Labor Law regulations

As a general rule, the labor law of the sending country must be applied in the case of secondment. Only certain minimum requirements regulating working conditions in the host country apply to the seconded employee.

The provisions of the Labor Code (“LC”) must be applied - including the provisions of collective agreements extended to the employment relationship - in the following cases (Section 295 of the LC):

1. the maximum working time or the minimum rest period,
2. the minimum amount of paid annual leave,
3. the minimum wage,
4. the conditions for temporary agency work as defined in Section 214-222
5. occupational safety conditions,
6. the working and employment conditions of pregnant or young workers, and
7. the requirement of equal treatment.

Hungarian law does not need to be applied if the law otherwise applicable to the employment relationship is more favorable to the employee in the above points.

In the case of a possible secondment to Hungary, it must be examined whether the regulations of the sending country are more favorable to the employee regarding the above points. If they are more favorable, the law of the sending country will apply entirely to the seconded work. If the relevant regulations of the sending country are not more favorable than the Hungarian regulations, the Hungarian labor law norms listed above will apply (e.g., maximum working time or minimum rest period).

In cases not specified in the Labor Code (e.g., breaks, work on Sundays or public holidays), the law of the sending country generally applies.

For practical reasons and to avoid legal disputes arising from the differences between the legal systems of the sending and receiving country, it is advisable for the parties to stipulate Hungarian law for the duration of the secondment in cases where the Hungarian rules are more favorable in the above points.

Administrative obligations related to secondment

The company receiving the seconded employees must pay special attention to the following legal obligations:

Before concluding the contract for the provision of services, the receiving Hungarian company (hereinafter referred to as the entitled party) must inform the foreign employer in writing about the working conditions applicable under Section 295 of the LC. If the entitled party fails to provide this information, it is liable as a guarantor for the employee’s claims specified in Section 295.

If the receiving party knew or should have known with due diligence that the foreign employer did not fulfill its wage and contribution payment obligations during the employment of the employee, it is jointly and severally liable with the foreign employer for the payment of the wages and contributions owed by the foreign employer.

Many Hungarian companies receiving seconded employees are unaware that, according to the provisions of Article 295 of the Labor Code, they must ensure that seconded employees

1. employment contract or equivalent document,
2. working time records, and
3. electronic or paper copy of the documents related to the payment of wages

are accessible and verifiable at the place of work for the entire duration of the secondment and at the employer’s headquarters or premises for 3 years after the end of the secondment.

In the absence of a clear provision, it is recommended to keep working time records in both Hungarian and English.

The foreign employer must appoint a person responsible for liaising with the labor authority acting as the designated authority and for sending and receiving the above documents. The foreign employer must immediately inform the labor authority of the appointed person and any changes in the appointed person.

Reporting obligations

The following notifications may also be required, depending on the length of the secondment.

Notification obligation to the Employment Supervision Authority

Before the actual start of the secondment, it is necessary to notify the Employment Supervision Authority of the secondment and the employment data to determine whether the employee qualifies as a seconded employee.

As a general rule, the foreign employer must make the notification, but anyone can make the notification, including the person appointed by the foreign employer or the Hungarian receiving company.

The notification must include data on the service provider, the activity, and the employment. The notification must be made on the electronic platform operated by the employment supervision authority (https://mvff.munka.hu/#/kikuldetes), which was renewed on 1 March 2024. Pre-registration is required for the platform, and those who have already registered on the old platform must re-register on the new platform.

Notification obligation to the Tax Authority

The notification obligation is related to the personal income tax payment obligation arising under Act CXVII of 1995 on Personal Income Tax (PIT) or the relevant double taxation avoidance agreement or reciprocity, so the receiving party is not subject to this notification obligation for seconded employees who are not expected to have a tax payment obligation.

If there is an obligation to pay personal income tax, the tax authority must be notified and will be informed of individuals who are not yet registered but are liable to pay tax.

Failure to make the notification may result in a fine of up to HUF 500,000 per notification imposed by the tax authority.

The notification must be made by the legal entity or other organization to whose headquarters or premises a foreign employee is assigned for work. This notification must be made on form T104 using the “ÁNYK” program within 30 days of the start of the activity.

The notification must include basic data on the seconded employee and the foreign employer, as well as the start and end dates of the employment (leaving the country). The notification of the end date must be made 30 days before the end of the employment and leaving the country. If the information is not available within the deadline for any reason, the notification must be made on the day following the end of the employment, stating the reason to the tax authority.

Tax payment obligation of seconded individuals

For foreign individuals seconded to Hungary, the receiving company is not considered a payer if they receive their wages from the sending organization. Therefore, the receiving organization is not obliged to withhold tax advances. Consequently, the foreign individual determines and pays the personal income tax advance on their income quarterly by the 12th day of the month following the quarter.

The foreign individual fulfills their personal income tax return obligation by May 20 of the year following the tax year.