Situated in Middle Eastern Europe, Hungary provides benefits and compensations to its employees that ensure their safety. The Hungarian Social Security systems focus mainly on solidarity and contributions. Even a self-employed person in Hungary can get social security benefits under this system.
Hungary focuses on its citizen’s well-being and puts special emphasis on safeguarding their rights. Hence, it has become an intellectual and commercial hub for foreign nationals to settle and start businesses.
The availability of a competitive level of compensation and benefits in Hungary helps an employer to stand out in the crowd and bring on the best candidates. These facilities in Hungary give investors a lucrative edge in setting up a business in Hungary.
In this article, let’s learn about the different types of compensation and benefits policy in Hungary alongside other important details.
What are Employee Benefits?
Employee benefits are a vast spectrum and come in many forms. Some benefits are mandatory; some are optional.
Employee benefits are different perks and compensations provided to the employee over their discussed salary. In the case of Hungarian companies, there are different aspects of taking after employees’ Social Security and Medicare. Additional benefits entail tax redemptions. These benefits are also called fringe benefits.
The employee benefits in Hungary differ in the context of state requirements. However, there are some standard benefits that employers follow. They are:
- Providing time off to vote, jury duty, or military service.
- Pay federal taxes toward unemployment insurance.
- Comply with the Family and Medical Leave Act (FMLA).
The state mandates these fringe benefits, and employers must comply with them. Thus, this compensation and benefits policy in Hungary would encourage foreign nationals to work there.
Compensation Laws in Hungary
The Hungarian compensation laws solely depend upon the Social Security systems of Hungary. They are:
- According to the Minimum Wages Act in Hungary, employers must pay a minimum wage of 232,000 HUF to their full-time employees, irrespective of the job.
- The Hungarian pay-as-you-go pension system ensures all employees and employing companies contribute to the system.
- According to Social Security, the compensation and benefits policy in Hungary also includes that employees should work five days a week for eight hours. They should not work more than 72 hours of overtime weekly. If they do, the employers have to compensate overtime at 50% on top of the employee’s gross salary as per the compensation laws of Hungary.
How to Design an Employee Benefits Program for Employees in Hungary?
If one wants to set up a unique benefits plan to provide the best employee compensation policy in Hungary, then one should follow a few simple steps to make things easier. Here is a step-by-step listicle approach to designing new employee compensation and benefits in Hungary.
Understanding and Determining Company Goals and Parameters
Understanding the goals and parameters the company abides by while creating a compensation package in Hungary is crucial. It helps one to evaluate their company’s situation to provide benefits.
It will help one understand whether the company is ready to provide benefits to its employees. One also needs to consider whether the employees in the industry have any specific needs for creating a compensation structure in Hungary benefits.
Knowing What the Employees Might Need
Employee benefits in Hungary depend on two crucial factors: what the company has and what the employees need. One must understand the needs of the employee and values the most. It would further help retain the company’s employees for the long run and attract outsiders to join the company.
For this, one has to interview the employees and understand what worker’s compensation in Hungary is looking for. After this, one can complete a comparative benefits analysis and thus prioritize the employee’s needs. It would also need meticulous legal research to make a benefits program adhere to the Labor Code of Hungary.
Developing an Employee Benefits Program
Once an employer completes meticulous research on employee needs, legal responsibilities, and market standards, it is time to build a benefits program. The research should help in making a proper decision of which programs to choose for the employees alongside keeping in mind the budgetary restrictions.
One must consider the logistics factor, the need for outsourcing, and cost containment features before charting a compensation structure in Hungary.
Types of Guaranteed Benefits in Hungary
The Hungarian government thrives for the betterment of its employees. For foreign nationals or citizens of the country, there are some guaranteed employee compensation and benefits in Hungary. Here are some lists of guaranteed benefits in Hungary.
- Pension: The pension system in Hungary was originally reformed in 1997. Later, after undergoing several changes, the pensions proliferated. According to the Social Security government, the second pillar assets, as passed by the Hungarian laws, have 3.7 million workers enjoying 2.7 trillion HUF of pension.
- The basic pension of the Hungarian government is segregated through the first, second, and third pillars, respectively. The amount of pension within an employee compensation structure in Hungary is subject to the employee’s age and increases upon the year of birth.
- Legislative leaves: Hungary’s annual paid leave is about 20 days. However, employees under the age of 18 or are permanently working underground or with 50% disability conditions are entitled to 25 days of legislative leaves. The applicable leaves for a compensation structure in Hungary increase substantially with the employee’s age.
- Eye Exams: The eye exams of the employees are dependent upon the Occupational Health Examination, which is a mandate in the Hungarian government. Medical benefits for employees in Hungary include vision benefits, where the companies are liable to provide their employees with eyeglasses and glass frames.
Employee Benefits for Expatriates
Immigrants are now turning their gaze toward Hungary because of its lucrative employee benefits and compensation policy in Hungary. There are several employee benefits in Hungary for expatriates. Let’s find those out.
- An expatriate in Hungary is liable for the same compensations and benefits provided to the country’s citizens. They also come under the Social Security Systems of Labor Code, where employers must pay their medical and other dues.
- An expatriate in Hungary can work in the country once they obtain an individual work permit from the government. However, this lasts only 90 days, so the foreign national must keep renewing their permit.
How are Employee Benefits Taxed in Hungary?
The Social Security System in Hungary provides tons of benefits to employers to impose solidarity and support for the government. However, employee benefits in Hungary also come with certain taxes. They are:
- Employees must make 18.5% of social security contributions for 30% of their income.
- The taxable base of every employee in Hungary is 15% and should be paid by the 12th of every month.
- The annual taxable income is determined by the monthly taxable income and thus obligatory by the social securities paid abroad.
Restrictions for Hungary’s Benefits and Compensation
The government’s top priority is providing a good benefits and compensation policy in Hungary. However, the Hungarian government follows certain rigid restrictions for the people. For example, an employee cannot disperse compensation unless incorporated in Hungary. Working with a global PEO allows one to make such an exception. It is where Multiplier comes in. Multiplier provides employers with existing subsidiaries without setting up a new subsidiary altogether.
Supplementary Benefits for Employees in Hungary
Besides the above-guaranteed benefits, the Hungarian government provides some supplementary benefits. They are:
- Retirement benefits: An employee is liable for retirement. The benefits include pension insurance or a voluntary pension fund that would offer a 20% tax refund.
- Healthcare or Medical Insurance: Companies can also provide extra healthcare and medical benefits if it is not covered under the Social Security Systems of Hungary. Medical insurances, in this case, are taxable per the compensation and benefits policy in Hungary.
How Multiplier Can Help with Benefits Management in Hungary
If one wants to expand their business and employ talents in the country, then Multiplier is the best choice. They provide employers with existing subsidiaries without even setting up their own. It helps test the new markets and creates a global reputation for the company. Multiplier also enables them to attract talent at cheaper costs. Be it insurance, grant facilitation, or issues with ESOPs, Multiplier is a one-stop solution for all.