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Changes to the rules on the employment of guest workers in connection with investments

News, Immigration law / / , , ,

As of 1 July 2025, the rules on prior group employment approval and residence permits for employment for the purpose of investment will change. The main novelty is that the implementation of the investment will be divided into two phases, preparation and installation, and the permit granting process will be adapted accordingly. In this newsletter, we provide an overview of the conditions under which third-country nationals can be employed in Hungary in the course of various investments and how the permit procedures should be handled.

Conditions of employment for investment purposes

Act XC of 2023 on the General Rules for the Entry and Residence of Third-Country Nationals (the “Third-Country Nationals Act“) allows for the employment of guest workers for investment purposes. Within this framework, a residence permits for employment for the purpose of investment may be granted to a guest worker whose purpose is to perform actual work in an employment relationship in order to implement an investment with an employer who has concluded an agreement or contract with the Minister of Foreign Affairs and Trade in order to implement this investment and the employer has a prior approval for group employment as defined by law (“Employment Approval “). Before applying for a residence permit for a guest worker, the employer must therefore first obtain prior approval for group employment.

Prior group employment approval

Under the new legislation, which will enter into force on 1 July, the investment is divided into two phases for the purposes of authorisation: the preparatory phase, which involves the preparation, construction and bringing into use of the investment, and the installation phase, which involves the operation of the units already in use and the training of the personnel.

The application for the Employment Approval for the preparatory phase of the investment is submitted by the investor in order to be able to employ more third-country nationals during the implementation of the investment. The application is assessed by the Minister of National Economy, who examines the business plan of the investment, the number of third-country nationals to be employed, their job (by FEOR codes) and the distribution of the employees between the main contractors and subcontractors. The application must specify the details of the investor, the main contractor and the subcontractor. The competent government office will also be involved in the procedure in order to examine the labour market situation in the region with regard to the available Hungarian labour force. The Employment Approval can be valid for the entire duration of the investment, up to a maximum of three years. During the period of the Employment Approval, any deviations from its provisions, such as the identity of the main contractors and subcontractors, the job of third-country nationals (by FEOR codes) and their distribution, must also be approved by the Minister of National Economy.

The application for the Employment Approval for the installation phase of the investment may be submitted during the period of the Employment Approval for the preparatory phase or from the day after its expiry. It may only be requested for the stage of the project for which installation is required. As with the application for the preparatory phase, the assessment is the responsibility of the Minister of National Economy and the procedure must also specify the number of third-country nationals to be employed, their job (by FEOR codes), the names of the main contractors and subcontractors and the distribution of the employees. For this phase, the competent government office will also examine the valid labour needs. The Employment Approval may be valid until the investment is put into operation, but for a maximum period of one year. As with the rules for the preparatory phase, any deviations from the provisions of the Employment Approval during the period of the Employment Approval, such as the identity of main contractors and subcontractors, the work of third-country nationals (by FEOR codes) and their distribution, must also be approved by the Minister of National Economy.

Employment of guest workers

Guest workers may be employed under a residence permit for employment for the purpose of investment. The residence permit may be granted to guest workers who carry out the work for remuneration and for the realisation of the investment. In addition to the general requirements, to the application for a residence permit must be attached the Employment Approval and proof of an agreement with the Minister of Foreign Affairs and Trade. In the case of the Paks Nuclear Power Plant and the Budapest-Belgrade railway line projects, the legislation provides for preferential treatment, and the employer does not need to attach the agreement issued by the Minister of Foreign Economic Affairs if it is a general contractor or subcontractor under the relevant legislation.

When applying, the employer must enclose, as proof of the suitability of the accommodation, the official permit for the establishment of the accommodation and proof of the number of persons the property can accommodate. If the employer does not provide accommodation for guest workers on the site of the project, in an area separate from the local population, the permit may be refused.

A residence permit issued for employment for the purpose of investment based on an Employment Approval for the preparatory phase of the investment is valid until the investment is carried out, but for a maximum of 3 years, while a residence permit issued for employment for the purpose of investment based on an Employment Approval for the installation is valid until the investment is put into operation, but for a maximum of 1 year and counts towards the number of permits determined annually.

With this permit, the guest worker cannot apply for a residence permit under any other title and is not entitled to a national residence card.

The fixed duration of the employment relationship should be determined with reference to the period of validity of the residence permit issued.

Obligations of the employer

The employer is obliged to ensure that the employees are properly accommodated and that the guest worker holding a residence permit for employment for the purpose of investment leaves Hungary no later than on the sixth day following the termination of the employment relationship, in the event of termination of the employment relationship, and in the event of a breach of this obligation the authority shall impose a fine of HUF 5 million on the employer. The employer may be exempted from the fine if it can prove that it has taken all the measures it could reasonably be expected to take.

Summary

The legal framework for the employment of guest workers in Hungary is strictly regulated and the new legislation coming into force from 1 July 2025 will change the framework for the employment of guest workers for investment purposes. The division of the authorisation procedures into two separate phases – the preparatory and the installation phase – and the detailed regulation of the employer’s obligations require considerable administrative and legal preparation on the part of investors and employers.

It is therefore of the utmost importance that employers familiarise themselves with the new requirements in time and comply fully with them, also in view of the severity of the sanctions. Timely and professionally sound legal advice can help to ensure compliance, smooth authorization procedures and avoid fines.

Image source: Anamul Rezwan, Pexels.com

EU Blue Card minimum wage in 2025

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The minimum wage that third-country professionals who work or will work in Hungary with an EU Blue Card can expect in 2025 has recently been published.

Why is this minimum wage important?

For this type of residence permit, the level of remuneration not only reflects professional standards, but is also an important criterion for the compliance of applicants and their employers. One important aspect of the minimum amount is that it avoids underpayment among those concerned, while it may also enhance the attractiveness of highly skilled positions.

In 2025, the minimum standard monthly wage will be HUF 883,671. And for specified health professions (general practitioner, pharmacist, specialised pharmacist, optometrist, dietician and nutritionist, physiotherapist, nurse, paramedic, nurse (tertiary level), midwife (tertiary level)) the minimum monthly wage is HUF 706,937.

What should employers look out for?

Employers concerned should check in good time that the wages of workers who are or will be employed with an EU Blue Card are in line with the new requirements.

If not, it is advisable to prepare for the change, which can go both ways:

  • adapt the related contracts to the new minimum wage requirements, or
  • if a pay rise is not possible, apply for other residence permit enabling continued employment.

If you have any questions about how to implement the changes in practice, or about the EU Blue Card in general, please contact our law firm.

Author: dr. Eszter Bohati, lawyer – CLVPartners

Residing in Hungary as a managing director

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Introduction

In the next part of our series of articles, we will look at the residence of third-country nationals in Hungary as managing directors from several perspectives.

The issue may also be of particular importance because it is not at all unusual nowadays to appoint foreigners, often third-country nationals, to certain management positions in companies. In many cases, the appointment of such persons may not even include among the preliminary considerations the need to have a document proving their residence and the right to perform the activity.

In this article, we try to provide our readers with some food for thought information that can help in similar and not necessarily simple situations.

Before and after the Btátv.

There are also significant differences between the former (the Harmtv.) and the new legislation (i.e. the Btátv.) in this area.

Under the Harmtv., it was still possible to apply for a residence permit for the purpose of pursuit of gainful activity, which may sound familiar to many, if you wanted to work in Hungary as a managing director of a company, cooperative or other legal entity established for profit. However, in cases where the person appointed as a managing director did not wish to carry out their duties related to such a position or would have carried out not only such duties but (also) duties as a worker in the classical sense, they had to apply for a residence permit for the purpose of employment instead of for the purpose of pursuit of gainful activity.

The Btátv. provides for a much more colourful palette than this binary system when it comes to one or the other of the activities of executive officers in Hungary, which we will deal with below.

Executive officer or classic employee

Although the dual system for the performance of representative and employee functions, which existed under the Harmtv., was basically maintained under the Btátv., the current code allows for a choice between several types of licences within these two main categories, depending on the circumstances. The following shows how each type of licence builds on the others and the main subdivisions under which they may be used.

Name of the residence permit Performing the duties of an executive officer[1] Actual work outside the scope of the executive function
Guest self-employment Available from Not applicable
Guest investor[2] Available from Not applicable
Hungarian Card Not applicable Available from
Company Card Available from Available from
National Card Not applicable Available from

 Guest self-employment

As in all cases, in order to be approved by the authorities, the applicant must provide evidence of the circumstances relating to the residence permit and duly substantiating the application.

For this type of residence permit, the applicant must prove that:

  • the company has been legally employing at least five Hungarian nationals or persons with the right of free movement and residence on a full-time basis for at least six consecutive months, or
  • their presence in Hungary is essential for the operation of the company and their detailed declaration of economic activity attached to the application shows that they are likely to generate income for the company that will ensure its subsistence. In particular, they can substantiate their declaration by one of the following: a contract of engagement, a contract of commission, an agreement, a contract of sale or a contract of purchase.

It is important to note that in addition to the above, the immigration authorities may also ask for additional documents.

It may be a consideration that a person holding a residence permit for guest self-employment is subject to a regular registration obligation but may do so electronically through the immigration authority’s platform.

Hungarian Card

In contrast to the previous type, the Hungarian Card cannot be applied for the performance of managerial duties in Hungary, but only for actual work outside the scope of the executive function. For the latter only if the applicant has an appropriate higher professional qualification recognised by the authority, i.e. this type is subject to regulated qualifications.

In addition to proof of the applicant’s qualifications, the immigration authority may also request additional documentation to support the operation of the affected company, as detailed in the guest self-employment residence permit.

Company Card

This type is new to the residence rules. The purpose of its introduction – as its name suggests – is to make investment in Hungary as attractive as possible. Therefore, not only the applicant, but also the company applying for the residence permit must meet certain prerequisites. For example, the legal person may be an employer as defined in the Government Decree or an entity who has concluded a settlement contract with it.

National Card

You can apply for the National Card not only for general employment, but also for employment that goes beyond the duties of an executive officer, as we have examined.  However, it is important to note that it is only available to executive officers of a specific nationality.

Summary

It can be seen, therefore, that the scope of residence permits that can be applied for the two purposes outlined overlap or are mutually exclusive, but in principle provide full coverage for the different cases. This also means, however, that, unlike in the past, which was more familiar and simpler, greater care must be taken in choosing the right type of residence permit, so that it serves the real interests of the applicant, taking into account all the other circumstances not yet discussed in this article as well.

Author: dr. Eszter Bohati, lawyer – CLVPartners

[1] Acting as a director of a company, cooperative or other legal person – for profit

[2] We will not go into this category in detail, we will just mention it.

Residence permit for employment purposes

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Introduction

Perhaps no one will think it is an exaggeration to say that the “general” residence permit for work purposes under the Harmtv. and the same under the Btátv. are the most applied for by foreigners when it comes to working in Hungary. This is true even though a number of permits for other purposes have been added to the range of employment-related possibilities over time.

In view of the practical importance of this type of permit, this article will look at the rights and obligations attached to the said permit under the Btátv., in comparison with its predecessor under the Harmtv., to help you understand what has changed or remained the same.

What remains the same

What will surely be familiar to anyone who has at least once dealt with such a residence permit application is the underlying prerequisite: the employment objective. Such a permit is primarily available to those who wish to spend a longer period in Hungary in order to carry out actual work for or under the direction of another person, for consideration, on the basis of an employment relationship. The Btátv. has not changed this, so the contractual relationship for this purpose must still be proven when applying (e.g. most often by a preliminary agreement with the future employer).

It may seem novel, but it is not really, that the Government can define occupations in which employment is prohibited. A similar protectionist provision has been part of the terms and conditions of employment of third-country nationals in the country for almost 30 years, although it was not so ‘in the spotlight’ before.

The same is true for the limitation of the number of foreigners employed in Hungary, as it has been a relatively long-standing option to maximize the number of residence permits that can be issued. The magic number for 2024 is 65,000, i.e. this is the maximum number of residence permits for employment purposes and guest worker residence permits that can be issued under the single application procedure this year.

What has changed

Guest worker instead of employment purposes

The Btátv. has completely overhauled the regulatory system. Among the redefinitions, the category of guest worker was born. This generic term, however, refers to a group, as it covers and encompasses not one but four types of residence permit. These are: seasonal guest worker, guest worker employed for the purpose of carrying out a project, residence permit for employment purposes and guest worker residence permit. The old-new type therefore falls into this category.

Why do you want to come?

Another noteworthy difference is the other purpose for which the authorisation is granted.

In the past, an employed person could also redeem this residence permit if, as an owner or executive officer of a company, cooperative or other legal person established for gainful purposes, actually intended to carry out work outside the scope of this activity. However, since under the Harmtv. a managing director could only work in Hungary under one legal title (i.e. one residence permit), the one for employment purposes emerged as the winner in the “competition” between two types of permits – which would otherwise be applicable to him/her – and it was worth obtaining it. In comparison, the Btátv. now places residence and activity in Hungary for such purposes under a completely different immigration category.

The rule that a residence permit for employment purposes can be obtained even if the employment relationship is not with the Hungarian employer, but the foreign worker is only on secondment in the Hungarian company is new.

What about the duration?

The maximum period of validity remains two years. Under the Btátv., however, the related provisions are also slightly different. In contrast to the previous application procedure, where employees could in practice have their residence permit extended as often as their (work) contract with their employer was extended, the possibility of continuous extension without limitation has been abolished under the new system. After three years from the date of the first issue, the worker concerned must apply for a new residence permit instead of an extension.

Who else can come?

Under the Harmtv., a family member of a foreign national holding or applying for a residence permit for employment purposes could apply for approval of residence in Hungary for the purpose of family reunification on the basis of the residence permit of the former. This meant that the person with a relatively close family relationship could, if the other conditions of the application were met, live here with their working relative even without an employment relationship.

As part of the conceptual revision of the Btátv., this possibility was not left untouched. Residence for the purpose of family reunification may still be granted to a very limited number of persons who previously held such a permit, but the new code has removed this possibility for family members of holders of the new type of work permit.  This may, in practical terms, lead to a significant change in the willingness to work, given the competition for certain guest workers with close family ties. However, no concrete negative effects that can be translated into figures can be reported at this stage.

Leaving the country as an employer’s obligation

There was probably no doubt in anyone’s mind before that a temporary worker could only remain in the country after the end of their temporary employment if there was a valid reason and an accompanying authorisation. If there was none, they had to leave. Violation of this obligation was also sanctioned by the Harmtv.

However, the Btátv. has also taken this to a new level, and to make the employer feel the weight of responsibility (even more), a new type of fine has been introduced, with a clearly visible amount. In this way, companies have an even greater interest in ensuring that all their foreign workers are, if not sent home, then at least sent outside the country within a short period of time. There is currently no well-developed official practice on how companies can best meet these obligations in a way that protects them, but if you are interested in our advice and suggestions in this regard, please contact us.

Summary

It is important to note that this summary is intended to provide a comprehensive overview of the overlaps and differences between the referred residence permits, but not all relevant parts have been covered and, due to its nature and general purpose, this article does not constitute legal advice. If you have any questions, either about the above, or about background not covered here, or if you just want a more comprehensive summary, we encourage you to contact us.

Author: dr. Eszter Bohati, lawyer – CLVPartners

The new era started on 1 January 2024 – Btátv.

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Introduction

Many of you will have read in many places about the new immigration code that arrived almost in tandem with 2024. With this series of articles, we will try to cover the relevant topics and changes not only in general terms, but also by answering more specific questions that may affect clients in general, as practitioners. With this aim in mind, the topics covered will essentially cover employment issues.

However, in order to put the changes and knowledge into context and to assist later interpretation, the first part of our initiative presents a summary of the changes to the legislation referred to.

Old and new

Perhaps the most noteworthy change between the former (i.e. the Harmtv.) and the new legislation (i.e. the Btátv.) is that the legislator has moved from a more general to a more categorical and in many respects more restrictive form of regulation. To be specific, residence in Hungary for employment purposes is covered by several types of permits that did not exist before or were regulated differently from the previous ones, but there are also permits that have been created to unify the ‘scattered’ provisions (see the National Card). The mechanisms practised under the Harmtv. are therefore not applicable under the Btátv. or only with significant differences.

In addition, the Btátv. also sets out protectionist objectives. For example, it has been declared that the new law aims to tighten “the legal titles and conditions of residence and employment of foreign nationals in Hungary“, to give preference to the employment of Hungarian workers over foreigners and to create a barrier against mass immigration.

It is important to note, however, that the new Code and its implementing regulation do not mean that the previous rules no longer need to be applied, or in certain cases may not apply. In fact, there are certain purposes of residence and situations in which the Harmtv. continues to apply, and it is necessary to be aware of it. Such a ‘surviving’ provision applies, for example, to residence permits to ensure family reunification, which (still) may be issued under the previous rules, and which may be of particular importance for certain groups of workers, even if (only) in terms of motivating and retaining employees.

Third-country national vs. person with the right of free movement and residence

The legislative background of course maintains the distinction between third-country nationals and persons having the right of free movement and residence (mainly EEA nationals and their family members). In this respect, it is suggested to keep in mind the practical aspect that in the case of a third-country national whom the employer knows will “join” or arrive with an EEA national entitled to a longer stay, the employer should check in advance whether such family member is covered by the Act on Admission and Residence of Persons with the Right of Free Movement and Residence and thus effectively exempted from the Btátv.

Categories by length of stay

The Btátv. basically distinguishes between three categories depending on how long the third-country national wishes to stay in Hungary, so the type of permit required can be decided on the basis of this period:

  1. short: i.e. any stay of no more than ninety days in any one hundred and eighty days is planned by the third-country national. This requires – for entry purposes – “only” a visa, or even none for certain nationals.
  2. permanent: this category includes planned stays in Hungary of more than ninety days in any one hundred and eighty days. Stays of this duration are subject to authorisation, i.e. the person concerned must apply to the immigration authority for a permit adapted to the purpose of his/her stay, which is in fact pre-selected on the basis of the purpose of the stay.
  3. long-term: this is a group of residence permits and cases for indefinite term, and of course subject to additional conditions compared to the previous categories.

The second, and most commonly used, category and duration of the authorisation is always purpose-bound. For this reason, it is very important that the employer and the person concerned consult an application specialist beforehand on the type of permit that is actually suitable for the purpose, as an incorrect application can lead to a significant delay in the establishment of the employment relationship.

As an illustration, a very simplified rule of thumb, but at least reminiscent of a preliminary assessment of the conditions for authorisation, has been modelled on the known principle. This means that all third-country nationals are covered by the Btátv., but not all persons covered by the Btátv. need a permit from the labour authority (either separately or combined with their residence) to work (as mentioned in the previous point, there are of course exceptions in the direction that the third-country national is not covered by the Btátv., but in practice these are the rarest.)

Summary

In general terms, the new legal regime allows some people to work in Hungary under stricter rules, while others – if the conditions are met – can benefit significantly. In order to comply with the stricter requirements and to benefit from such potential “advantages”, it is recommended that all concerned seek prior advice on this issue. Should any questions arise in this respect, our office is of course at your disposal to help you untie any knots.

Author: dr. Eszter Bohati, lawyer – CLVPartners

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