WHAT TO LOOK FOR BEFORE HIRING AN EMPLOYEE IN HUNGARY

22 September 2023

In the field of labour law, we meet with strict rules which protecting the workers. The failure of compliance may result in not only consequences, but it can cause serious harm to the company’s reputation. Therefore, in this short summary we sum up the most important things that an employer needs to know before hiring an employee in Hungary.

1. Employment contract – written form

The employment contract shall be in writing, printed and signed by both parties. The employment contract will also be valid in the absence of the written form, but in this case the employer risks serious sanctions. The labour inspectorate may impose penalties or in the worst-case scenario prohibits the further employment.

Not only the employment contract, but the modification of the contract shall be in a written from.

2. Essential elements of the employment contract

The employment contract sets out the basic rights, duties and responsibilities of both parties. At least the basic wage and the position have to be agreed in the employment contract.

It is very important that in Hungary workers must not be paid less than the statutory minimum wage which is specified by the government and reviewed annually.

3. Probationary period

The above-mentioned were the essential elements of the employment contract, however there are also optional elements, such as a probationary period. The employer can also set up a maximum 3 months’ probationary period in the labour contract, during which he can fire the employee without justification and notice period.

4. Medical examination

The employer is responsible for the safety and secure work environment. This requires to set up strict health & safety rules.

Therefore, among other requirements, prior to beginning to work the employee shall be examined by a doctor who issues a medical certificate, attesting that the employee is medically fit to perform its work duties.

5. Reporting to the tax authority

You shall report your employee to the tax authority on the first working day. You shall also report the termination of the employment relationship within 8 days.

6. Position description and info sheet

The employer needs to provide a description about the position. It contains the tasks and responsibilities of the employee.

The employee must receive a written info sheet within 7 days from the beginning of employment for example about the

• daily working time,
• elements of the salary,
• time-off and leave,
• termination of the contract,
• applicability of collective agreement.

7. Non-competition clause

One of the largest business risk is an employee who leaves the company with the information and know how acquired during his employment. Especially if the firm corners a market there is a high chance that competitors will try to solicit key employees. Business owners should think about protecting their business in advance, before it is too late.