Checklist: how to hire a new employee in Hungary

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Checklist: how to hire a new employee in Hungary

Finding the perfect candidate for the position at your Hungarian company requires commitment, planning, and remembering all the administrative aspects. See our short checklist here, and a more detailed description below.

  • Formulate the position, job description, salary expectation
  • Advertise the job
  • Filter candidates and find the right one
  • Agree on the gross salary
  • Prepare a contract
  • Alert your accountant that there is a new employee to register
  • Make sure they have all the necessary documents
  • Arrange for payroll administration
  • Pay salary by the 10th of each month
  • Pay contributions by the 12th of each month

Formulate the position

When you want to hire someone, your first task is to determine what exactly want your new employee should do for you. This will affect what kind of experience or education they will need and what kind of salary they will expect. As the salary is a recurring cost for your company, you have to make sure you have the necessary funds to pay the salary before you decide to make a new hire.

If you are planning to make a new hire, discuss this with your accountant! They will be able to help you check if you have the necessary funds, give you a checklist for necessary documents, or direct you to a recruitment specialist.

Advertise the job

There are several channels for advertising positions, ranging from social media ads to professional headhunters. The method best for you will depend on who you are looking for: you might be able to hire a temp through a Facebook ad, while a multilingual microbiologist might be a bit more difficult to find.

Filter candidates and find the right one

The first filter might be a request in your advertisement for a motivation letter written in a specified language and for a salary expectation. A nicely written CV can also be an indicator of the precision and language skills of a candidate. At one point you should have a personal interview, where you can even put your candidate’s expertise to the test.

If you need help with the recruitment procedure, you can get expert help with that as well.

Agree on the gross salary

In Hungary, there are three terms you should know related to salary.

  • The gross salary is what you agree on with your employee. It will change only if you modify the labor contract.
  • The net salary is what the employee gets to spend after taxes. (In Hungary, it is the employer who transfers the employee’s income tax and other contributions to the tax authority.) It might change if relevant regulations change.
  • The total salary cost is what the employee actually costs you, as you the employer have to pay some taxes and contributions too. This might change if relevant regulations change.

Remember there is a minimum salary in Hungary – learn more about it here.

Prepare a contract

The labor contract must be signed at least one day before your new hire starts working for you. This is because your accountant has to report the starting day of your employee to the authorities before the employment starts. The labor contract should contain the gross salary you have agreed on and the first day of employment – whether it is the following day or months away. Ask for expert help to prepare the labor contract.

Alert your accountant that there is a new employee to register

Make sure your accountant knows you are planning to make a new hire. They might even be able to help you prepare the labor contract, calculate the salary, and advise you on the documents, certificates, and licenses should ask for. More importantly, your accountant has to report to the authorities when a new employee is starting to work for you. They have to do it at least one work day before your employee starts, so it is best to alert them already in the negotiation phase.

If you fail to report new hires to the authorities, you can expect heavy penalties.

Make sure they have all the necessary documents

Anyone who wants to enter employment in Hungary needs to have certain documents that verify they are entitled to work in Hungary. Your accountant or labor contract specialist will be able to give you a full list, which will probably include these below:

  • social security number
  • tax number
  • university degree or other certificates
  • residence permit and work permit (if your employee is not Hungarian)

If your new hire does not have the required documents when you are negotiating the agreement, make sure they can acquire them by the time you are signing a contract. You can even help them acquire these (especially the work permit and the residence permit) by the time you want them to start working for you.

Arrange for payroll administration

Paying salaries is not like buying something for your company and then handing the invoice to your accountant. Since it includes paying various contributions on behalf of both the employer and the employee, it requires a special kind of administration and reporting. Daily attendance, holidays and sick-leaves should also be documented. Discuss the details with your accountant already when you are alerting them about your new hire.

Pay the salary – by the 10th

In Hungary, employees who are paid monthly should receive their net salary by the 10th of the following month. This way if someone works for you in March, they should be paid by the 10th of April.

Pay the contributions – by the 12th

After you have paid your employee, you should transfer the relevant contributions to the authorities. The deadline for this is the 12th day of the month following the work performed. This way if someone works for you in March, relevant contributions should be transferred to the authorities by the 12th of April.

Disclaimer: The data in this article reflect the state of affairs upon publication. To get up-to-date information, always consult your accountant.