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Hungary – Employment law review 2017

Written by
CLV Partners, one of Hungary's best specialist firms.
This article provides a short overview of the biggest changes to employment law that took place in Hungary in 2017.

An overview of the main changes

  • The statutory minimum wage was increased.
  • Daily rest provisions for stand-by work were increased.
  • Changes were made to the taxation of fringe benefits.
  • The definition of ‘posting’ has been clarified.
  • The amount of employers’ contribution to rehabilitation of disabled workers was increased.


Increase in the minimum wage

The minimum wage was increased from HUF 111,000 to HUF 127,500 for unskilled workers by Government Decree No. 430/2016 (XII.15.). For positions requiring at least a secondary school diploma the minimum wage was increased from HUF 129,000 to HUF 161,000.

Minimum wage for full-time employment:

Pay period Minimum wage for unskilled labour (gross HUF) Minimum wage for skilled labour (gross HUF)
Monthly 127,500 161,000
Weekly 29,310 37,020
Daily 5,870 7,410
Hourly 733 926


The minimum wage set out above is applied on a pro rata basis for part-time employment.

The Labour Code also sets out the rules on minimum pay for employees in executive roles: the salary of an employee whose position is of significant importance for the employer’s operations or involves increased levels of confidentiality must be at least seven times the minimum wage. The above provisions are therefore also important for calculating executive salaries.

The daily rest period

The Labour Code states that employees are generally entitled to a daily rest period of at least 11 hours. The Labour Code contains several exceptions from this rule, where a daily rest period of at least eight hours is sufficient. According to an amendment to the Labour Code, stand-by work ceases to be one of these exceptions. This means these employees must be granted a daily rest period of at least 11 hours rather than the eight hours previously stipulated.

Reimbursement of daily commuting expenses

Government Decree No. 4/2017 (amending Decree No. 3/2010) amended the rules on reimbursement of commuting expenses.

Employees shall be reimbursed HUF 9/km for the daily commute to work. The employee is legally entitled to this reimbursement, if he or she satisfies the statutory requirements. The employer can reimburse employees further travel expenses above HUF 9/km up to HUF 15/km (according to the Act on the Personal Income Tax) if they satisfy the statutory requirements. This further reimbursement is discretionary for the employer: there is no discretion regarding the HUF 9 reimbursement.

Under the Act on Personal Income Tax, any amount below or equal to HUF 15 in reimbursement of commuting expenses does not constitute a wage. Any reimbursement above HUF 15 constitutes taxable income for private individuals.

Changes to the fringe benefit regime(Amendments to Act CXVII. of 1995 on Personal Income Tax)

Employers are required to pay tax on non-salary benefits known as ‘cafeteria benefits’ and certain other benefits that do not fall under the ‘cafeteria’ umbrella (‘other benefits’).

From 2017, the tax base for both categories of benefit shall be calculated using a multiplier of 1.18. This means the tax payable by the employer on cafeteria benefits is 34.22% and 49.56% on other benefits (15% personal income tax and 14% healthcare contribution for both).

From 2017 employers can pay employees a maximum amount of HUF 100,000 net per year in cash for cafeteria benefits (until 2017, cafeteria benefits only included non-cash payments) at a reduced tax rate.

The following benefits granted to employees qualify as cafeteria benefits as of 2017:

  • cash (up to a maximum amount of HUF 100,000, for payments exceeding this amount the general tax rates shall apply);
  • SZÉP Card (maximum amounts on sub-accounts have not changed: amounts above the maximum shall be considered as other benefits, thus after the amount exceeding, the increased tax is payable);
  • holiday services provided by trade unions to members and relatives of the members;
  • non-cash benefits provided by a cooperative society to its members up to 50% of the minimum wage.


The following are considered other benefits from 2017:

  • gift vouchers (unlimited);
  • dining at work (unlimited);
  • Erzsébet voucher (meal voucher, unlimited);
  • local travel passes (unlimited);
  • school beginners’ vouchers (unlimited);
  • voluntary pension fund contributions (up to 50% of the minimum wage per month);
  • voluntary welfare fund contributions (up to 30% of the minimum wage per month).


The following benefits are tax-free from 2017:

  • housing benefit to encourage mobility provided by the employer:

– up to 40% of the minimum wage for the first 24 months of employment;

– up to 25% of the minimum wage for the second 24 months of employment;

– up to 15% of the minimum wage for the following 12 months up to a total of 60 months maximum);

  • tickets for cultural events or institutions (up to HUF 50,000 per employer per year);
  • tickets for sporting events (without limitation);
  • allowances paid under the dual training system during the theoretical and practical training elements (up to the amount of the minimum wage applied on the first day of the month);
  • compensation for kindergarten costs (until 2017 only nursery costs were tax-free  benefits);
  • healthcare services paid by the employer (not included the services provided in form of vouchers);
  • housing benefit (up to HUF 5 million for five years, if the special conditions set out in the Act are fulfilled);
  • monthly risk insurance up to 30% of the minimum wage.

Eligibility for the tax exemption for housing benefit depends on the ratio of the number of the rooms in the home to the number of occupants and whether the occupants are close relatives of the employee. From 2017, a spouse is considered a close relative and siblings can be included in the calculation of the number of the family members residing together. For newly-weds, as yet unborn children can be included.

The calculation of the reasonable size of a home has also been relaxed: three rooms for one or two people, four rooms for three or four people. Thereafter the reasonable size increases by a ration of one room per additional person.

The value of other benefits and tax-free benefits shall not be included in the yearly amount of HUF 450,000 (the maximum amount of annual tax-free benefits permissible under Hungarian law).

The definition of ‘posting’ has been clarified

According to the previous definition, posting meant work ordered by the employer and carried out at a different workplace from that defined in the employment agreement. From 2017, posting is defined as any official or business travel ordered by the employer, not including travel to work and travel between the employee’s residence or place where they are staying and the employer’s headquarters or establishment.

Contribution to rehabilitation

Employers are required to pay a contribution in advance to the rehabilitation of disabled workers if they employ more than 25 workers and disabled workers make up less than 5% of the total workforce (mandatory employment rate).

The amount of the contribution is nine times the minimum base salary for full-time employees on the first day of the current calendar year. From 2017, the amount of the contribution is increased from HUF 964,500 per person per year to HUF 1,147,500 per person per year.