Severance Pay in Hungary 2026 – How Much Do You Actually Receive?

When is severance pay due?

Under Hungary's Labour Code (§ 77), severance pay (végkielégítés) is due when the employment is terminated by the employer's ordinary dismissal, when the employer ceases to exist without a legal successor, or when the employee exercises a justified immediate dismissal.

Not payable: employee's own resignation, mutual agreement, expiry of probation, or employer's immediate dismissal for serious employee misconduct.

How many months of pay?

Tax treatment in 2026

Example: 12 years, HUF 500,000/month gross

Example: 25 years, HUF 600,000/month gross

Practical tips for expats

If you are a foreign national with Hungarian tax residency, your severance pay is subject to the same rules. For cross-border situations – e.g. if your contract was originally signed abroad – consult a local employment attorney.

How is the absence pay calculated?

The basis of severance pay is not the gross monthly wage but the so-called absence pay (távolléti díj). This is an important distinction that many people misunderstand. Under sections 148–152 of the Hungarian Labour Code, absence pay is calculated from the base salary, regular wage supplements (such as shift or night-work allowances), and the monthly average of performance-based pay. If someone has a base salary of 400,000 HUF but regularly receives an additional 50,000 HUF shift allowance, their absence pay will be around 450,000 HUF — and severance is calculated from this higher figure.

In practice, this means that employees who receive significant allowances will also have higher severance pay than they would expect based on the base salary alone. It is worth asking the employer in writing for the exact absence pay calculation, as this reveals whether the allowances were correctly taken into account.

The deductions in detail

A widespread misconception holds that part of a severance payment – typically up to six times the minimum wage – is tax-free. No such rule exists. Under the Personal Income Tax Act, severance is income from employment and is taxed in exactly the same way as a monthly salary.

The full gross amount is subject to 15% personal income tax and an 18.5% social security contribution – 33.5% in total. Importantly, the 13% social contribution tax is paid by the employer, not the employee, so it does not further reduce the net amount received. Allowances (such as the family allowance) can be claimed in the month of payment, just as with regular salary.

Common mistakes and misunderstandings

1. "Severance is due when I resign." This is incorrect. If the employee resigns, no severance pay is due. It is only payable upon employer termination by ordinary notice, the employer ceasing without a legal successor, or the employee's lawful immediate termination.

2. "Mutual agreement equals dismissal." No. In a mutual agreement, the law does not mandate severance pay. The parties may agree on a settlement payment, but this does not enjoy the tax exemption applicable to statutory severance and is taxed fully as employment income.

3. "Those near retirement are not entitled." On the contrary: protected-age employees (those within five years of the retirement age) are entitled to increased severance, one to three months of absence pay above the standard rate, if dismissal occurs during the protected period.

Frequently asked questions

Is pension contribution deducted from severance?

Yes, from the full amount. Severance forms the basis of the 18.5% social security contribution, which includes the 10% pension contribution, and therefore counts toward pensionable income.

Do I need to file a return for severance?

The employer withholds and reports the tax at payment, so you generally have nothing to do. Severance appears in your annual draft tax return, and it is worth checking that the withheld tax and contribution together amount to 33.5% of the gross.

Can I receive severance and jobseeker's allowance at the same time?

Yes, the two do not exclude each other. Severance does not affect your entitlement to jobseeker's allowance, which you can claim separately after the employment ends.

Worked calculation example

Consider an employee with a gross monthly salary of 600,000 HUF who has worked for 25 years. They are entitled to six months of absence pay, so the gross severance is 3,600,000 HUF. From this, 15% personal income tax (540,000 HUF) and an 18.5% social security contribution (666,000 HUF) are deducted – 1,206,000 HUF in total – leaving a net severance of 2,394,000 HUF. The lesson is the opposite of the common myth: budget for keeping roughly two-thirds of the gross figure, not all of it.