Legal framework of simplified employment in Hungary

Simplified employment is one of the most popular atypical form of employment in Hungary primarily as a result of its streamlined administrative requirements and more favourable public levies.

Simplified employment in Hungary is basically regulated by two pieces of legislation: Act I of 2012 (Hungarian Labour Code) typically contains the most important labour law restrictions and specifies which basic labour law rules may be deviated from in the case of simplified employment and casual employment. Act LXXV of 2010 on Simplified Employment regulates administrative details.

Two forms of simplified employment are distinguished: seasonal work (agricultural or tourist seasonal work) and casual employment, including film extras.

Unchanged provisions: on casual employment

A casual employment arrangement may be entered into between the same parties for a maximum of five consecutive calendar days up to a total of 15 calendar days within a calendar month and not more than 90 calendar days within a calendar year.

A film extra continues to be defined as a natural person whose occupation is classified under FEOR code 3711, provided their role is auxiliary and exchangeable within the film production. The daily net income from this activity can not exceed 12% of the minimum wage valid on the first day of the month, rounded to HUF 100, i.e. HUF 34,900 as from 1 January 2025.

In the case of casual employment under a simplified employment relationship, the number of employees employed on a calendar day may not exceed:

• 1 person, where the employer has no full-time employees under the Hungarian Labour Code,
• 2 persons, where the employer employs between 1 and 5 employees,
• 4 persons, where the employer employs between 6 and 20 employees,
• 20% of the total workforce, where the employer employs more than 20 employees.

Unchanged reporting obligations and wage conditions

The simplified employment relationship is established by verbal agreement between the parties, upon notification by the employer. However, it is recommended that concluding a written contract by using a template available on the NAV website.

Based on the employment relationship established for simplified employment, the basic salary or performance-based wage shall be at least 85% of the statutory minimum wage, or 87% in the case of a guaranteed minimum wage, in accordance with the specified conditions. For film extras, the daily net wage can not exceed HUF 34,900 from 1 January 2025.

The simplified legal relationship has to be reported electronically, by telephone or via a mobile application prior to commencement of work. Notifications cannot be amended or withdrawn retrospectively. Amendments or withdrawals are permitted within two hours of submission, or until 9 a.m. on the day of notification if employment commences the following day or lasts more than one day.

Changes effective since February 1: public levies

From 1 February 2025, public levies payable by employers have changed. The new amount of the public levy calculation base had to be applied for the first time after 1 February 2025, i.e. for legal relationships established on or after 2 February 2025.

The new public tax payable for each calendar day of employment per employee is as follows:

• for seasonal work in agriculture and tourism, 0.75% of the minimum wage valid on the first day of the month, i.e. HUF 2,200
• for casual employment, 1.5% of the minimum wage valid on the first day of the month, i.e. HUF 4,400
• for casual employment as a film extra, 3% of the minimum wage valid on the first day of the month, i.e. HUF 8,700.

Forthcoming changes: new rules on time limits

Unlike casual employment, the time limit for seasonal and casual employment combined is a maximum of 120 days within a calendar year. This time limit has not changed from the previous one and will not change. However, from 1 July 2025, a significant change will come into effect regarding the calculation of the 120 days. While currently a worker cannot work under simplified employment scheme for more than 120 days in a calendar year for the same employer, from 1 July, this restriction will apply to all employers. This means that if someone works for several companies under simplified employment in Hungary, the total number of days spent in simplified employment at all his/her employers cannot exceed 120 days per year.

This restriction was supplemented by a legislative amendment promulgated on 24 April 2025. The amendment supports people working in agriculture by allowing them to extend the 120-day limit by an additional 90 days, subject to higher public levies. This amendment will take effect from 1 January 2026, and does not apply to 2025.

To monitor the time limit, the Hungarian tax authority will introduce an electronic query system enabling employers to verify an individual’s remaining simplified employment quota prior to engagement.

The new time limit rule represents a significant change, as until now the number of days of simplified employment was limited only on the employer’s side. The system, which will come into force on 1 July, will further restrict the possibility of simplified employment in Hungary: employers will have to take the time to check the employee’s quota, as the tax authority may reject the registration if it exceeds 120 days.

With decades of experience supporting clients across diverse sectors, the payroll experts at WTS Klient Hungary offer tailored advice to help employers comply with legal requirements and to optimise employment structures. Feel free to contact us!

This article provides general information and does not constitute advice.

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The legislators want the new Act on Social Security to unify and simplify the fragmented regulation, thereby reducing administrative burdens. In our article on the tax changes in 2020 we looked at the main amendments; below we take a closer look at some of the more important details with regard to private individuals in particular (employees, posted staff).

Key element in new Act on Social Security: 18.5% social security contribution

The key element of the new Act on Social Security is that the 4% in-kind health insurance contribution, the 3% in-cash health insurance contribution, the 1.5% labour market contribution and the 10% pension contribution are to be amalgamated into one single contribution, the 18.5% social security contribution. The pension contribution remains separate, however, and must be paid in special cases in line with the previous rules. So the rate of the individual contribution will not change from 1 July, and it will be paid by the insured person on all income subject to contribution payments that is earned from a legal relationship subject to the payment of social security (with the statutory exceptions).

In addition to alleviating the tax administration burdens of employers, the other advantage of the single social security contribution is that the family contribution relief can now be claimed on the entire 18.5% amount by those who are eligible to do so. (Before 1 July the relief cannot be claimed in Hungary on the 1.5% labour market contribution). This will benefit low-wage families and those with several children in particular.

Income subject to contribution payments

For the sake of transparency, income subject to contribution payments is governed in a separate section in the new law, but the definition is also changing. Based on Section 27 (1) of the new Act on Social Security, income subject to contribution payments includes the following:

a) from the income derived from independent and non-independent activity that pertains to the consolidated tax base under the Act on Personal Income Tax, the income taken into account when calculating the base for tax advances, membership fees deducted (paid) for the body representing employee rights, cash benefits actually paid based on vocational training contracts, service fees, and scholarships paid on the strength of scholarship-based employment relationships,

b) in derogation from point a), if Hungary is not entitled to impose a tax based on an international agreement,

• the basic wage, but no less than the average national gross wage published by the Hungarian Central Statistical Office for full-time employees in July of the previous year, or
• the income earned in the given month as consideration for activity – accounted for the given month in the case of an employment relationship – if such falls short of the amount as per the previous sub-point.

So essentially, the income considered in Hungary when calculating the base for tax advances as per the Act on Personal Income Tax can still be deemed the contribution base (alongside other types of income, such as service fees, etc.). At the same time, it should be noted that tips received by waiters directly from customers shall not form part of the contribution base from 1 July (the service fee is still part of it, though), while the assessment of income subject to the payment of contributions is to change in the event that Hungary is not entitled, or not fully entitled, to impose tax on the given income.

In the case of employment relationships and postings, this basically means that if the taxation of income is split in a given month between Hungary and a different country, then the following must be taken into joint account as the contribution base:

a) wage for (working) days in Hungary, and

b) for calendar days abroad

• the basic wage, but no less than the average national gross wage published by the Hungarian Central Statistical Office in July of the previous year (which according to CSO information was HUF 362,600 – roughly EUR 1,074 – in July 2019), or
• the income earned as consideration for activity, if such falls short of the amount as per the previous point.

Despite the rules regarding income subject to contributions being incorporated into a separate paragraph, and the definition having been updated, the Act on Social Security still not does define the concept of basic wage, which can be very important with international circumstances. In addition, the tax payers also have to define what “consideration for activity” means, for example.

Minimum threshold for contribution payments in employment relationships

What is completely new to the new Act on Social Security, and what deserves particular attention in the case of part-time work, is the definition of a minimum contribution base for employment / employment-type work. (So far the Act only specified a minimum contribution base for business owners.) On this basis the social security contribution must be paid on at least 30% of the minimum wage. Deviating from this provision is permitted only in certain listed cases.

Health service contribution

Health service contributions still have to be paid by resident individuals – as per the Act on Social Security – who are not insured and who are not entitled to any health service on any other grounds. One change from 1 July is that the NAV will now automatically determine the liability ex officio, and a procedure starting upon the registration of a private individual at the tax authority (as the system will operate until 30 June) will become the exception.

One stricter rule is that if the person obliged to pay the health service contribution accumulates arrears of more than three times the amount of the contribution, then their social security number becomes invalid. This means that health services may no longer be claimed free of charge with this social security number – unless all the debt is settled prior to using the health service.

Supplementary activity – pensioners

In accordance with the new Act on Social Security, from 1 July it is not only pensioners drawing a direct pension employed in accordance with the Hungarian Labour Code who are exempt from paying contributions, but also pensioners with other legal statuses that provide insurance by default (e.g. income received for membership of supervisory boards, which reaches 30% of the minimum wage).

As demonstrated by this article, the new Act on Social Security brings no radical change to the system of social security. The basic principles, the fundamental provisions and procedural rules relating to insurance relationships are all based on the previous legal sources, and changes to actual content only affect small parts of the regulation. That said, it is important that all employers in Hungary are aware of the changes. If you would like more detailed information on how the social security amendments affect your company, please get in touch with the tax experts of WTS Klient Hungary.

A New Act on Social Security takes effect on 1 July in Hungary bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Source of uncertainty regarding Brexit effects on social security

The first and most important change regarding a disorderly Brexit effects on social security is that if the withdrawal agreement is not approved, then upon leaving the European Union the United Kingdom will become a third country in terms of social security issues with immediate effect, as the social union regulations will no longer be applicable.

No social security agreement has been reached between Hungary and the United Kingdom that – similarly to the Coordination Regulation (2004/883/EC) – would provide for applicable social security rules for the contracting countries, for example rules determining the social security (contribution payment) obligations related to postings between the two countries.

This raises the question of what procedure should be applied for postings starting after Brexit, and what social security rules should be followed if a posting has started before a disorderly Brexit takes place.

Postings starting after Brexit

Since the United Kingdom would be considered a third country if it is no longer an EU Member State, the so-called two-year rule governing postings and set out in Section 11 (2) a) of Act LXXX of 1997 on the Eligibility for Social Security Benefits and Private Pensions and the Funding for these Services would need to be applied.

Namely, social security would not cover employees and they would be exempted from the social security payment obligation if the following conditions are met:

• the employer is not registered in Hungary,
• the employee is employed in the territory of Hungary,
• the employee classified as a foreign employee according to the Social Security Act is a citizen of a third country (e.g. the United Kingdom),
• the duration of the posting or employment does not exceed two years,
• three years have elapsed from the conclusion of the previous work performed in Hungary.

Pursuant to Section 5 (2) d) of Act LII of 2018 on Social Contribution Tax, foreign employers are not obliged to pay social contribution tax.

According to the law, when assessing the three-year condition for employment in Hungary, postings that started before the Brexit date should be ignored until 31 December 2020. 

Postings already in progress

Postings that started earlier, before Brexit, either in Hungary or the United Kingdom, should be regarded as postings until the date known as of the start date, but until no later than 31 December 2020. Consequently, until the above date British employers would be exempted from the obligation to pay social security contribution for postings in progress on the day of the Brexit.

The ultimate aim of the approved law is to reduce the uncertainty related to the social security effects of a disorderly Brexit. The amendment to the Hungarian regulation ensures the governing rules in accordance with the previously applied provisions on social security systems can still be applied – temporarily, until 31 December 2020 – even if the United Kingdom leaves without a deal.

If you would like more detailed information on how the Brexit effects on social security may affect your company, please get in touch with the tax experts at WTS Klient Hungary.

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