As companies become remote-first, employers are increasingly hiring international employees. Often, this is because countries like Hungary offer highly skilled talent at lower costs compared to western Europe, the United States, and Canada.
Salaries are essential when budgeting for hires in Hungary, but there are numerous other costs to consider. From overtime and severance, to social security contributions, hiring abroad requires more than calculating your new employee’s wage.
Employers should also keep in mind supplementary benefits like coworking passes or gym memberships. This can help with employee retention and satisfaction.
Overall, it can be challenging to determine total costs. This article will guide you through the costs of hiring employees in Hungary.
Mandatory Costs of Hiring in Hungary
You’ll need to consider numerous mandatory costs when hiring an employee from Hungary. These include salary, taxes, benefits, overtime pay, and severance pay. Adherence to these costs will ensure that you are compliant with local labor laws and regulations.
Salary Considerations
Hungary’s metropolis, Budapest, is a vibrant hub for startups, tech entrepreneurs, and new SaaS companies. The Hungarian economy has been thriving thanks to scientific innovation, numerous successful startups, and skilled software engineers.
The minimum wage in Hungary is HUF 232,000.00 per month, which comes to about USD 687.00. For those who have secondary qualifications or certified training, the minimum wage is HUF 296,400.00, which comes to about USD 875.00.
However, software engineers and developers earn well above the minimum wage. The average salary of a software engineer in Budapest is HUF 998,390.00 per month, which is approximately USD 2900.00.
Still, salaries in Hungary are significantly lower than in western Europe, the United States, and Canada. Hungary’s cost of living index ranks 82nd in the world, with an overall score of 39.2. This provides employers with the opportunity to recruit highly skilled talent while minimizing costs.
Taxes and Benefits
When hiring in Hungary, it’s critical to be aware of mandatory taxes and contributions. Employers are to pay 13% towards social security, which includes unemployment insurance, pension, and health insurance.
Paid Leave
Employees in Hungary are entitled to take numerous types of leave if they meet the requirements. For annual vacation, employees are entitled to a minimum of 20 paid days per year. The amount of paid time off increases with age — at 25 years old, an employee earns one extra day off. From 45 years of age, they earn ten extra days.
Hungary also has 11 public holidays which are non-working days.
Employers need to consider the cost of maternity leave as well. New mothers are entitled to 24 weeks of maternity leave. However, they only receive 70% of their wages. Paternity leave is also available; new fathers can take 10 days off. The first five days of paternity leave are fully paid, whereas the last five days, employees only receive 40% of their normal pay.
Regarding sick leave, employees are allowed to take 15 sick days at 70% of their normal pay. After 15 days, employees receive payment through Hungarian social security for up to one year.
Overtime Pay
The standard working week in Hungary is eight hours over a five day span. Overtime is allowed, however, employees must not work more than 48 hours per week. Overtime pay is 150% of the employee’s regular wage. If they work overtime on weekends, they’re paid 200%. When hiring in Hungary, this cost is something to keep in mind.
Severance Pay
Severance pay depends on the employee’s salary and tenure. After three years of employment, employees are entitled to receive the equivalent of one month’s pay. Severance increases with the time spent at a company. For example, if an employee has worked for a company for 25 years, they receive six months pay.
Supplemental Costs of Hiring in Hungary
In addition to statutory benefits, employers may also provide supplemental benefits. Offering additional benefits will help attract top talent, motivate staff, and increase retention.
Benefits
Making sure your new employees are happy and healthy is vital. You can support their health by offering a strong benefits package. Many employers choose to offer private health insurance for their employees.
The price will vary significantly depending on the type of private health insurance and coverage. Common health insurance providers in Hungary include AXA Global Healthcare, Bupa Global, and Pacific Prime.
An EOR like Borderless will typically offer benefits packages. This will usually include medical, dental, vision, and life insurance along with a retirement savings plan.
Bonuses and Extras
There are no mandatory bonuses in Hungary, but performance-based bonuses are common. Additionally, employers may want to consider offering employees a lunch or coffee stipend.
Employers also need to take workspace costs into account when hiring in Hungary. Since your new hires will likely be working remotely, they’ll need to set up a home office or access a coworking space.
Providing a home office stipend can be hugely beneficial. It can go towards a company laptop, ergonomic office chairs, or antivirus software.
With the rise of remote working, the Hungarian government has implemented new rules. Employers can provide remote workers with a tax-free reimbursement of 10% of their monthly salary towards a home office.
In recent years, Budapest has become a hotspot for digital nomads and remote workers, so the city is booming with affordable coworking offices.
Impact Hub has coworking memberships ranging from HUF 15,000 to 54,500 per month — about USD 44.00 to 162.00. Kubik, a coworking space with private offices available, has memberships ranging from HUF 45,000 to 100,000 per month, which comes to approximately USD 133.00 to 295.00). Muse Budapest offers daily passes to monthly memberships, ranging from HUF 4,000 per day to 60,000 per month —about USD 12.00 to 177.00.
Work with Borderless
Hiring in Hungary may feel overwhelming, especially with so many different costs to keep in mind. Working with an Employer of Record (EOR) can help take the stress out of global hiring and budgeting.
An EOR like Borderless will do the heavy lifting, guaranteeing that you compliantly hire and pay employees in Hungary. To get started, book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
