Individual employment relations in Hungary

Requirements regarding an employment contract

According to the Labour Code, an employment relationship is established by entering into an employment contract (Article 42). In some cases, a medical examination is required to certify fitness to work.

Employment contracts may only be concluded in writing. If the employment was not agreed in writing, it is invalid and can only be invoked by the worker within 30 days.

The minimum working age is 16 years (Labour Code, Article 34(2)). By way of derogation from the above, any person of at least 15 years of age receiving full-time school education may enter into an employment relationship during school holidays. By authorisation of the relevant authority, young people under 16 years may be employed for the purposes of performance in cultural, artistic, sports or advertising activities (Labour Code, Article 34(2) and (3)).

There are special requirements in the public sector set by the relevant law (especially Act CXCIX of 2011 on civil servants, Act XXXIII of 1992 on public employees, Act CCV of 2012 on the armed forces and Act XLII of 2015 on the professional staff of law enforcement agencies). One special requirement is that secondary education is required for civil servants and law enforcement officers. Most government sector jobs require no criminal convictions. The minimum working age in the public sector is usually 18 years. Specific jobs in the government sector require appropriate educational attainment, which is regulated by the relevant acts and the implementation decrees of the given acts.

Dismissal and termination procedures

The Labour Code (Article 64) stipulates three major forms of termination of the employment relationship:

• termination by notice

• termination with immediate effect

• termination by mutual agreement

Termination by notice (Labour Code, Articles 65–70) can be initiated by either the worker or the employer. There are various bans on dismissal linked to pregnancy, maternity and childcare. Employers are required to justify the dismissal. A worker may be dismissed only for reasons connected with their behaviour in relation to the employment relationship, with their ability or with the employer’s operations. Workers are not required to give reasons for terminating their employment relationship. The basic notice period is 30 days, which has to be extended by between 5 and 60 days in proportion with the length of service if employment is terminated by the employer. A dismissed worker with at least three years of service is also entitled to severance payment. Severance payment is also due in some other cases (Labour Code, Article 77), such as if the employment relationship is ended without just cause.

There are special provisions regarding collective dismissals (Labour Code, Articles 71–76) in line with the Collective Redundancies Directive (98/59/EC). For example, negotiation with the works council is compulsory and the employer has to inform the works council in writing about the reason for the collective dismissal.

Both the employer and the worker can terminate the employment relationship with immediate effect and without notice if the other party (Labour Code, Articles 78–79):

• wilfully or by gross negligence commits a grave violation of any substantive obligations arising from the employment relationship

• otherwise engages in conduct that would render the employment relationship impossible

The employment relationship can be terminated by mutual agreement. The term ‘mutual agreement’ is loosely regulated by the Labour Code: the parties have considerable freedom and only the general principles have to be followed.

Some special groups – for example executive officers and temporary agency workers – are subject to less stringent regulations.

In the public sector, termination of employment has specific (often more specific than in the private sector) and binding rules; the notice period is different and the severance payment is higher. The specific rules are regulated by the relevant acts (primarily Act CXCIX of 2011 on civil servants and Act XXXIII of 1992 on public employees).

Parental, maternity and paternity leave

Although the social system has been transformed in Hungary relatively significantly, radical changes have not occurred in this type of leave. There are no data available about the trends in the uptake of paternity leave – a 2022 survey suggests that, in recent decades, about one-fifth of eligible fathers have taken paternity leave. From 2014, people who received the childcare fee (gyermekgondozási díj, GYED) and the child home care allowance (gyermekgondozást segítő ellátás segély, GYESE; see below) could work after the first birthday of the child. Since 2016, the recipients have been able to work after the child reaches the age of six months.

Owing to a change in the Labour Code adopted in December 2022, the duration of paternity leave increased from 5 to 10 days as of 1 January 2023 (Act I of 2012, Article 118(4)). Another amendment introduced into the Labour Code at the same time established parental leave. Both parents are entitled to this type of paid leave. Each parent is entitled to a total of 44 days of parental leave until the child reaches 3 years of age (Act I of 2012, Article 118A(1)).

This short-term parental leave, based on the Labour Code, is entirely unrelated to the long-established, long-term parental leave arrangement that is enshrined in Act LXXXIV of 1998 on family support, which entitles one of the parents to stay at home until the third birthday of the child while receiving financial support from the state.

Under the latter parental leave arrangement, parents can choose whether the father or the mother will stay with the child, although usually it is the latter. After the child is six months old, staying home is optional: the recipient of state assistance may go back to work if they so choose.

Regarding the number of benefits provided, and the financing institution, there is a difference between ‘insured’ and ‘non-insured’ people. People can be considered insured if they have at least 365 days of employment within two years of the birth of the child. The various benefits are as follows:

• maternity care fee (csecsemőgondozási díj, CSED)

• GYED

• GYESE

The table ‘Statutory leave arrangements’ gives an overview of the main characteristics of the statutory leave arrangements in Hungary. Specific rules (on adoptive parents, foster parents, twins and so forth) can be found in Act LXXXIII of 1997 on health insurance allowances and Act LXXXIV of 1998 on family support, as amended for the given years.

Statutory leave arrangements

Sick leave

Sick leave and the related payment are regulated by Act LXXXIII of 1997.

For the duration of sick leave, 60% of the absence fee – which is based on the average wage of the worker and is defined by the Labour Code – is paid if the employee has been insured under social insurance for at least 730 days. Otherwise, the sick leave payment is 50% of the absence fee. The daily allowance of sick leave payment may not exceed the one-thirtieth of twice the monthly minimum wage.

Retirement age

Retirement age is regulated by Act LXXXI of 1997 on social security pension benefits.

The retirement age for old-age pension benefits under the social security system has been 65 years since 2022. The retirement age has been gradually increasing since 2010. The other eligibility criterion for a full old-age pension is at least 20 years of service. A partial retirement pension is granted to people who have reached the relevant retirement age for the old-age pension and have at least 15 years of service.

There is a gender difference: the full old-age pension benefit is due to any woman having at least 40 years of service, irrespective of age.

In the public sector, civil servants and some other officers are obliged to retire at the age of 70. There is a new regulation that a government sector employee should not have a parallel pension and salary; if they are past retirement age, they have to choose whether the pension is suspended or the paid public sector employment is terminated.

From 1 September 2022 to 31 August 2023, the application of the above rule was suspended for those above the retirement age working in the public sector for social, child protection and child welfare services and in the sectors of public education and vocational education as public employees or officials (Government Decrees 268/2022 and 269/2022). For the relevant period, the employees affected could receive both their wage/salary and their pension.

In the armed forces and law enforcement agencies, employees can retire five years earlier.