Labor contract at your Hungarian company

Labor contract at your Hungarian company

When are you planning to make the first hire at your Hungarian company? Your new employee will need a labor contract that defines the employment relationship between the two of you, and protect the rights of both the employer and the employee. Let’s take a closer look at how that works.

How to prepare a Hungarian labor contract?

If you already have a foreign business with employees, you might be inclined to use your existing labor contract templates with your Hungarian employees. However, it is not that simple.

First of all, to avoid future disputes, the labor contract should be in Hungarian (it can also be bilingual). This way the Hungarian employee cannot claim that they did not understand the terms of the contract before signing. However, a simple translation is not enough.

  • Hungarian laws might be different from those in your country of origin, and the contract should not refer to laws or concepts that do not exist in Hungarian law.
  • Moreover, you should be careful that there is nothing in the agreement that is not legal according to Hungarian law.
  • At the same time, the labor contract has a few mandatory elements which should always be included.

While you can use your existing template as a basis for your agreement with your Hungarian employees, you must make sure they match local requirements. For that purpose, it might make more sense to create a new labor contract using a Hungarian template. The HR support offered by Helpers covers this type of consultancy as well, while we also work together with labor lawyers who can make sure the final version of the agreement will match both your intentions and Hungarian regulations.

Mandatory elements of the labor contract

When creating a labor contract for your Hungarian employees, it should always include the following elements:

  1. The name of the contracting parties: your company and your employee.
  2. The name of the position, possibly complemented by the main tasks in that position, but usually not a detailed list of tasks.
  3. The first day of employment: if your employee is moving to Hungary based on a work permit, this cannot be a date before the first day of validity of the work permit.
  4. The employment period: normally it can be definite or indefinite, but if your employee is moving to Hungary based on a work permit, the labor contract must be written for a definite term, up till the expiry of the work permit. Of course, it can be extended later on alongside the work permit.
  5. The gross salary: contracts always list the gross salary, even though it is normally the employer who deducts taxes and forwards them to the Hungarian Tax Authority.
  6. The trial period: normally 1-3 months, during which both the employer and the employee have the right to back out from the employment relationship without a notice.
  7. The notice period: normally 1-3 months after either the employee or the employer indicates that they wish to end the employment relationship. Whether / How much the employee must work during this period depends on the conditions of the termination.
  8. Place of work, where the actual work by the employee must be performed.

While not part of the labor contract, the employer must also provide the following documents shortly after the first day of employment:

  • Job description: a detailed list of tasks to be performed by the employee, which the employer may change without consulting the employee or changing the labor contract (provided the tasks still match the job title).
  • Information by the employer: a list of relevant labor regulations, and how they are implemented at your Hungarian company, including information about regular working hours, taking holidays, or when salaries are paid.

Click here to learn more about the mandatory elements of the labor contract.

Get expert help to keep compliant

The labor contract is there to define the main responsibilities and obligations of both the employer and the employee, and to protect the rights of both in case of a future dispute. As a result, it is essential that it matches the Hungarian Labor Code. To make sure the agreement between your Hungarian company and your employee is legal, get expert help from a HR specialist or a labor lawyer in time.

Helpers Hungary provides assistance not only with company setup, but also with every aspect of business operation in Hungary, which includes HR support, complete with offering bilingual labor contract templates and consultation with a labor lawyer as necessary.

Let us help you take care of the paperwork so you can focus on growing your business.