labour Code (Act I of 2012). Employers must follow specific procedures for termination, with notice periods increasing with tenure, ranging from 30 days for less than a year to 150 days for 20+ years of service. Employees are entitled to severance pay after at least three years of employment, with amounts based on length of service.

Anti-discrimination laws prohibit bias based on characteristics such as race, gender, age, religion, disability, sexual orientation, and others. Enforcement is handled by the Equal Treatment Authority, and legal action is available for victims. Working conditions standards include a 40-hour workweek, mandated rest periods, paid annual leave, and minimum wage regulations. Employers must ensure health and safety through risk assessments, protective equipment, training, and accident reporting.

Dispute resolution is facilitated via negotiation, mediation, labor courts, arbitration, and works councils. Employers should maintain compliance with these regulations to foster fair and safe workplaces.

Key Data Point	Details
Notice Period (by tenure)	Less than 1 year: 30 days; 20+ years: 150 days
Minimum Wage (annual update)	Set annually by government
Working Hours	40 hours/week
Paid Leave	Varies with age and service
Discrimination Protected Characteristics	Race, gender, age, religion, disability, etc.

Agreements in Hungary

Employment agreements in Hungary are governed by the Labour Code, requiring clarity and compliance to ensure legal protection. Employers must understand the different contract types, mandatory clauses, and regulations on modifications and terminations to avoid legal issues and foster positive employee relations.

There are several contract types:

Contract Type	Description
Fixed-Term	Defined start and end dates; suitable for temporary work
Indefinite	No end date; standard employment with higher security
Part-Time	Fewer hours than full-time employment
Full-Time	Standard working hours as per law

Mandatory clauses include details on job description, duration, salary, working hours, confidentiality, non-compete, and termination conditions. Contracts must also specify probation periods, which are regulated by law, and include provisions for contract modifications and termination procedures. Ensuring these elements are properly addressed helps employers maintain compliance and protect their interests in Hungary's legal framework.

Remote Work in Hungary

Remote work in Hungary is increasingly adopted, with legal and practical frameworks evolving to support flexible arrangements. Employers should formalize remote work agreements in writing, covering working hours, data protection, and performance expectations, while ensuring occupational safety through ergonomic assessments and equipment provision. Although there is no universal legal right to remote work, agreements are encouraged to foster productivity and compliance.

Key legal obligations include providing a safe remote workspace and adhering to data protection laws. Flexible work options such as telecommuting, part-time remote work, and hybrid models are common, helping companies attract talent. The Hungarian Labor Code underpins these practices, emphasizing employer responsibilities and employee rights.

Aspect	Details
Formalization of Agreements	Written remote work agreements covering hours, data, and performance
Employer Responsibilities	Safe environment, ergonomic assessments, equipment support
Legal Framework	Hungarian Labor Code
Common Flexible Arrangements	Telecommuting, hybrid work, part-time remote work

Working Hours in Hungary

Hungary's Labour Code regulates standard working hours, overtime, and rest periods to protect employee rights and ensure compliance. The typical workweek consists of 8 hours per day and 40 hours per week, usually spread over five days. Collective agreements may allow shorter hours, and part-time work can be as low as 4 hours daily, with a maximum of 8 hours per day.

Overtime is permitted up to 250 hours annually, extendable to 300 hours via collective agreement or up to 400 hours voluntarily. Overtime must be compensated with at least a 50% wage premium or time off. Employers are required to record working hours meticulously to ensure adherence to regulations.

Aspect	Standard/Maximum/Requirement
Daily Working Hours	Generally 8 hours (can be up to 12 in specific cases)
Weekly Working Hours	Generally 40 hours; max 48 hours including overtime
Overtime Limit	250 hours/year (up to 300 via agreement; 400 voluntary hours)
Overtime Compensation	At least 50% wage supplement or time off

Salary in Hungary

Hungary's salary landscape varies by industry, role, and region, with Budapest offering higher compensation levels. Typical annual gross salaries range from HUF 3.5 million for customer service roles to HUF 13 million for project managers, with IT roles like software engineers earning between HUF 6 million and HUF 12 million. Employers must comply with statutory minimum wages, which in 2025 are set at HUF 266,800 gross per month for full-time roles and HUF 346,000 for roles requiring secondary education.

Wage Category	Amount (HUF/month)
Minimum Wage	266,800
Guaranteed Minimum Wage	346,000

Compensation packages often include bonuses such as a 13th-month salary, annual performance bonuses, and allowances for transportation, meals, or language training. Salaries are paid monthly, primarily via bank transfer, with detailed payslips required. Wage growth is expected to continue gradually in 2025, driven by labor shortages in sectors like IT and engineering, alongside evolving remote work practices and regulatory adjustments.

Termination in Hungary

In Hungary, employment termination must comply with specific legal procedures, including minimum notice periods based on employee tenure. These notice periods range from 30 days for less than 1 year of service to 150 days for over 20 years, with the possibility of longer terms specified in contracts or collective agreements.

Severance pay is generally required for employees terminated by the employer, calculated according to their length of service. The entitlement varies as follows:

Length of Service	Severance Pay Entitlement
Less than 1 year	Not typically entitled
1 to 3 years	1 month's average salary
3 to 5 years	2 months' salary
5 to 8 years	3 months' salary
8 to 10 years	4 months' salary
Over 10 years	5+ months' salary

Employers must adhere to these regulations to avoid legal disputes, costly litigation, and reputational damage. Proper understanding of notice and severance rules is essential for managing employee separations effectively in Hungary.

Freelancing in Hungary

Hungary's labor market increasingly favors freelancing and independent contracting, offering flexibility for businesses and access to specialized skills. Proper legal classification is vital, as Hungarian law distinguishes clearly between employees and contractors based on control, integration, economic dependence, tools, and risk. Misclassification can lead to legal and financial penalties.

Independent contractors typically operate under civil law contracts that specify scope, deliverables, payment, IP rights, and termination terms. Contractors are responsible for their taxes and social contributions, with a flat personal income tax rate of around 15%. VAT registration is required if annual revenue exceeds HUF 12 million. Clear contractual agreements on IP rights and compliance with tax obligations are essential for smooth collaboration.

Aspect	Key Data Points
Tax Rate (Personal Income)	~15%
VAT Registration Threshold	HUF 12 million annual revenue
Social Security Contributions	Varies based on income and scheme
Contract Types	Civil law contracts (megbízási, vállalkozási)
IP Ownership	Typically owned by creator unless contract states otherwise

Dispute Resolution in Hungary

Hungary's employment dispute resolution relies on labor courts and arbitration panels. Labor courts, part of the general judiciary, handle disputes such as unfair dismissal, discrimination, and wage claims through lawsuits, hearings, and appeals. Arbitration offers a voluntary, faster, and cost-effective alternative, with decisions enforceable in court. Employers should be aware of these forums to effectively manage disputes.

Compliance audits and inspections are regularly conducted by authorities, focusing on wage, safety, contracts, discrimination, and data protection. The frequency varies by industry and risk level, with high-risk sectors inspected more often. Employers must cooperate fully; failure to comply can lead to fines, penalties, or criminal charges.

Aspect	Details
Dispute Forums	Labor courts (judicial) and arbitration panels (voluntary, binding/non-binding)
Labor Court Process	Filing, hearings, evidence, judgments, appeals
Arbitration Process	Selection of arbitrator(s), hearing, binding or non-binding decision
Compliance Audit Focus	Wages, safety, contracts, discrimination, data protection
Audit Frequency	Varies by industry; high-risk sectors inspected more often

Cultural Considerations in Hungary

Hungarian business culture emphasizes formal, direct communication with politeness and respect. Addressing by titles and surnames is standard until familiarity develops. Negotiations are formal, requiring thorough preparation, patience, and relationship-building, with trust forming the foundation for deals. Hierarchies are prominent; respect for authority and following the chain of command are essential, though teamwork is valued. Understanding local holidays is important for planning, with key observances including:

Date	Holiday Name	Significance
March 15	National Day	Commemorates the 1848 revolution
August 20	St. Stephen's Day	Celebrates Hungary's founding and statehood
October 23	Revolution Memorial Day	Marks the 1956 uprising

Employers should note that decision-making can be slow, requiring patience and transparency, and that formal communication and respect for hierarchy are crucial in workplace interactions. Learning basic Hungarian phrases can demonstrate goodwill.

Work Permits & Visas in Hungary

Key Data Point	Details
Common Work Permits	Single Permit, EU Blue Card, ICT Permit, Short-term Visa
Application Timeline	Several weeks to months
Essential Documentation	Passport, employment contract, qualifications, accommodation proof, health insurance
Permanent Residency Eligibility	3 years of continuous residence, clean record, financial stability, language exam
Employer Obligations	Verify permits, report changes, maintain records
Employee Obligations	Comply with permit conditions, renew permits, inform authorities of changes

Frequently Asked Questions in Hungary

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Hungary?

When using an Employer of Record (EOR) in Hungary, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes the calculation, withholding, and remittance of income tax, social security contributions, and any other mandatory deductions required by Hungarian law. The EOR ensures compliance with local tax regulations and deadlines, thereby relieving the client company of the administrative burden and complexities associated with payroll and tax compliance in Hungary. This service helps companies avoid potential legal issues and penalties related to non-compliance, allowing them to focus on their core business activities.

What is the timeline for setting up a company in Hungary?

Setting up a company in Hungary involves several steps and can vary in duration depending on the complexity of the business structure and the efficiency of the processes. Here is a detailed timeline for setting up a company in Hungary:

Preparation Phase (1-2 weeks):
- Business Plan and Strategy: Develop a comprehensive business plan and strategy.
- Legal Consultation: Engage with a local legal advisor to understand the specific requirements and regulations.
- Choose a Company Type: Decide on the type of company you want to establish (e.g., Limited Liability Company - Kft, Private Company Limited by Shares - Zrt, etc.).
Company Name Reservation (1-2 days):
- Name Check: Conduct a name check to ensure the desired company name is available.
- Reservation: Reserve the company name with the Hungarian Company Registry.
Drafting and Signing Incorporation Documents (1 week):
- Articles of Association: Draft the Articles of Association and other necessary documents.
- Notarization: Have the documents notarized by a Hungarian notary public.
Opening a Bank Account (1-2 weeks):
- Bank Selection: Choose a bank and open a corporate bank account.
- Deposit Capital: Deposit the required initial capital into the bank account.
Registration with the Company Registry (1-2 weeks):
- Submission: Submit the incorporation documents to the Hungarian Company Registry.
- Registration: The registry processes the application and registers the company.
Tax Registration (1 week):
- Tax Number: Obtain a tax number from the Hungarian Tax Authority (NAV).
- VAT Registration: If applicable, register for VAT.
Social Security Registration (1 week):
- Social Security Number: Register the company with the Hungarian Social Security Authorities.
Additional Licenses and Permits (Varies):
- Industry-Specific Licenses: Obtain any additional licenses or permits required for your specific industry.
Operational Setup (1-2 weeks):
- Office Space: Secure office space and set up the physical infrastructure.
- Hiring Employees: Begin the process of hiring employees and setting up payroll.

In total, the process of setting up a company in Hungary can take approximately 6-10 weeks, depending on the efficiency of each step and the specific requirements of your business. Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process, as they handle many of the administrative and compliance-related tasks, allowing you to focus on your core business activities.

What is HR compliance in Hungary, and why is it important?

HR compliance in Hungary refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes ensuring that all employment contracts, workplace policies, and HR practices align with Hungarian labor legislation. Key aspects of HR compliance in Hungary include:

Employment Contracts: Hungarian labor law mandates that employment contracts must be in writing and include specific details such as job description, salary, working hours, and duration of employment.
Working Hours and Overtime: The standard working week in Hungary is 40 hours. Employers must comply with regulations regarding overtime, which is generally capped and requires additional compensation.
Minimum Wage: Employers must ensure that employees are paid at least the national minimum wage, which is periodically adjusted by the government.
Leave Entitlements: Hungarian law provides for various types of leave, including annual leave, sick leave, maternity leave, and parental leave. Employers must ensure that employees receive their entitled leave and that it is properly documented.
Health and Safety: Employers are required to maintain a safe working environment and comply with occupational health and safety regulations. This includes conducting regular risk assessments and providing necessary training and equipment.
Termination and Severance: Termination of employment must comply with Hungarian labor laws, which include specific notice periods and, in some cases, severance pay. Employers must follow proper procedures to avoid wrongful termination claims.
Data Protection: Compliance with data protection laws, including the General Data Protection Regulation (GDPR), is crucial. Employers must ensure that employee data is collected, processed, and stored in accordance with these regulations.

Importance of HR Compliance in Hungary:

Legal Protection: Adhering to HR compliance helps protect the company from legal disputes and potential lawsuits. Non-compliance can result in significant fines, legal penalties, and damage to the company's reputation.
Employee Satisfaction and Retention: Compliance with labor laws ensures fair treatment of employees, which can lead to higher job satisfaction and retention rates. Employees are more likely to stay with a company that respects their rights and provides a safe and fair working environment.
Operational Efficiency: Proper HR compliance ensures that the company operates smoothly without interruptions caused by legal issues or disputes. This allows the company to focus on its core business activities.
Reputation Management: Companies that comply with labor laws and treat their employees well are viewed more favorably by customers, investors, and potential employees. This can enhance the company's reputation and attract top talent.
Risk Management: By adhering to HR compliance, companies can mitigate risks associated with non-compliance, such as financial penalties, legal actions, and loss of business licenses.

Using an Employer of Record (EOR) like Rivermate can significantly simplify HR compliance in Hungary. An EOR takes on the responsibility of ensuring that all employment practices comply with local laws and regulations. This includes managing payroll, taxes, benefits, and other HR functions, allowing companies to focus on their core business activities while minimizing the risk of non-compliance.

Is it possible to hire independent contractors in Hungary?

Yes, it is possible to hire independent contractors in Hungary. However, there are several important considerations to keep in mind when doing so.

Legal Framework: Independent contractors in Hungary are governed by the Hungarian Civil Code, which outlines the terms and conditions under which they can operate. Unlike employees, contractors are not subject to the Hungarian Labor Code, which means they have more flexibility but also fewer protections.
Contractual Agreement: It is crucial to have a well-drafted contract that clearly defines the scope of work, payment terms, duration, and other relevant conditions. This contract should explicitly state that the relationship is one of an independent contractor and not an employment relationship to avoid any legal ambiguities.
Taxation: Independent contractors are responsible for their own taxes, including social security contributions and VAT if applicable. They must register with the Hungarian tax authorities and comply with all tax filing requirements. Employers do not withhold taxes for contractors, which simplifies payroll but requires contractors to be diligent about their tax obligations.
Misclassification Risks: One of the significant risks of hiring independent contractors is the potential for misclassification. If a contractor is found to be functioning more like an employee (e.g., working under direct supervision, using company equipment, having set working hours), Hungarian authorities may reclassify the relationship as employment. This can result in back taxes, penalties, and other legal issues for the hiring company.
Benefits and Protections: Independent contractors do not receive the same benefits and protections as employees, such as paid leave, health insurance, and severance pay. This can be a cost-saving measure for companies but may also affect the attractiveness of the position to potential contractors.
Intellectual Property: Ensure that the contract includes clauses related to intellectual property (IP) rights. Typically, any IP created by an independent contractor should be assigned to the hiring company, but this needs to be explicitly stated in the contract to avoid disputes.
Termination: The terms for terminating the contract should be clearly outlined. Unlike employees, independent contractors do not have the same protections against unfair dismissal, but having clear termination clauses can help prevent potential conflicts.

Using an Employer of Record (EOR) service like Rivermate can simplify the process of hiring independent contractors in Hungary. An EOR can handle the complexities of local compliance, tax regulations, and contractual agreements, ensuring that your business remains compliant with Hungarian laws while mitigating the risks associated with misclassification and other legal issues. This allows your company to focus on core business activities while leveraging the expertise of local professionals.

How does Rivermate, as an Employer of Record in Hungary, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Hungary, ensures HR compliance through a comprehensive understanding of local labor laws, regulations, and best practices. Here are several ways Rivermate achieves this:

Local Expertise: Rivermate employs local HR professionals who are well-versed in Hungarian labor laws and regulations. This local expertise ensures that all employment practices are compliant with national standards, including hiring, contracts, payroll, and terminations.
Employment Contracts: Rivermate ensures that employment contracts are drafted in accordance with Hungarian labor laws. This includes specifying terms of employment, job descriptions, compensation, benefits, and termination conditions. These contracts are regularly updated to reflect any changes in legislation.
Payroll Management: Rivermate handles payroll processing in compliance with Hungarian tax laws and social security regulations. This includes accurate calculation of wages, deductions, and contributions to social security, health insurance, and other statutory benefits.
Tax Compliance: Rivermate ensures that all tax obligations are met, including income tax withholding, corporate taxes, and value-added tax (VAT) where applicable. They stay updated on tax law changes to ensure ongoing compliance.
Benefits Administration: Rivermate manages statutory benefits such as health insurance, pension contributions, and other mandatory benefits. They also offer guidance on additional benefits that can help attract and retain employees while remaining compliant with local laws.
Labor Law Adherence: Rivermate ensures compliance with Hungarian labor laws regarding working hours, overtime, leave entitlements (such as annual leave, sick leave, and maternity/paternity leave), and workplace safety regulations.
Employee Onboarding and Offboarding: Rivermate manages the entire employee lifecycle, from onboarding to offboarding, ensuring that all processes comply with Hungarian labor laws. This includes proper documentation, notice periods, and severance payments where applicable.
Data Protection: Rivermate ensures compliance with data protection regulations, including the General Data Protection Regulation (GDPR), which is applicable in Hungary. They implement robust data security measures to protect employee information.
Dispute Resolution: Rivermate provides support in handling employee disputes and grievances in accordance with Hungarian labor laws. They ensure that any disciplinary actions or terminations are conducted legally and fairly.
Continuous Monitoring and Updates: Rivermate continuously monitors changes in Hungarian labor laws and regulations. They proactively update their policies and practices to ensure ongoing compliance, reducing the risk of legal issues for their clients.

By leveraging Rivermate's services, companies can confidently expand their operations in Hungary, knowing that all HR and employment-related matters are handled in full compliance with local laws and regulations. This allows businesses to focus on their core activities while minimizing legal and financial risks.

What options are available for hiring a worker in Hungary?

In Hungary, employers have several options for hiring workers, each with its own set of legal, administrative, and financial considerations. Here are the primary options available:

Direct Employment:
- Permanent Employment Contracts: This is the most common form of employment in Hungary. It involves hiring an employee directly under an indefinite-term contract. The employer is responsible for all aspects of employment, including payroll, taxes, social security contributions, and compliance with Hungarian labor laws.
- Fixed-Term Contracts: Employers can hire workers for a specific period or project. These contracts must comply with Hungarian labor regulations, which include limitations on the duration and renewal of fixed-term contracts.
Temporary Employment:
- Temporary Agency Work: Employers can hire workers through temporary employment agencies. The agency acts as the employer, handling payroll and compliance, while the worker performs tasks for the client company. This option provides flexibility but can be more expensive due to agency fees.
Freelancers and Independent Contractors:
- Freelancers: Hiring freelancers or independent contractors can be an option for specific projects or tasks. However, it is crucial to ensure that the working relationship does not resemble an employment relationship, as this could lead to reclassification and legal issues.
- Consultants: Similar to freelancers, consultants can be hired for their expertise on a contractual basis. This arrangement is suitable for short-term or specialized projects.
Outsourcing:
- Outsourcing Services: Employers can outsource certain functions or projects to third-party service providers. This can include IT services, customer support, or manufacturing. The outsourcing company handles the employment and compliance aspects.
Employer of Record (EOR):
- Employer of Record Services: Using an EOR, like Rivermate, allows companies to hire workers in Hungary without establishing a legal entity in the country. The EOR acts as the legal employer, managing payroll, taxes, benefits, and compliance with local labor laws. This option is particularly beneficial for companies looking to expand quickly and efficiently without the administrative burden of setting up a local subsidiary.

Benefits of Using an Employer of Record in Hungary

Compliance and Risk Management:
- Legal Compliance: An EOR ensures that all employment practices comply with Hungarian labor laws, including contracts, working hours, termination procedures, and employee benefits.
- Risk Mitigation: By handling all legal and regulatory requirements, an EOR reduces the risk of non-compliance, which can result in fines and legal disputes.
Cost Efficiency:
- Reduced Overhead: Setting up a legal entity in Hungary involves significant time and financial investment. An EOR eliminates these costs, allowing companies to allocate resources more effectively.
- Scalability: EOR services provide flexibility to scale the workforce up or down based on business needs without the long-term commitment of establishing a local entity.
Administrative Relief:
- Payroll and Tax Management: The EOR manages payroll processing, tax withholding, and social security contributions, ensuring accuracy and timeliness.
- Employee Benefits Administration: An EOR handles the provision and management of employee benefits, such as health insurance, pensions, and other statutory benefits.
Speed to Market:
- Quick Onboarding: An EOR can facilitate the rapid hiring and onboarding of employees, enabling companies to start operations in Hungary quickly.
- Focus on Core Business: By outsourcing employment administration to an EOR, companies can focus on their core business activities and strategic goals.
Local Expertise:
- Knowledge of Local Market: An EOR has in-depth knowledge of the Hungarian labor market, cultural nuances, and employment practices, providing valuable insights and support.
- Employee Support: The EOR can offer local support to employees, addressing their concerns and ensuring a positive employment experience.

In summary, while there are multiple options for hiring workers in Hungary, using an Employer of Record like Rivermate offers significant advantages in terms of compliance, cost efficiency, administrative relief, speed to market, and local expertise. This makes it an attractive option for companies looking to expand their operations in Hungary without the complexities of establishing a local entity.

Do employees receive all their rights and benefits when employed through an Employer of Record in Hungary?

Yes, employees in Hungary receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial for protecting employee rights and benefits. Here are some key aspects:

Employment Contracts: An EOR will provide employment contracts that comply with Hungarian labor laws. These contracts will outline the terms of employment, including job responsibilities, salary, working hours, and other essential details.
Wages and Salaries: Employees will receive their wages and salaries in accordance with Hungarian standards, including adherence to minimum wage laws and timely payment schedules.
Social Security and Taxes: The EOR will handle all necessary social security contributions and tax withholdings, ensuring that employees are covered under Hungary's social security system, which includes healthcare, pensions, and unemployment benefits.
Paid Leave: Employees are entitled to paid leave, including annual leave, sick leave, and maternity/paternity leave, as stipulated by Hungarian labor laws. The EOR will manage these entitlements and ensure employees can take their leave as required.
Working Hours and Overtime: The EOR will ensure compliance with regulations regarding working hours and overtime. In Hungary, the standard workweek is 40 hours, and any overtime must be compensated according to legal requirements.
Health and Safety: The EOR is responsible for ensuring that the workplace meets health and safety standards as required by Hungarian law. This includes providing a safe working environment and necessary training.
Termination and Severance: In the event of termination, the EOR will handle the process in compliance with Hungarian labor laws, which include specific notice periods and severance pay requirements.
Employee Benefits: The EOR can also manage additional employee benefits, such as private health insurance, meal vouchers, and transportation allowances, ensuring that employees receive a comprehensive benefits package.

By using an EOR like Rivermate, companies can ensure that their employees in Hungary receive all the rights and benefits they are entitled to under local laws, while also simplifying the complexities of international employment compliance.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Hungary?

When a company uses an Employer of Record (EOR) service like Rivermate in Hungary, the EOR assumes many of the legal responsibilities associated with employment. However, the company still retains certain obligations and must ensure compliance with Hungarian labor laws. Here are the key legal responsibilities and considerations:

Employment Contracts:
- The EOR is responsible for drafting and maintaining employment contracts in compliance with Hungarian labor laws. These contracts must include terms such as job description, salary, working hours, and other conditions of employment.
Payroll and Tax Compliance:
- The EOR handles payroll processing, ensuring that employees are paid accurately and on time. This includes calculating and withholding the appropriate taxes and social security contributions, and remitting them to the Hungarian tax authorities.
Social Security and Benefits:
- The EOR ensures that employees are registered with the Hungarian social security system and that all mandatory contributions are made. This includes health insurance, pension contributions, and other statutory benefits.
Labor Law Compliance:
- The EOR ensures compliance with Hungarian labor laws, including regulations on working hours, overtime, rest periods, and leave entitlements. They also handle any necessary reporting to labor authorities.
Employee Rights and Protections:
- The EOR is responsible for ensuring that employees' rights are protected, including adherence to anti-discrimination laws, health and safety regulations, and other statutory protections.
Termination and Severance:
- The EOR manages the termination process in compliance with Hungarian labor laws, including providing the required notice period and calculating any severance pay or other termination benefits.
Record Keeping:
- The EOR maintains accurate records of employment, including contracts, payroll records, and any other documentation required by Hungarian law.
Legal Representation:
- In case of any legal disputes or issues related to employment, the EOR may represent the company and handle legal proceedings in accordance with Hungarian labor laws.
Data Protection:
- The EOR ensures compliance with data protection regulations, including the General Data Protection Regulation (GDPR), which applies in Hungary. This involves safeguarding employees' personal data and ensuring proper data handling practices.
Local Expertise:
- The EOR provides local expertise and guidance on employment practices, helping the company navigate the complexities of Hungarian labor laws and regulations.

While the EOR takes on many of the day-to-day responsibilities of employment, the company must still ensure that it selects a reputable EOR provider and maintains oversight of the employment relationship. This includes regular communication with the EOR to ensure that all legal obligations are being met and that the company's interests are protected.

What are the costs associated with employing someone in Hungary?

Employing someone in Hungary involves several costs that employers need to consider. These costs can be broadly categorized into direct salary expenses, mandatory social security contributions, and other employment-related costs. Here is a detailed breakdown:

Gross Salary: This is the base salary agreed upon with the employee. It is subject to taxation and social security contributions.
Employer's Social Security Contributions: Employers in Hungary are required to make several contributions based on the gross salary of the employee:
- Social Contribution Tax: As of 2023, the rate is 13%.
- Vocational Training Contribution: This is 1.5% of the gross salary.
Employee's Social Security Contributions: While these are deducted from the employee's gross salary, they are important for the employer to calculate the total cost of employment:
- Pension Contribution: 10% of the gross salary.
- Health Insurance and Labor Market Contribution: 8.5% of the gross salary.
Personal Income Tax: Employees are subject to a flat personal income tax rate of 15%. This is also deducted from the gross salary but is part of the overall employment cost structure.
Other Employment Costs:
- Holiday Pay: Employees are entitled to paid annual leave, which varies based on age and years of service.
- Sick Leave: Employers must cover a portion of the employee's salary during sick leave.
- Severance Pay: In case of termination, employees may be entitled to severance pay, which depends on the length of service.
Administrative Costs: These include costs related to payroll processing, compliance with local labor laws, and other HR administrative tasks.
Additional Benefits: Depending on the company's policy, additional benefits such as health insurance, meal vouchers, transportation allowances, and bonuses may also be provided.

Using an Employer of Record (EOR) like Rivermate can help manage these costs effectively. An EOR handles all aspects of employment, including payroll, tax compliance, and benefits administration, ensuring that the company remains compliant with Hungarian labor laws. This can save time and reduce the administrative burden on the company, allowing it to focus on its core business activities.

Hungary

Hire in Hungary at a glance