What is termination by mutual agreement?
Termination by mutual agreement (közös megegyezés) is one of the three ways to end employment under section 64 of Hungary’s Labour Code, alongside dismissal with notice and immediate termination. The employer and employee agree that the employment will end, and on what terms.
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Because the employment contract must be in writing, an agreement to end it must be in writing too. The parties set the end date and any payments, such as a settlement amount or how bonuses are treated.
The statutory notice period and severance pay do not apply, because they belong to dismissal. The agreement does not need a reason, and the protected periods that block a dismissal with notice, such as pregnancy, do not prevent it. That makes it a flexible way to end employment, as long as both sides genuinely agree.
Final pay and paperwork
By the fifth working day after the employment ends, the employer must pay the employee’s wages and other amounts due, and issue the certificates required by law. Proportional annual leave that has not been taken is paid out, except paternity and parental leave. The employee must hand over their work in the proper way and settle accounts with the employer.
Challenging the agreement
An employee can challenge the agreement if they signed it under a material mistake that the employer caused or could have recognised, because of deception, or under an unlawful threat. The challenge must be made in writing within 30 days of recognising the mistake or the end of the threat, and the right to challenge lapses after six months. If it succeeds, the court restores the employment at the employee’s request.
Mutual agreements when you hire through an EOR
With TopSource as your Employer of Record in Hungary, we draft the termination agreement in Hungarian with the end date, payments and final settlement agreed with you and the employee, and process the final pay and certificates on time.
Frequently asked questions
Is severance pay due on termination by mutual agreement in Hungary?
Not by law. Statutory severance applies to dismissal by the employer, but the parties can agree a payment as part of the agreement.
Does a mutual termination agreement have to be in writing?
Yes. The employment contract must be in writing, so an agreement ending it must be in writing too.
Can an employee withdraw from a mutual agreement in Hungary?
Not at will, but they can challenge it for a material mistake, deception or an unlawful threat. The challenge must be made in writing within 30 days, and the right lapses after six months.
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)
- Non-Compete Agreement (Hungary)
- Works Council and Collective Agreements (Hungary)
- Guest Worker Permit and Single Permit (Hungary)
- Occupational Safety and Medical Aptitude Exam (Hungary)