As of 1 July 2025, the rules on prior group employment approval and residence permits for employment for the purpose of investment will change. The main novelty is that the implementation of the investment will be divided into two phases, preparation and installation, and the permit granting process will be adapted accordingly. In this newsletter, we provide an overview of the conditions under which third-country nationals can be employed in Hungary in the course of various investments and how the permit procedures should be handled.

Conditions of employment for investment purposes

Act XC of 2023 on the General Rules for the Entry and Residence of Third-Country Nationals (the “Third-Country Nationals Act“) allows for the employment of guest workers for investment purposes. Within this framework, a residence permits for employment for the purpose of investment may be granted to a guest worker whose purpose is to perform actual work in an employment relationship in order to implement an investment with an employer who has concluded an agreement or contract with the Minister of Foreign Affairs and Trade in order to implement this investment and the employer has a prior approval for group employment as defined by law (“Employment Approval “). Before applying for a residence permit for a guest worker, the employer must therefore first obtain prior approval for group employment.

Prior group employment approval

Under the new legislation, which will enter into force on 1 July, the investment is divided into two phases for the purposes of authorisation: the preparatory phase, which involves the preparation, construction and bringing into use of the investment, and the installation phase, which involves the operation of the units already in use and the training of the personnel.

The application for the Employment Approval for the preparatory phase of the investment is submitted by the investor in order to be able to employ more third-country nationals during the implementation of the investment. The application is assessed by the Minister of National Economy, who examines the business plan of the investment, the number of third-country nationals to be employed, their job (by FEOR codes) and the distribution of the employees between the main contractors and subcontractors. The application must specify the details of the investor, the main contractor and the subcontractor. The competent government office will also be involved in the procedure in order to examine the labour market situation in the region with regard to the available Hungarian labour force. The Employment Approval can be valid for the entire duration of the investment, up to a maximum of three years. During the period of the Employment Approval, any deviations from its provisions, such as the identity of the main contractors and subcontractors, the job of third-country nationals (by FEOR codes) and their distribution, must also be approved by the Minister of National Economy.

The application for the Employment Approval for the installation phase of the investment may be submitted during the period of the Employment Approval for the preparatory phase or from the day after its expiry. It may only be requested for the stage of the project for which installation is required. As with the application for the preparatory phase, the assessment is the responsibility of the Minister of National Economy and the procedure must also specify the number of third-country nationals to be employed, their job (by FEOR codes), the names of the main contractors and subcontractors and the distribution of the employees. For this phase, the competent government office will also examine the valid labour needs. The Employment Approval may be valid until the investment is put into operation, but for a maximum period of one year. As with the rules for the preparatory phase, any deviations from the provisions of the Employment Approval during the period of the Employment Approval, such as the identity of main contractors and subcontractors, the work of third-country nationals (by FEOR codes) and their distribution, must also be approved by the Minister of National Economy.

Employment of guest workers

Guest workers may be employed under a residence permit for employment for the purpose of investment. The residence permit may be granted to guest workers who carry out the work for remuneration and for the realisation of the investment. In addition to the general requirements, to the application for a residence permit must be attached the Employment Approval and proof of an agreement with the Minister of Foreign Affairs and Trade. In the case of the Paks Nuclear Power Plant and the Budapest-Belgrade railway line projects, the legislation provides for preferential treatment, and the employer does not need to attach the agreement issued by the Minister of Foreign Economic Affairs if it is a general contractor or subcontractor under the relevant legislation.

When applying, the employer must enclose, as proof of the suitability of the accommodation, the official permit for the establishment of the accommodation and proof of the number of persons the property can accommodate. If the employer does not provide accommodation for guest workers on the site of the project, in an area separate from the local population, the permit may be refused.

A residence permit issued for employment for the purpose of investment based on an Employment Approval for the preparatory phase of the investment is valid until the investment is carried out, but for a maximum of 3 years, while a residence permit issued for employment for the purpose of investment based on an Employment Approval for the installation is valid until the investment is put into operation, but for a maximum of 1 year and counts towards the number of permits determined annually.

With this permit, the guest worker cannot apply for a residence permit under any other title and is not entitled to a national residence card.

The fixed duration of the employment relationship should be determined with reference to the period of validity of the residence permit issued.

Obligations of the employer

The employer is obliged to ensure that the employees are properly accommodated and that the guest worker holding a residence permit for employment for the purpose of investment leaves Hungary no later than on the sixth day following the termination of the employment relationship, in the event of termination of the employment relationship, and in the event of a breach of this obligation the authority shall impose a fine of HUF 5 million on the employer. The employer may be exempted from the fine if it can prove that it has taken all the measures it could reasonably be expected to take.

Summary

The legal framework for the employment of guest workers in Hungary is strictly regulated and the new legislation coming into force from 1 July 2025 will change the framework for the employment of guest workers for investment purposes. The division of the authorisation procedures into two separate phases – the preparatory and the installation phase – and the detailed regulation of the employer’s obligations require considerable administrative and legal preparation on the part of investors and employers.

It is therefore of the utmost importance that employers familiarise themselves with the new requirements in time and comply fully with them, also in view of the severity of the sanctions. Timely and professionally sound legal advice can help to ensure compliance, smooth authorization procedures and avoid fines.

For further inquiries, please feel free to contact us at info@clvpartners.com.

Anna Katalin Papp, LL.M.

CLVPartners

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