An overview of the main changes
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:
|Minimum wage for unskilled labour (gross HUF)
|Minimum wage for skilled labour (gross HUF)
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:
The following are considered other benefits from 2017:
The following benefits are tax-free from 2017:
– 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);
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.