An employee with an open-ended contract who has two years’ continuous service with the same employer (and is not being dismissed due to an intentional breach of contractual obligation) is entitled to a severance payment. The statutory minimum severance payment is calculated by multiplying one-third of the average monthly salary in the preceding three months by the number of years’ continuous service with that employer. The severance payment is capped at six times the average monthly salary, unless otherwise provided for by law, by-law, collective agreement or work contract
An employee shall be entitled to severance pay if his/her employment relationship is terminated (i) by the employer; (ii) upon the dissolution of the employer without succession; or (iii) in case of the transfer of a business undertaking, if the transferee employer does not fall under the scope of the Hungarian Labour Code.
Entitlement to severance pay shall only apply upon the existence of an employment relationship with the employer during the period of at least three years at the time when the notice of dismissal is delivered or when the employer is terminated without succession.
The amount of severance pay increases according to the length of the employment relationship: up to a six-month absence fee (i.e. in practical terms, the base salary).
The employee shall not be entitled to receive severance pay if (i) he/she is recognised as a pensioner at the time when the notice of dismissal is delivered or when the employer is terminated without succession; or (ii) he/she is dismissed for reasons in connection with his/her behaviour in relation to the employment relationship or on grounds other than health reasons.
Statutory maximum severance payment of one month’s salary for dismissals on specific grounds (e.g. closure of the establishment, partial closure of the establishment, staff cuts, etc.).
Two months’ salary for dismissal due to disability or hazard to the health of an employee, if the employee has worked for at least five years and has not received such severance pay in the last five years.
Two months’ salary for termination of the employment contract of an employee, whatever the grounds, who has reached the required retirement age and length of service.If the employee has worked for the last ten years with the same employer, the severance pay amounts to six months’ salary. Such severance payment shall be due only once.
Compensation for the non-used annual leave.
Where the employment contract is terminated against payment of compensation by mutual agreement on the initiative of the employer, the severance pay is in the amount of at least four monthly salaries of the employee.