In Hungary, the employment relationship is strictly regulated to ensure fair conditions both for employers and employees. Workers should always receive a living wage, and this is regulated by defining a minimum wage and regularly updating it.
Living wage is the minimum
The minimum wage in Hungary is the minimum sum you are required by law to pay your employees. It is adjusted yearly to keep up with inflation, so if you have employees on minimum wage, you must regularly give them a raise to meet new requirements. The minimum wage is defined monthly for a full-time job, and it is always a gross sum (more on these below).
In Hungary, there are in fact two types of minimum wage:
- Minimum wage: Relevant to those doing work that does not require at least a secondary education. Skilled work and work in a factory often belong here.
- Guaranteed minimum salary: relevant to those doing work that requires at least secondary education and a high school diploma.
These two types of minimum wage are defined based on the requirements of the position, not the qualifications of the employee. Someone with a PhD is allowed to work in a minimum wage position, making minimum wage (even if it does not happen often).
While these are two separate concepts, we usually mean both when we say “minimum wage” in Hungary. This is because they work similarly, legislation pertaining to both is normally changed at the same time, and both employers and employees know which is relevant to them.
Minimum wage in part-time jobs
Minimum wage in Hungary is defined as a monthly sum for full-time jobs, so for 40 hours / week. If you employ someone part-time, you must still pay them proportionately.
Minimum wage (gross)
Guaranteed minimum salary (gross)
Net and gross salary
The minimum wage and the guaranteed minimum salary are both gross amounts. Your employee pays taxes on their gross salary – more precisely, you as the employer deduct taxes from their salary and forward them to the Tax Authority, after which you give your employee only their net salary. At the same time, you as the employer must also pay taxes on salaries.
Guaranteed minimum salary
Cost borne by employee
Income tax (15%)
Social security contribution (18.5%)
Cost borne by employer
Social contribution tax or “szocho” (13%)
Total payroll cost
Minimum wage and salaries in the labor contract
The salary must be indicated in the labor contract you make with your employee. This always means the gross salary. The reason for this is that various tax benefits may apply to salaries (e.g. child benefits, young people’s tax benefit, the tax benefit of mothers of four, fringe benefits), and the benefits available to an employee may change over time. With the gross salary indicated in the labor contract, you do not have to update the labor contract each time a new benefit becomes available to your employee.
If you have employees on minimum wage in Hungary, their wage must be increased each time the minimum wage is increased. When that happens, you must also amend their labor contract to reflect the new salary.
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