While the basis of the severance pay is the latest gross salary of the employee, many employees receive wage supplements, and those must also be considered. For proper calculation, you should take the wage supplements provided to the employee over the last 6 months of employment, and calculate a monthly average. Then that average should be added to the gross salary, which should be multiplied by the right number of months, based on the number of years spent at the company (see the table above).
For example, the latest monthly gross salary is HUF 500,000, and the employee received an average wage supplement of HUF 60,000 over the last six months. In this case, your calculation basis will be HUF 560,000. If they worked for the company for 12 years, you need to multiply that sum by 3.
Moreover, if you terminate an employee who is within 5 years of reaching the current Hungarian retirement age (which is 65 years in 2023), you must add some extra to their severance pay.
Time spent at your company | Extra severance pay equals their latest gross salary for |
3-9 years | 1 month |
10-19 years | 2 months |
20+ years | 3 months |
For example, your employee is 61 years old, and has been with your company for 12 years. As severance pay, they shall receive 3 months’ gross salary by default, and another 2 months’ as an age-related compensation.