As globalization continues to advance, more and more companies are expanding their focus to overseas markets. When venturing into international business, compensation management becomes an essential aspect. If you are planning to enter the Hungarian market, this article will introduce you to some important considerations for compensation management in Hungary.
1. Hungary's Compensation System
Hungary's compensation system differs significantly from that of China. In Hungary, an employee's compensation primarily consists of base salary and allowances. Moreover, Hungary has government-set minimum wage standards that all companies must adhere to when paying their employees.
Additionally, Hungary offers various special allowances such as meal allowances, transportation allowances, and health insurance. These allowances are typically determined by the employer and specified in employment contracts.
2. Taxation Policies
Taxation policies in Hungary also warrant close attention. Hungary has a two-tier personal income tax system: 15% and 30%. Employees with an annual income below 4.5 million forints (approximately 12,500 euros) are subject to a 15% tax rate, while those with an income exceeding 4.5 million forints are subject to a 30% tax rate.
Furthermore, Hungary has a unique taxation policy known as social security tax. Social security tax is jointly contributed by both employers and employees at a rate of 18.5%. Employers are required to remit the social security tax to the government at the end of each month, with no additional contribution required from employees.
3. Labor Regulations
In Hungary, labor regulations are also a critical consideration. According to Hungarian labor laws, employees should not work more than 40 hours per week or 8 hours per day. Additionally, employees are entitled to a minimum of one day off per week and are entitled to 20 days of paid annual leave per year.
Hungary also outlines overtime pay standards for specific situations. For instance, if an employee works overtime on weekends or holidays, the overtime pay is typically 50% of their regular wage. If an employee works during night shifts, the overtime pay is usually 30% of their regular wage.
4. Conclusion
When engaging in international business, compensation management is a crucial aspect to consider. If you are planning to enter the Hungarian market, the key considerations outlined in this article are essential to understand. We hope this information proves helpful, and we wish you success in the Hungarian market!