To succeed in business in Hungary, it is vital to have a strong understanding of the country’s business culture. Hungarian business culture is modernizing and reflects ongoing changes in Western society, placing importance on both the work of management and the employees.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Hungarian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Hungary to start your expansion well-informed.
The work culture in Hungary
Hierarchical structures are still present in Hungarian structures. Punctuality, flexibility, preparedness and socialization are significant to the development of business relationships in Hungary. Local businessmen place great importance in their relationships. Thus, it is important to both you and your local business partners to treat business dealings with respect and great care.
There has been an increasing awareness around the world in the importance of work-life balance and flexible working times, but Hungary still places significant importance on business etiquette for the smooth operation of businesses. Here are some tips and tricks to use during your first few months:
- Punctuality: Punctuality is important to Hungary’s business culture. It is advised to arrive at least ten minutes before the scheduled meeting time. Business meetings are expected to start on time, whilst public events typically start with a delay of about 10 minutes.
Sticking to a strict schedule or agenda is not common, and spontaneity is often a driving force of public events.
- Languages: Whilst Hungarian is the official language, many people speak several languages due to its closeness to other countries. The business language in Hungary is English, and most businessmen speak English to varying degrees of proficiency – so a few words or phrases in Hungarian can go a long way in breaking the ice and making good first impressions.
- Business Relationships: Hungarians are generally not reserved, but upon the first meeting they might give that impression. However, once they get familiar with you, they can relax and communicate more openly. Business relationships are usually built on trust and familiarity, and often involve socializing outside the workplace.
If the business relationship develops into a partnership, a Hungarian businessman might invite you to their home for a meal and to meet their family.
- First Contact: First contact is generally done by telephone and followed up by an email. Appointments must be made at least a month in advance and must be confirmed in writing.
Having a local representative to facilitate introductions is advised, as introductions are better received by someone known and trusted.
- Introductions/Greetings: In business, greetings consist of a firm handshake with direct eye contact. When greeting yourself, it is advised to state your name, as well as present your business card.
- Gift-giving: Gifts are neither necessary nor expected for business relationships – however, small presents like a diary, a pen with a company logo engraving, or a souvenir that represents your company are acceptable.
During festive seasons, such as Christmas, businessmen in Hungary can exchange gifts such as a bottle of wine. If invited to a business partner’s home for dinner, it is normally expected to present the host with chocolates, flowers, or a bottle of wine/liquor.
- Dress code: Business dress in Hungary is generally conservative and formal. Men wear a suit and tie, whilst women wear either a suit or elegant dress. However, the dress code may vary depending on the sector and the formality of the meeting.
- Formality: It is recommended to address your local counterparts by their titles and surnames, unless invited to address them differently.
- Meetings Management: Meetings in Hungarian are considered necessary for the exchange of ideas, but agreements are rarely agreed to on the same day. Meetings generally begin with small talk, before the projects are presented. Projects should be well-researched, thorough, and accurate. Decisions are not made on the spot, and talks can last for an extended period of time.
Hungarians are well-prepared, and flexible as business negotiators – their goal is to reach an agreement, so comprising is not off limits. Confrontational behavior, high-pressure sales tactics, and exaggeration should be avoided. Debates in meetings are also regarded as healthy.
- Agreements: Promises made in meetings are usually respected. However, agreements are only binding when they are written, so it is best not to rely on verbal agreements.
- Socializing: Socializing is an important part of the relationship-building process in Hungary. Expect many invitations to dinner and cultural events and be sure to reciprocate if you can. Business lunches and dinners are common to getting to know local associates.
- Hierarchy: Hungarian organizations generally structured hierarchically. Employees are generally not expected to give opinions in the decision-making process, so it is best to establish formal and respectful relationships with executives and managers who will make all the major decisions.
- Communication: Hungarians prefer face-to-face communication. They are emotive speakers who say what they think and expect you to do the same, and also pride themselves on using proper etiquette. They often use stories, jokes, and anecdotes to prove a point, and are suspicious of people who are not willing to share their innermost thoughts. Hungarians also view eye contact as indicative of sincerity.
Hungary Minimum Wage
The minimum wage is determined annually by the government, in cooperation with the National Social and Economic Council. As from the 1 February 2021, the basic minimum monthly wage for full-time employees is HUF 167,400.
Hungary also has a guaranteed minimum wage for jobs that require (at least) a secondary school qualification or secondary vocational qualification, which was also increased in 2021 to HUF 219,000.
Probation in Hungary
When concluding the employment contract, the employee and employer can agree to a probationary period, but it generally it can be no longer than 3 months. A period that is shorter than this limit may only be extended once, but only if the added extension with the old probation period does not go over 3 months.
A collective bargaining agreement, however, can extend this period to 6 months. However, an extension of this probation period is prohibited.
During the probationary period, employment may be terminated by either party with immediate effect and without justification.
Working Hours in Hungary
In Hungary, a typical working day is 8 hours a day, 5 days a week.
The working day starts at 8/8:30am and ends at about 5pm. Office hours can vary, and Friday is often a short day with people leaving at about 4pm or earlier. Daily lunch breaks are between 30 minutes to 1 hour.
Overtime in Hungary
The maximum amount of overtime hours an employer may request from an employee is 250 hours. The maximum daily working hours is 12, and weekly hours 48, both inclusive of overtime. So, an employee can work a maximum of 4 hours of overtime daily, and 8 hours of overtime weekly.
Overtime work is paid with a 150% wage rate, and a 200% wage rate for weekends and holidays.
Notice period in Hungary
In Hungary, the standard notice period for the termination of an employment contract is one month. However, this can also vary according to the employment contract type:
- Indefinite contract – This contract type can be terminated by either giving a regular notice (one month), or a notice with immediate effect, in writing.
- Definite contract – The contract type is more limited in terminate notices, and both parties must provide justification. It can be terminated with an immediate effect at its convenience.
The notice period also depends on the length of service of the employee:
- 3-5 years - 35 days
- 5-8 years - 45 days
- 8-10 years - 50 days
- 10-15 years - 55 days
- 15-18 years - 60 days
- 18-20 years - 70 days
- 20+ years - 90 days
Redundancy, Termination / Severance in the Hungary
When terminating employment, an employee is obliged to send in a written notice, which, depending on the grounds of termination, may be done at least 30 days before (depending on the length of employment), or immediately.
Upon termination of employment, the employer must provide a cause justifying the dismissal in most cases.
Severance payments for indefinite contracts vary between 1-6 months, depending on the length of employment. For the termination of a definite contract, the employee must be paid 12 months’ severance payment if the outstanding term of employment is less than 12 months.
Collective dismissal, or redundancy, is subject to special rules. Before making any decisions, however, the employer must initiate consultation with the workers’ council. The number of dismissed employees will vary according to the number of employees in the company:
- An employer with between 21 and 99 employees – dismissal of at least 10 employees.
- An employer with between 100 and 299 employees – dismissal of at least 10 per cent of the employees.
- An employer with at least 300 employees – dismissal of at least 30 employees.
Pension Plans in Hungary
The pension system in Hungary is a one-pillar and statutory scheme with an earnings-related public pension that is combined with a minimum pension. In order to qualify for a pension in Hungary, employees must have a contribution history of at least 20 years.
Private pension plans are also available but are not as popular.
Public Holidays in Hungary
Employees in Hungary are also entitled to paid leave for 11 public holidays. The day before the public holiday, work ends an hour early, but employees are still paid for the full day. Employees who work on a public holiday are entitled to full pay. The holidays are as follows:
- January 1st: New Year’s Day
- March 15th: Revolution Day
- Easter Monday
- May 1st: Labor Day
- Whit Monday
- August 20th: Hungary’s National Day
- October 23rd: 1956 Revolution Memorial Day
- November 1st: All Saints’ Day
- December 24th: Christmas Eve
- December 25th: Christmas Day
- December 26th: Boxing Day
Sick Leave in the Hungary
An employee is entitled to 15 days of paid sick leave, which is paid at 70% of the employee’s average daily wage. After that, sick pay is paid by the social security system, but only for a period of up to 1 year.
Vacation / Holiday in Hungary
All employees are entitled to annual leave in Hungary is 20 working days. Employees also receive additional annual leave days depending on their age:
- From the age of 25 – 1 working day
- From the age of 28 – 2 working days
- From the age of 31 – 3 working days
- From the age of 33 – 4 working days
- From the age of 35 – 5 working days
- From the age of 37 – 6 working days
- From the age of 39 – 7 working days
- From the age of 41 – 8 working days
- From the age of 43 – 9 working days
- From the age of 45 – 10 working days
Annual leave is granted in the year is which it is due, and if the vacation time could not be granted in that year due to reasons within the employee’s control, it shall be allocated within 60 days after the cause is dealt with.
Maternity/Paternity Leave in Hungary
Employees in Hungary are entitled to 24 weeks of maternity leave. They are also entitled to a further 3 years off. They may also receive maternity benefits by the National Health Insurance Fund (NEAK). During the first six months of maternity leave, mothers receive a Pregnancy and Confinement Benefit (CSED) at a rate of 70% of their salary.
In the case of paternity leave, fathers are entitled to 5 days’ leave for the first two months of the child’s birth. Any income or taxes related to this period may be reimbursed by the Hungarian State Treasury.
After the period of maternity leave ends, one parent is entitled to parental leave up until the child reaches the age of 2 years, as well entitled to a Child Care Fee (GYED) at a rate of 70% of the salary that can go up to double the minimum wage.
Bonus in Hungary
Bonuses in Hungary are not required, but employers can choose to include them into their employees’ compensation packages. Bonuses are typically paid at the end of the year.
Car allowance Hungary
Tax-free travel allowances are given to employees for their travel by car between their homes and their workplaces.
It is currently set at HUF 15 per kilometer.
Contact us to learn more about business opportunities in Latvia
To expand into Hungary fruitfully, an understanding of the local business culture is vital for your business’ success. With Bradford Jacob’s expertise and knowledge of employment through our Professional Employment Organization (PEO), as well as our experience with Hungarian customs, law, compliance, and tax regulations, we can assure the recruitment of the right people to make your expansion goals a reality.
Contact us today to see how we can benefit your expansion!