Deduction from salary in Hungary – the most common payroll errors in Hungary 2.
10/2020
- Rafał Krajewski
To make it clear for the Employer and Employees in Hungary how to handle the deductions from the salary correctly, we would like to call your attention to another type of limit which has to be calculated beyond the 33 and the 50%.
EMPLOYERS OBLIGATIONS IN CASE OF DEDUCTION FROM SALARY IN HUNGARY
According to Law LIII. the year 1994 about the rules of the forbidding from the salaries which determines the enforceable base and percent of the deductions, in addition to the exceptions.
As it turns out, there are a lot of tasks, obligations to do from the Employers side.
Employers obligations:
+ to notify the debtor about the official attachment,
+ to handle the deduction and make sure to transfer the amount to the executor,
+ if the garnishment is not possible for any reason contact the Authority or other institution ordered the deduction
The Employer has to take the responsibility to handle the attachment. In case of not achieving following the legislation, the Employer will be the guarantor of the attachment’s amount.
As the law says, the deduction has to be applied to the net salary. The general deduction rate is 33%, except for the children’s maintenance order, where the rate of the deduction could be 50%.
WHEN CAN A DEDUCTION FROM SALARY BE MORE THAN 50%?
Based on rule 63 of the Hungarian Law Common Provisions of Withholding from the amount remaining after the deductions 33% or 50% the portion of monthly salaries in excess of five times the minimum amount of the old-age pension – actually 142.500 HUF – may be subject to garnishment without restrictions.
As you can see in the calculation below in case of high salary the debtor receives less than half of the net salary:
CERTIFICATION OF PAYROLL DEDUCTION IN HUNGARY
In case of the salary deduction, the Hungarian Labor Code needs to be taken into account which could be important too for the Employer because of additional obligations:
+ When the employment relationship ends a certification has to be provided to the leaving Employee about the deduction.
+ In the turn of a new joiner, this kind of certification must be requested and handled from the Employer side.
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