The rules of labour law are regulated in Act I of 2012 (Labour Code). The regulation is very similar to the labour laws of other European countries in that it has only minimum requirements as to the content of employment contracts. Employment contracts, modification and termination of employment must be incorporated in writing. Employment contracts are usually concluded for an indefinite period of time.
At the beginning of the employment relationship, the parties may specify a probationary period for a maximum of three months, or in case of a collective bargaining agreement for a maximum of six months. Employment contracts may also be signed for definite terms but the extension thereof requires the existence of the legitimate economic interest of the employer, and the period thereof may not exceed 5 years together with the extension of the contract.
Termination of employment is usually based on mutual agreement of the parties or a unilateral notice given by one of the parties. Note that the employer is required to provide a reason for its termination of the employee’s contract and that the reason must be realistic and rational. Employees may terminate their employment by notice without the obligation to provide a reason. In case of termination with immediate effect, both the employer and the employee are required to provide a substantial and verified reason. Employees have a 30-day forfeit period for legal remedies if the reason provided for the termination with notice or with immediate effect is contrary to the law.
Even though the law has provisions for part-time employment and distance working (“home office”), these methods are not yet widely used. Regular working hours are 40 hours per week, Monday to Friday. Working time conditions (e.g. the ceiling) and extra payment for overtime are strictly regulated by the law.
The annual paid holiday is 20 workdays, which increases with the age of the employee in categories with the maximum being 30 days. Pregnant women are entitled to 24 weeks of maternity leave. By the main rule (i.e. in the case of one healthy child), childcare benefit is available until the child reaches the age of 3. The labour law protects women on maternity leave and those receiving childcare benefit against regular termination of their employment. The age limit for the full old-age pension varies between 62 and 65 years depending on the date of birth.
Citizens of EU member states and their family members may be employed in Hungary without a work permit since 1 January 2009. For statistical purposes the employer is required to report the employment data of EU citizens to the employment centre.
No residence permit is necessary for EU citizens who plan to spend more than 3 months in the country for employment purposes. Nevertheless, they are required to report the details of their extended stay to the Office of Immigration and Nationality and to apply for a residence card.
With a few exceptions, non-EU citizens need work permits to work in Hungary. Individual work permits are usually valid for a maximum of 2 years with the option of extension for another 2 years. Officially, the employee applies for the work permit, but first the employer must document that they had already tried to fill the position with a Hungarian citizen with the help of the employment centre. Non-EU citizens may only begin their employment in Hungary after they have obtained all permits and documents necessary for their employment.
To get more information about how these and other incentives make Hungary a prime investment location, please read the Hungarian Investment Promotion Agency’s Invest in Hungary publication.