Both employers and employees will have to prepare for some major changes next year in Hungary. However, unlike in previous years, some of the rules on the minimum wage and the guaranteed wage minimum must already be applied this year, and it’s also worth noting that some of the benefits will not be continuing next year. There will also be a new form.
Minimum wage
Breaking with tradition, this year the decision to raise the minimum wage and the guaranteed wage minimum was taken in November. The amounts and the detailed rules were set out by the government in Decree 508/2023 (XI.20).
It is important to know that this time the change will be applied in two stages. The new minimum wage and the guaranteed wage minimum will be taken into account for the first time when determining wages due for the month of December.
According to the government decree, the amounts are as follows:
The Hungarian minimum wage has increased to HUF 266,800 gross, while the guaranteed wage minimum is now HUF 326,000 gross.
One related change is the tax payable on simplified employment, since this rate is based on the minimum wage. The minimum contribution threshold for employees has also changed, and is now 30% of the minimum wage, so from 1 December the social security contribution and social contribution tax will be payable on HUF 80,040. When assessing insurance in the case of contract work, the increased minimum wage in force from 1 December will also be used to determine whether or not the individual becomes insured. If the income underlying the contributions for the given month reaches 30% of the minimum wage or, one-thirtieth of the minimum wage when broken down by calendar days, i.e. HUF 2,668, the contractor is obliged to register, declare, deduct and pay.
In other respects, such as with social security benefits, rehabilitation contribution, social contribution tax allowance, personal tax allowance or remote-working cost reimbursements, which are linked to the minimum wage, the change will be applicable in Hungary until January 2024.
Social contribution tax
An important change was also made during the year in relation to employer social contribution tax allowances, according to which, from 14 August 2023, a worker considered a third-country national does not qualify as a person entering the labour market. This means that the labour market entrants’ allowance may not be applied for employees who are citizens of countries that do not fall under the scope of the bilateral social security convention between the European Economic Area and Hungary.
SZÉP card allowances
Under a government decree adopted this summer, employers were enabled to transfer up to HUF 200,000 to their employees as a fringe benefit to a restricted payment account opened for SZÉP card allowances, on a one-off basis between 1 August and 31 December 2023, in addition to the HUF 450,000 annual recreational allowance. This type of one-off benefit is not prorated even for employees who do not have a full year of employment behind them. The same Government Decree 237/2023 also allowed employees to use the money on their SZÉP cards to buy cold food until 31 December.
It is important to note, however, that if the employee receives the SZÉP card allowance as compensation for work performed, or in lieu of a bonus, the favourable rules on fringe benefits and other benefits do not apply, and the allowance is taxable as employment income in Hungary.
Employment certificate
From 1 January 2024, upon terminating employment, the employer must issue an employment certificate to exiting employees, which combines the previous certificates issued upon the termination of employment into a single form. The employment certificate can be issued electronically, but the employee can also request a hard copy.
The employer must issue the employment certificate to the employee on the last working day if the employment is terminated by the employer, and otherwise within five working days of the termination of employment.
In this article, we have highlighted only the most important mid-year changes to payroll accounting from those affecting the minimum wage and the guaranteed wage minimum, or other changes affecting employers and employees. Our payroll experts will be happy to provide you with more information on other benefits and legislation, and how they may be applied at your company. Please do not hesitate to contact us.
