Hungary Employment Guide

Understanding Employment Termination Requirements in Hungary

Navigating employment termination in Hungary requires careful attention to complex regulations and country-specific requirements. The separation process must be managed collaboratively between employers and key stakeholders, often involving special considerations and mandatory procedures depending on the termination circumstances.

Hungarian labor law provides limited flexibility for employers regarding termination. Outside of probationary periods, employers cannot terminate employment arbitrarily and must demonstrate valid grounds for dismissal.

Permissible Termination Methods

Compliant termination approaches include:

• Voluntary resignation by the employee
• Mutual agreement between parties
• Employer-initiated termination based on:
  • Probationary period assessment
  • Objective business reasons
  • Disciplinary dismissal
  • Performance-related issues due to work incompatibility

Notice Period Regulations

Hungarian law mandates minimum notice periods that increase with employee tenure:

Parties may mutually agree to extend notice periods up to a maximum of six months.

Severance Pay Requirements

Hungarian severance calculations are tenure-based:

Enhanced severance applies when termination occurs within five years of pension eligibility.

Risk Management Considerations

International companies operating in Hungary should implement proactive financial planning for potential termination scenarios. SailGlobal addresses this challenge through systematic severance accrual applied to all employment agreements in Hungary. This approach, grounded in extensive global litigation management expertise, calculates reserves based on statutory requirements and local best practices. Should employees resign or become ineligible for severance, unused accruals are returned to the employer.

Practical Implementation Examples

Consider a multinational technology firm that recently expanded operations to Budapest. By implementing SailGlobal's severance accrual system, the company successfully navigated a restructuring that affected 15 employees with varying tenure levels. The pre-established financial reserves ensured compliance with Hungarian termination requirements while maintaining budget predictability.

Another case involves a manufacturing company facing performance-based terminations. Through careful documentation and adherence to Hungarian procedural requirements, the organization minimized legal risks while ensuring fair treatment of affected employees.