Simplified employment is an atypical employment relationship that offers the possibility to work in a more flexible framework than the general rules. The specific provisions can be found in Act LXXV of 2010 on Simplified Employment (“Simplified Employment Act“), whereas the provisions of Act I of 2012 on the Labour Code (“Labour Code“) serve as a background rule. This year, there are several significant changes to the rules on simplified employment, which will be or have been introduced gradually in two stages. This article summarizes these changes.
Amendments effective from 2 February 2025
- Changes concerning taxes
Employers are required by law to pay a specific contribution for their employees working under the Simplified Employment Act. The amount of this tax is based on a percentage of the minimum wage applicable on the first day of the month in question, thus the increase in the minimum wage also affected the amount of the tax payable. It is also important to note that the percentage of the minimum wage per employee and per calendar day has also increased, i.e., the following percentage of the minimum wage applicable on the first day of the month shall be paid:
- 0,75% (compared to 0.5% previously), i.e. HUF 2 200 per day for seasonal agricultural and touristic work;
- 1,5% (compared to 1% previously), i.e. HUF 4 400 per day for occasional work.
There was no increase for film industry extras, thus, the tax rate remained unchanged at 3%, i.e. HUF 8,700 per day.
It is important to note that these new provisions will only apply to employment relationships concluded after 1 February 2025. Accordingly, if an employment relationship was established on or before 1 February 2025, the rate of tax will be based on the previous rules.
- Employee benefit entitlement
An employee employed in a simplified employment relationship is not considered to be insured, but is entitled to pension, accident health care and job-seeker’s allowance.
The amount of the pension benefit is adjusted to the minimum wage applicable on the first day of the month in question, therefore the amount has already been increased from 1 January 2025. Under the amendment to the Simplified Employment Act, the percentage rate has also increased from 2 February 2025. On this basis, the pension is calculated on the basis of the following percentages of minimum wage on the first day of the month:
- 2,1% (compared to 1.4% previously), i.e. HUF 6 100 per day for seasonal agricultural and touristic work;
- 4,2% (compared with 2.8% previously), i.e. HUF 12 200 per day for occasional work.
There was no change for film industry extras, which remained at 2.8%, i.e. HUF 8 100 per day.
Amendment to take effect from 1 July 2025
- Annual limit, introduction of electronic enquiry system
In the future, employees will be allowed to work up to 120 days per year under a simplified employment relationship. This change is of particular importance, as the duration limit previously applied only to the specific employer-employee relationship, but now it will have to be taken into account for all the simplified employment relationships of the employee established in a given year. Hence, the number of working days worked by the employee in the context of simplified employment must be aggregated, irrespective of the employer. In order to enable employers to verify that the employee concerned has not exhausted his/her annual “limit” of 120 days, the National Tax and Customs Administration (“NAV”) will provide them an electronic enquiry system.
Given that this limit will be introduced during the year, the 120-calendar day limit will be taken into account from 1 July 2025 when calculating the duration of employment in 2025.
Summary
It can therefore be concluded that the cost of simplified employment has increased this year, and the rules on the annual limit have made this type of work more restrictive than before.
However, we would like to point out that on 11 March 2025, the Government submitted an act proposing to ease the rules on simplified employment, such as the general limit of 120 days and the possibility of extending the limit with an additional 90 days for occasional agricultural work, with effect – as planned – from 1 January 2026. The provisions of the proposal will be detailed in a separate article, once it is adopted and officially published.
For more information on simplified employment, please have a look at the information brochure (unfortunately, the information brochure only available in Hungarian language) on the following link issued by the NAV. If you have any further questions on this topic, please do not hesitate to contact us.
Image source: Maria Turkmani, Pexels.com