How do you terminate an employee in Hungary in 2026?
Severance in Hungary buys you nothing for the first three years. It starts at 1 month of absence pay after 3 years of service and climbs only to 6 months at 25 years. Get the reason wrong, though, and a court can order up to 12 months of lost-earnings damages on top.
· Hungary guide
Illustration · Budapest, Hungary
You need a real reason to dismiss someone in Hungary. The reason must be true and well-founded. It has to relate to the employee's conduct, their capability, or your business needs. (Labour Code 66. §)
Notice starts at 30 days when you dismiss someone. It grows with service. After 3 years it is 35 days. After 5 years it is 45 days. It reaches 90 days after 20 years.
Severance is not owed in the first three years. It begins at 1 month of absence pay after 3 years. It tops out at 6 months after 25 years. Hungary has no statutory 13th-month salary, so there is no extra month built into the maths.
Dismiss someone unlawfully and a court can award lost earnings up to 12 months of absence pay. That sits on top of the severance and notice you already owe. (Labour Code 82. §)
What counts as a valid reason to dismiss in Hungary?
You must give a real reason. Hungarian law calls it true and well-founded. It has to relate to the employee's conduct, their capability, or your business needs. (Labour Code 66. §)
Write the reason down in the notice itself. A vague or unprovable reason is the most common way employers lose. The employee can challenge it in the labour court.
Section 66 of the Labour Code (Act I of 2012) sets the test for an open-ended employee. The employer's notice reason must tie to one of three things: the way the employee behaves at work, what the employee is able to do, or how your business is run. Courts read this as a true and well-founded standard. The reason has to be real, and you have to be able to back it up if it is challenged.
The three valid grounds
- Conduct, where the employee breaches their duties or acts in a way that damages the working relationship
- Capability, where the employee cannot meet the reasonable requirements of the role, including health-related incapacity
- Operational reasons, where the role is no longer needed, such as restructuring or redundancy
You can also end employment by mutual agreement, by the employee's own resignation, or by summary dismissal for a serious breach. For an ordinary employer notice on conduct or capability grounds, the employee has the right to be heard before the decision is final.
Who you cannot dismiss on notice
Some employees are protected from ordinary notice. You cannot serve notice on a pregnant employee, an employee on maternity leave (which runs to 24 weeks), or an employee on unpaid leave to care for a child, among other protected situations. Dismissal linked to union activity or to enforcing a legal right is also unlawful. These protections apply regardless of length of service.
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Pin down a valid reason
Anchor the dismissal to conduct, capability, or your business needs. The reason must be true and well-founded, and you must be able to prove it if it is challenged.
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Write the reason in the notice
State the reason in the written notice itself, not just in a side conversation. A vague or missing reason is the easiest way for an employee to win a challenge.
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Give the employee a hearing
For conduct or capability grounds, let the employee respond before the decision is final. Skipping this weakens your position if the case reaches the labour court.
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Serve notice and release the employee
Serve the correct notice for the employee's length of service. Release them from work for at least half of that notice while keeping them on absence pay.
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Settle all final dues
Calculate severance where service has passed three years, pay out unused leave, and run the final payroll. Pay it by the tenth of the month after the last reference month.
How much notice must you give a Hungary employee?
Notice starts at 30 days when the employer dismisses. It grows with length of service. After 3 years it is 35 days. After 20 years it reaches 90 days.
During probation, either side can end the contract with no notice and no reason. Probation lasts up to 3 months. (Labour Code 69. §)
The base notice period is 30 days, set by Section 69 of the Labour Code. When the employer is the one giving notice, the period gets longer the longer the employee has worked for you. The extension is added to the base, so the totals below are the full notice you owe.
| Length of service | Employer notice period |
|---|---|
| Under 3 years | 30 days |
| 3 years or more | 35 days |
| 5 years or more | 45 days |
| 20 years or more | 90 days |
The ladder has more rungs between 5 and 20 years, rising in steps as service builds. The 90 days figure is the statutory ceiling on the extension. A contract or collective agreement can set longer notice, but it cannot go below these floors.
Working the notice or paying it out
For at least half of the employer-side notice, the employee must be released from work duties while still being paid. That released time is calculated on absence pay (távolléti díj), the same reference used for severance. Notice during probation works differently. Either party can walk away during the probationary period with immediate effect and no reason given.
How is severance pay calculated in Hungary?
Severance is owed only after 3 years of service. It starts at 1 month of absence pay. It rises to 2 months after 5 years and reaches 6 months after 25 years.
Severance is due when you dismiss on notice or when the role is cut. It is not owed on a resignation or a dismissal for serious misconduct. (Labour Code 77. §)
Section 77 of the Labour Code ties severance (végkielégítés) to length of service. The first three years earn nothing. From three years on, the entitlement steps up at fixed service thresholds. Severance is measured in months of absence pay (távolléti díj), not in gross salary, so allowances and overtime do not feed the figure.
Severance entitlement by service
| Length of service | Severance entitlement |
|---|---|
| Under 3 years | None |
| 3 years or more | 1 month absence pay |
| 5 years or more | 2 months absence pay |
| 25 years or more | 6 months absence pay |
The steps in between 5 and 25 years rise gradually, and 6 months is the statutory maximum. Severance is paid on top of any notice owed, so a long-serving employee dismissed on operational grounds can receive both 90 days of notice pay and up to 6 months of severance.
What absence pay covers
Absence pay (távolléti díj) is the reference wage used for severance, released notice time, and unfair-dismissal damages. It is built from base salary plus regular wage supplements, averaged over a recent period. It excludes one-off bonuses. Hungary has no statutory 13th-month or 14th-month salary, so there is no extra annual month folded into the calculation. Any 13th-month pay an employer offers is contractual, not required by law.
Accrued leave on exit
Unused annual leave is paid out on termination. The base statutory entitlement is 20 days, rising with age and the number of children, so the leave payout is a separate cash liability on the final settlement alongside notice and severance.
Are there extra rules for group redundancies in Hungary?
Yes. A group redundancy triggers a consultation duty with the works council and a notification duty to the labour authority. The thresholds depend on your headcount.
Skip the consultation or the filing and the dismissals can be challenged as unlawful. That reopens the door to a lost-earnings award.
An employer planning a group redundancy must consult employee representatives and notify the government employment authority before the dismissals take effect. The base notice of 30 days and any service-based extension still apply to each affected employee, and severance is owed to anyone past 3 years of service.
Source: Act I of 2012 on the Labour Code, Nemzeti Jogszabálytár
Group redundancy rules apply when an employer plans to dismiss a set number of employees within a 30-day window for operational reasons. The exact trigger scales with the size of the site, so a mid-sized employer reaches the threshold with fewer dismissals than a large one. The duty is to consult the works council, where one exists, and to file a notification with the labour authority.
The consultation has to be genuine. It covers the reasons for the cuts, the number and groups of employees affected, the selection method, and any way to soften the impact. The employer cannot serve the individual notices until the consultation has run and the authority has been told.
What the consultation must cover
- The business reasons behind the planned redundancies
- The number of employees affected and which job groups they fall in
- The criteria used to select who is dismissed
- Steps to reduce the number of dismissals or ease the consequences
- The timeline for the notices and the final exits
Can you agree a mutual exit in Hungary?
Yes. Employer and employee can end the contract by written mutual agreement (közös megegyezés). It is the cleanest route when both sides want to part.
A mutual agreement can settle notice, severance, and any final payments in one document. It also closes off a later unfair-dismissal claim.
Mutual termination by written agreement is recognised under the Labour Code. Because it is a genuine agreement rather than an employer decision, it sidesteps the valid-reason test and the consultation duties that come with employer-side notice. It is the standard exit route when both parties accept the relationship is ending.
A Hungary mutual exit usually records:
- The agreed leaving date, replacing any statutory notice the employer would otherwise serve
- A severance or ex gratia sum, often pitched around the 1 month to 6 months statutory band so the offer feels fair against what notice would have produced
- Accrued annual leave, paid out for any unused days from the 20 days base entitlement
- A waiver of claims, which prevents the employee taking an unfair-dismissal case to the labour court
- Reference and confidentiality terms, agreed in advance and attached to the document
Final pay timing follows the normal payroll rule. Wages and the final settlement are paid by the tenth day of the month after the reference month. Get the agreement signed before the last working day so there is no dispute over timing or amount.
How Teamed runs Hungary terminations
Teamed is your legal employer of record in Hungary. The cost is from $599 per employee per month, with zero FX mark-up in any currency. Every Hungary termination runs through Teamed's local operations team.
You decide who to let go and why. We handle the notice maths, the severance calculation on absence pay, the works-council consultation, and the labour-authority filing. All of it runs on one platform.
Real HR and legal experts handle your Hungary hires, from the first employment letter through every monthly payroll run and statutory deduction. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.
The split of responsibilities under EOR for Hungary terminations:
| What Teamed handles | What the client decides |
|---|---|
| Notice calculation from the 30 days base up to the 90 days ceiling | Whether to dismiss, why, and on what timeline |
| Drafting a true and well-founded reason in the notice, to the Section 66 test | The performance standards and what counts as a breach of conduct |
| Severance on absence pay, from 1 month after 3 years to 6 months after 25 | Whether to offer enhanced terms above the legal floor |
| Works-council consultation and labour-authority notification for group cuts | Communication with the wider team |
| Accrued annual leave payout on the 20 days base entitlement | Reference wording and confidentiality terms |
| Final payroll: notice, leave, severance, SZJA and contributions | The commercial terms of any mutual agreement |
Hungary's real exposure is the 12 months lost-earnings award a labour court can order when a dismissal reason does not hold. Teamed builds the written reason and the procedure to that standard before the notice goes out.
EOR, contractors, and entity employees all live on one platform. An employee hired through Teamed's Hungary network can graduate to your own Hungarian legal presence when headcount makes entity formation the right call, until it isn't. Run the Crossover Calculator to see when the model flips. Start from the Hungary hiring overview.
Key sources: Act I of 2012 on the Labour Code, Mt. 66. § and 82. §, and Mt. 69. § and 77. § on notice and severance.
Frequently asked questions
Do you need a reason to dismiss an employee in Hungary?
Yes. An employer-side notice must give a reason that is true and well-founded, and it must relate to the employee's conduct, their capability, or the employer's operations, under Section 66 of the Labour Code (Act I of 2012). The reason has to be written into the notice and you must be able to prove it. A dismissal with no valid reason, or one that cannot be backed up, can be challenged in the labour court.
How much notice must you give a Hungary employee in 2026?
Employer notice starts at 30 days and grows with length of service. It becomes 35 days after 3 years, 45 days after 5 years, and reaches 90 days after 20 years, which is the statutory ceiling. During probation, which runs up to 3 months, either side can end the contract immediately with no notice and no reason.
Is severance pay mandatory in Hungary?
Severance (végkielégítés) is owed only once an employee has at least 3 years of service, and only on an employer-side notice or an operational dismissal. It starts at 1 month of absence pay, rises to 2 months after 5 years, and tops out at 6 months after 25 years. It is not owed on a resignation or a summary dismissal for serious misconduct. Hungary has no statutory 13th-month salary, so no extra month is folded into the figure.
What happens if a Hungary dismissal is found unlawful?
If a labour court finds the dismissal unlawful, it can order lost-earnings damages capped at 12 months of absence pay under Section 82 of the Labour Code. That award sits on top of any notice pay and severance the employer already owed. The most common reason an employer loses is a dismissal reason that is not true and well-founded.
What is the maximum probation period in Hungary?
The Labour Code sets a maximum probationary period of 3 months. During probation, either party can end the contract with immediate effect and without giving a reason, and no severance is owed. For fixed-term contracts of up to one year, the probation is pro-rated.
Does unused annual leave get paid out on termination in Hungary?
Yes. Unused annual leave is paid out as a cash sum on termination, whatever the reason for leaving. The base statutory entitlement is 20 days, increasing with the employee's age and the number of children they have. The payout sits alongside notice and severance in the final settlement, which is due by the tenth day of the month after the last reference month.
The Hungary mistake we see most is a thin dismissal reason. Employers assume a clean notice period is enough. It is not. If the reason is not true and well-founded, the notice and severance are still owed, and a court can add up to a year of lost earnings on top.
Hungary pays no severance at all for the first three years, then starts at 1 month and caps at 6 months.
Most employers budget for severance from day one. In Hungary the clock does not start until year three.
But thin out the dismissal reason and a court can still add up to 12 months of lost earnings.
Get the reason right before you get the maths right.
