As a main rule, you can start an employment relationship if you are over 16. However, a person over 15 who is in full-time education during the school holidays can also be a worker. If the student is under 18, he or she can work only with the consent of his or her legal representative. A tax identification number is required for any form of employment.

Employers must apply the same rules for determining the wages and remuneration of students and for registration obligations as for non-students.

Employment relationship

Labour law rules

If the students are employed, the provisions of the Labour Code (LCA) apply, in particular the rules that apply to young workers.

Students under the age of 18 are considered young workers. The provisions of the Labour Code on young workers must be taken into account even if the student is not employed in the context of an employment relationship, but under a contract of assignment or through a school cooperative.

A young worker may not be assigned night work or extraordinary working hours (overtime). In addition, the maximum daily working time for a young worker is eight hours. If the young person has more than one employment relationship, all working hours must be added together.

Employers who use a time-frame should take into account that young workers can only be assigned to a time-frame of one week.

The health and safety of minors requires special protection, so special rules apply to breaks and daily rest periods. Young people must be allowed at least thirty minutes' break per day if their scheduled working time exceeds four and a half hours, at least forty-five minutes' break per day if their scheduled working time exceeds six hours. The daily rest period should reach 12 hours.

In addition to the above special rules, young workers are of course also subject to the other provisions of the Labour Code, so they are also entitled to leave, but they are obliged to fulfil their obligations arising from the employment relationship in the same way as adult workers.

Taxation:

Students are also entitled to the minimum wage or guaranteed minimum wage.

For tax purposes, students' income from employment is wage income in the same way as any other employee. The 15%personal income tax on gross wages is deducted, declared and paid by the employer.

From 1 January 2022, young people under 25 will be eligible for a tax base reduction (the "under-25s' allowance"), so students will also benefit from this reduction. The discount is available on income included in the consolidated tax base, such as wages, sick pay, contractor's fees, commission.

This means that the young person entitled to the benefit does not have to pay personal income tax on income included in the consolidated tax base during the eligibility period up to the monthly amount of the benefit, which is HUF 576 601 in 2024. For young people under 25 years of age, the employer is - as a general rule - not required to deduct, declare and pay the 15% personal income tax.

A student in employment is considered to be insured and therefore pays 18.5%social security contributions, which are deducted, declared and paid by the employer from the gross salary.

In addition to the above, the employer pays a social contribution tax of 13% of the gross wage.

SCHOOL COOPERATIVE:

Labour law rules

It is common for students to work through a school cooperative. Student cooperative employment is an atypical form of employment in which there is a legal relationship between the student and the cooperative, but the student performs a task for a third party with whom he or she has no legal relationship.

The legal characteristic of a cooperative is that the natural person members (in the case of a school cooperative, the students) are obliged to make a personal contribution to the cooperative. This is usually the work itself, which is carried out by a third party contracted by the cooperative.

Employment in a cooperative is a specific type of employment relationship, not an employment relationship. For this very reason, the cooperative does not conclude an employment contract with students, and only the following exceptional rules of the Labour Code apply to student employment, as opposed to traditional employment.

Even though the employment of a student does not create an employment relationship, students are still entitled to the minimum wage or guaranteed minimum wage.

A member of a cooperative is entitled to the same amount of time off and daily rest as an employee. Thus, if the member's work exceeds six hours a day, he or she shall be entitled to a break of twenty minutes a day, and if it exceeds nine hours a day, to an additional break of twenty-five minutes a day. Here too, the special rule mentioned above applies: if the member has not yet reached the age of 18, he is entitled to longer breaks.

In addition to the rules on young workers and wage protection, the provisions of the Labour Code protecting employees do not apply. For example, a member of a student cooperative is not entitled to holidays, severance pay, the prohibition of dismissal and restrictions on dismissal.

Taxation:

Given that a member of a student cooperative does not become insured by virtue of his/her employment in the cooperative, he/she does not have to deduct and pay the 18.5% social security contribution from his/her gross income and does not have to pay social contribution tax.

The 15% personal income tax on the gross salary must be deducted, declared and paid by the school cooperative.

If a young person under 25 years of age receives income from a non-self-employment activity as a member of the school cooperative on which he or she can claim the youth allowance, he or she will not have to pay 15% personal income tax up to HUF 576 601 per month of entitlement.

AGENCY RELATIONSHIP

Students also have the possibility to work under a civil law contract. It is understood that the rules of the Labour Code do not apply to this relationship, but that the provisions of the Civil Code governing the contract of assignment must be taken into account. Remuneration received under an agency contract is taxable as income from an independent activity.

Taxation:

Personal income tax is assessed on income from self-employment less expenses.

Unlike income from employment, income from self-employment may be offset against expenses. There are two ways of doing this: itemised or 10 % without vouchers.

The tax rate is also 15%. If a young person under 25 years of age qualifies under the Personal Income Tax Act, he or she will not have to pay personal income tax up to HUF 576 601 per month of entitlement.

In the case of a contract of employment, the student will not automatically be insured. To be insured, the student's monthly income must be 30% of the minimum wage valid on the first day of the month in question, or 30% of the minimum wage on calendar days. If the student does not work the whole month, the remuneration per day must reach HUF 2 668 to be insured.

Once the insurance relationship is established, the student pays 18.5% social security contributions. The employer deducts, declares and pays the contribution. If the monthly remuneration of a student employed in another employment relationship is less than 30% of the minimum wage on the first day of the month in question, the insurance relationship is not established, and no contributions are due.

The student must submit an income tax return on income from both employment and contract work by 20 May of the year following the year in question. The return must be filed even if the person is under 18 years of age. The NAV will also prepare a draft tax return for them. In the case of a minor, the draft tax return can be seen and approved by the legal representative.

SIMPLIFIED EMPLOYMENT

A student can also work in a simplified employment relationship, but only in the areas and for the specified duration in the relevant legislation.

A simplified employment relationship may be established:

• for agricultural and tourist seasonal work, or
• occasional work.

For casual work, the employer and the employee may

• for a maximum total of 5 consecutive calendar days,
• for a maximum of 15 calendar days in any one calendar month, and
• for a maximum of 90 calendar days in total within a period of 1 calendar year.

Taxation:

The employer pays the tax in the case of simplified employment. The student does not have to pay social security contributions or advance personal income tax. A person employed as a simplified employee is not insured under the Social Insurance Contribution Act and is only entitled to pension benefits, accident health care and job-seeker's allowance.

The value of the work thus performed is income from employment. The student only needs to declare income from simplified employment on his/her income tax return if the income from simplified employment exceeds the exempt amount.

The tax payable by the employer is linked to the minimum wage applicable on the first day of the month and is payable for each calendar day of employment per employee:

- for casual work, 1% of the minimum wage applicable on the first day of the month, i.e. HUF 2,700,

- for agricultural and tourist seasonal work, 0.5% of the minimum wage valid on the first day of the month, i.e. HUF 1,300,

- 3% of the minimum wage applicable on the first day of the month for film extras, i.e.  HUF 8,000.

The employer must declare and pay the tax by the 12th of the month following the month of employment, rounded up to HUF 100.

WORK PROTECTION:

Unlike the Labour Code, the Labour Protection Act covers all organised work, regardless of the form it takes. For this reason, student work must also comply with certain occupational safety and health requirements, including the provision of appropriate protective equipment and clothing and the provision of healthy and safe working conditions.

It is also important to note that in the case of student work, the aptitude test cannot be waived, as it is only waived in the case of simplified employment.

The employer or payer is obliged to provide the student with a certificate of the amount paid, the deducted social security contributions, individual contributions and social security contributions when the student is paid. The student must also be given a tax year summary certificate (M30) by 31 January of the year following the tax year.