We are witnessing an important advancement in the field of employment administration in Hungary. Starting from 1 January 2024, the Act on the Promotion of Employment and Unemployment Benefits was amended, introducing the obligation for employers to issue an employment certificate following the termination of employment.
The amendment needed to ensure that employees do not receive six different documents when their employment relationship is terminated, but only one single document containing all the necessary information, either in electronic form or on paper.
Previously, the certificates to be issued included: the employer's certificate issued on termination of employment, a form for income from the employer and deduction of tax and tax advances on termination of employment, a certificate for contributions deducted and paid in the year in question, a form for maintenance obligations determined by court order, a certificate for the determination of unemployment benefit and jobseeker's allowance and the social certificate. All of these have been replaced by the employment certificate mentioned above.
The amendment also lists the contents of the certificate, including the employer's details, the employee's personal details, the nature and duration of the employment relationship, the position held, the income and benefits, the compensations, the deductions, the reasons for termination of employment, the leave – in particular paternity and parental leave granted -, the insurance details, the information on income paid and tax deductions made, and finally, the information on social security benefits such as sick pay, infant or child care allowances. The deadline for issuing the certificate is the last day of work in the case of resignation by the employer, and in all other cases, the employer must issue it to the employee within five working days of the termination of employment.
In conclusion, the amendment and the introduction of the employment certificate bring significant benefits. On one hand, it will require less time and resources on the part of employers and, on the other hand, it will provide employees with simpler and more transparent documentation of information about their employment affairs.
By Rita Parkanyi, Partner, KCG Partner