Blog » THE 7 MUST-KNOWS BEFORE HIRING AN EMPLOYEE IN HUNGARY
THE 7 MUST-KNOWS BEFORE HIRING AN EMPLOYEE IN HUNGARY
17 September 2015
In this short summary we sum up the 7 most important things that an employer needs to know before hiring an employee in Hungary.
If your employee is EU-citizen (or family member), no work permit is needed to employ him. Although on the first day of the employment, the employer has to report it to the employment centre.
On the contrary, in case of hiring a non-EU citizen, a valid work permit will be required. In this case before recruiting the workforce you have to file an application for work permit to the employment centre, or alternatively, the employee has to file a consolidated application for residence and work permit to the immigration authority.
In case of employing foreign workforce without permit the labour inspectorate may apply severe sanctions.
Practical advice: The employment centre will issue the work permit for non-EU citizens for maximum 2 years and after that it can be prolonged.
Employment contract – written form
In Hungary the employment contract shall be concluded in writing. It means that the contract shall be printed and signed by both parties. The absence of written form does not affect the validity of the employment relationship but it is a risk for the employer, because the labour inspectorate may apply sanctions (among other prohibits the further employment, imposes penalty).
Practical advice: Not only the employment contract, but the modification of the contract shall be in a written from.
Employment contract – base content
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.
Practical advice: the trial (probation) period shall be expressly agreed in the contract, and it cannot be longer than 3 months. During the probation period you can fire the employee without reasons and notice period.
An employer is responsible for providing their employees with a safe and secure environment to work in.
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.
Practical advice: The medical examination is not only required before the beginning of the employment, but periodically (e.g. in case of some dangerous workplaces in every six months).
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.
Practical advice: keep your reporting obligations to the tax authority seriously, so that you avoid penalties imposed by the tax authority.
Informing the employee
You shall inform your employee in writing within 15 days from the beginning of employment about the following conditions: the daily working time, the parts of the wage, time-off and leave, termination of the contract, collective agreements.
Practical advice: It is very useful to issue a handbook on employment terms and conditions, in which you can set forth all the rules which you consider as important in connection with the employment relationship.
If you would like to prevent your employee from competing with your business you will have to include a non-competition clause in the contract.
The non-competition obligation cannot be longer than 2 years after the end of labour contract and you have to pay an appropriate compensation to the employee.
Practical advice: The compensation for the non-compete obligation shall not be less than 33 % of the base wage for the same period.
CAN YOUR DEBTOR ESCAPE LIQUIDATION BY SETTING OFF CLAIMS IN HUNGARY?
The initiation of a liquidation procedure is an effective debt collection method, since the debtor may only avoid being liquidated by paying the claim if the conditions specified in the Act on Bankruptcy Proceedings and Liquidation (Bankruptcy Act) are met. For this reason, in the case of liquidation, one of the most common defences of the debtor is the reference to offsetting. But can the debtor refer to offsetting without limitation during liquidation? In our short article we answer this question.Read more »
SZIGET FESTIVAL FINED RECORD HUF 30 MILLION FOR GDPR BREACHES – WHAT WENT WRONG?
A few days prior to the first anniversary of the entry into force of the GDPR the Hungarian Data Protection Authority imposed the biggest data protection fine in Hungary so far. The target was the biggest Hungarian festival organizer company thanks to whom the public may enjoy the SZIGET, the VOLT or the Balaton Sound Festival. The Data Protection Authority reviewed the check-in system of the festival and the data processing in relation with the check-in. In our short article we summarize the mistakes the Authority identified.Read more »
CONSTRUCTION TRUSTEESHIP IN HUNGARY - GETTING PAID IN CONSTRUCTION PROJECTS AS SUBCONTRACTOR
Construction trusteeship, as mandatory collateral management of major private construction projects in Hungary, strives for protecting subcontractors against non-paying general contractor, by allowing direct payments from employer under certain conditions. How does it work in practice and what are the limits of subcontractor protection? We address these issues in this article.Read more »