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Hungary EOR (Employer of Record)

Imagine tapping into the potential of a growing economy, rich in skilled workers and diverse industries, and doing so with minimal hassle and maximum efficiency. This is the advantage of expanding your business to Hungary with the help of a Hungary Employer of Record (Hungary EOR).

Key Takeaways

  • Understanding Hungary’s employment landscape and the benefits of engaging an Hungary Employer of Record can help streamline business expansion.
  • An EOR in Hungary is responsible for drafting valid contracts, payroll management, tax & social security contributions and employee benefit administration.
  • When evaluating potential providers consider their understanding of local laws & services offered as well as customer service skills to ensure successful transition into the market.

Understanding Hungary’s Employment Landscape

As a member of the European Union, Hungary presents a unique opportunity for global employment, thanks to:

  • Its rich pool of skilled, cost-effective labor

  • Its business-friendly environment in full compliance with local labor laws

  • The variety of industries present in Hungary, such as automotive, IT, engineering, pharmaceutical, medical technology, and electronics

These factors make Hungary an appealing destination for international hiring.

The average income for skilled workers in Hungary is HUF 493,000 per month, with a minimum wage of HUF 232,000. Roles involving specialised training or higher qualifications come with a minimum monthly payment of HUF 296,400. This is to ensure that employees are adequately compensated. Part-time employees are limited to a maximum of six working hours per day as per Hungarian labor laws. These factors contribute to Hungary’s lower cost of labor compared to many other European countries, making it a cost-effective choice for businesses considering global expansion.

Benefits of Using an Employer of Record in Hungary

An Employer of Record (EOR) in Hungary can significantly aid in managing the intricacies of the overseas hiring process. Their responsibilities range from maintaining compliance with local regulations to simplifying the creation of Hungary employment contracts, which greatly helps in streamlining your expansion process.

By ensuring compliance with local labor laws and regulations, the EOR allows your business to concentrate on its core functions. The EOR’s expertise in comprehending and adhering to Hungarian labor laws helps to alleviate the risk of non-compliance and potential legal repercussions.

Key Components of a Hungary EOR Service

A Hungary EOR service handles the intricate details of the employment process, covering everything from compliance and payroll management to tax and employer benefits. This allows the company to maintain a direct relationship with the employee, assign work tasks, and evaluate performance, as outlined in the Hungary employment contracts.

The responsibilities of an EOR service in Hungary include:

  • Managing the initial hiring phase

  • Ensuring compliance with local employment laws

  • Handling payroll and benefits administration

  • Providing ongoing HR support

  • Managing employee contracts and terminations

When you hire employees, it ensures a seamless employment relationship, with the employee fulfilling all contractual obligations and adhering to local employment laws as well as local labour laws.

Employment Contracts

One of the main responsibilities of an Employer of Record in Hungary is to draft valid employment contracts, ensuring each employment contract is compliant with local labor laws. These contracts include essential terms of employment such as:

  • Identification of both parties

  • Workplace(s)

  • Job position

  • Duties and responsibilities

  • Detailed job description

The EOR also ensures that employment contracts contain information about the basic salary and any other compensation or benefits provided. From January 2023, employers must provide employees with detailed information about the terms of employment when they begin their job. This should include details on:

  • termination rules

  • training policy

  • working hours

  • any other additional items

Payroll Management

As the legal employer, the EOR oversees the payroll systems in Hungary. An EOR’s role includes ensuring precise and punctual payments to employees in accordance with local tax and social security regulations.

Collaborating with a global payroll company in Hungary provides assurance of compliance with local payroll regulations. Employers should adhere to the payment of salary by the 10th of each calendar month and contributions by the 12th of each calendar month, ensuring a smooth employment relationship between the employer and the Hungarian employees.

Tax and Social Security Contributions

Handling tax and social security contributions for both employers and employees forms an integral part of an EOR’s role in Hungary. This involves informing the tax authority of an employee’s joining on the first working day and similarly of their termination within the notice period of eight working days. This adherence to tax and social security regulations is essential to avoid any penalties imposed by the tax department.

Employers are obligated to pay social security taxes and employees are obligated to pay both social security and income taxes. The EOR ensures that these income tax obligations are met in a timely and compliant manner, guaranteeing a smooth employment process for both the employer and the employee.

Employee Benefits Administration

An EOR in Hungary also has the responsibility to administer employee benefits. This includes providing mandatory benefits such as pension, paid time off, and certain health insurance coverage as required by Hungarian labor law, including contributions to the national health insurance fund.

In Hungary, entitlements for leaving a job, such as severance pay, are determined by how old the worker is and how long they have been in the position. These two factors dictate the level of compensation they receive upon departure.

Here are some specific entitlements in Hungary:

  • New mothers are entitled to a minimum of 24 weeks of maternity leave.

  • New fathers can take up to ten days of employer-paid paternity leave.

  • Workers can take up to 15 days of sick leave in case of illness.

  • Hungary has eleven public holidays that are observed each year.

Navigating Legal and Compliance Challenges

For businesses expanding into this market, navigating the complexities of legal and compliance requirements in Hungary can pose a challenge. By partnering with a local business entity, such as an EOR, businesses can ensure compliance with local employment laws and regulations, making the process smoother and more efficient.

Businesses must adhere to complex and demanding employment regulations, which can present legal and compliance challenges. When terminating an employee in Hungary, employers must provide a written reason that is based on factual grounds and clearly stated. The EOR ensures that these requirements are met, minimizing legal risks and ensuring smooth business operations.

Hiring Process Simplified: Steps to Engage a Hungary EOR

Engaging a Hungary EOR involves a straightforward process. The first step is to assess potential providers, taking into account their familiarity with local legislation, the breadth of services they offer, and their customer service competencies.

Once the suitable partner is chosen, the company works alongside the EOR to manage the recruitment process and address ongoing employment obligations. With an EOR in Hungary, the hiring process is expedited, and the company can focus on its core mission while the EOR takes care of the employment-related responsibilities.

Evaluating EOR Providers: What to Look For

When assessing EOR providers in Hungary, their understanding of local laws, the array of services they offer, and their customer service skills should be taken into account. An EOR should possess specific knowledge regarding Hungarian employment laws, including the legal system for employment, hiring procedures, and regulations relating to employee benefits and rights.

The services offered by an EOR in Hungary typically include:

  • Payroll management

  • HR administration

  • Compliance with local labor laws

  • Tax and social security compliance

  • Work permit and visa support

  • Termination and offboarding services

Good customer service is of paramount importance in an EOR’s operations in Hungary, facilitating a seamless and efficient hiring process, and providing ongoing support to both the employer and the employees.

Case Study: Successful Expansion with a Hungary EOR

A non-profit global food relief company serves as an example of a successful business expansion in Hungary utilizing an EOR service. They sought an efficient global HR specialist to back their development efforts in Hungary. By partnering with an EOR service, they were able to simplify their recruitment and compliance processes, enabling them to concentrate on their core mission of providing swift meal deployment to areas affected by disasters.

Risk mitigation and compliance with local regulations were key considerations that facilitated successful business expansion in Hungary through an EOR. Ensuring compliance with local labor laws, familiarity with the Hungarian market, and the scope of services provided were critical factors that contributed to the success of the expansion.

Summary

In conclusion, expanding your business to Hungary can be an exciting venture, offering access to a skilled workforce, growing economy, and diverse industries. Partnering with a Hungary EOR can streamline this process, ensuring compliance with local laws, simplified hiring, and efficient management of ongoing employment responsibilities. By understanding the role and benefits of an EOR, businesses can make informed decisions and successfully navigate the complexities of global expansion.

At RemotePad, Lech draws on his professional experience to write about employment taxes and payroll (both remote, and in-office). Lech holds a Bachelors’ degree from the University of Kent, a Master of Arts (MA) from Kings College London, and professional payroll and tax qualifications. He has 20 years experience advising on all manner of tax and business planning matters.

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