What is a non-compete agreement in Hungary?
A non-compete agreement (versenytilalmi megállapodás) is a written agreement under which an employee in Hungary undertakes not to act in a way that would harm or endanger their employer’s legitimate economic interests for up to two years after the employment ends. Section 228 of the Labour Code (Act I of 2012) governs it.
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The employer must pay appropriate compensation for the restriction. The amount should reflect how far the agreement keeps the employee, given their qualifications and experience, from finding new work, and for the term of the agreement it cannot be less than one third of the base wage for the same period. A collective agreement can change this rule only in the employee’s favour.
Because the compensation is owed for the whole restricted period, a non-compete is a real cost. It makes sense for roles where a move to a competitor would cause harm, with a scope and length that match that risk.
Other conditions
The agreement must be in writing, and neither the parties nor a collective agreement can depart from that rule. Its restrictions apply after the employment ends. If the employee ends the employment with immediate effect because of the employer’s serious breach, under section 78(1) of the Labour Code, they can withdraw from the agreement. If the employer changes, for example in a business transfer, the rights and obligations pass to the new employer. The parties can also agree a penalty (kötbér) for breach, under the Civil Code rules on penalties.
Non-competes when you hire through an EOR
With TopSource as your Employer of Record in Hungary, we agree with you the scope the restriction needs, put the non-compete in writing in the employment documents and set compensation of at least one third of base wage, which we pay through payroll after the employment ends.
Frequently asked questions
How long can a non-compete last in Hungary?
Up to two years after the employment ends, under section 228 of the Labour Code.
How much compensation does a Hungarian non-compete require?
Appropriate compensation, and at least one third of the base wage for the same period. A collective agreement can only change this in the employee’s favour.
Can an employee withdraw from a non-compete in Hungary?
Yes, if they end the employment with immediate effect because of the employer’s serious breach, under section 78(1) of the Labour Code.
Related terms in Hungary
- Written Employment Information (Hungary)
- Fixed-Term Employment Limits (Hungary)
- Simplified Employment (Hungary)
- Overtime Cap (Hungary)
- Telework and Home Office Rules (Hungary)
- Additional Leave (Hungary)
- Protected Periods and Dismissal Justification (Hungary)
- Termination by Mutual Agreement (Hungary)
- Works Council and Collective Agreements (Hungary)
- Guest Worker Permit and Single Permit (Hungary)
- Occupational Safety and Medical Aptitude Exam (Hungary)