Introduction: What Is Severance Pay and When Is It Due?
A severance pay a one-time cash benefit paid by the employer to the employee upon termination of employment. It is not due in every case — eligibility is regulated by Section 77 of the Labor Code (Mt.) and is subject to several conditions. The purpose of the benefit is to ensure that the employee is not left entirely without income after losing their job and has time to find a new position.
Many people have heard of severance pay, but few know exactly when it is due, how much it amounts to, and how to calculate it. This guide answers all essential questions based on the 2026 rules, referencing the Labor Code and the applicable tax regulations.
If you want to quickly calculate the amount you are entitled to, use the szamologep.hu severance pay calculator— and after reading the guide below, you will know exactly what the resulting figure means.
When Is Severance Pay Due? — Eligibility Conditions in 2026
A severance pay is not automatic. The law precisely defines the cases in which there is an entitlement to it. The table below summarizes the most common cases.
In the case of employer termination
A severance pay as a general rule, it is due if the employer terminates the employee's employment. However, two conditions must also be met:
- The reason for the termination is not the employee's conduct related to the employment relationship
- The reason for the termination is not the employee's reason related to health condition
If these conditions are met, the employee is entitled to severance pay, provided that the employment relationship has lasted at least 3 years. at the time of termination. This means that ordinary termination initiated by the employer is the most common legal basis for severance pay.
When is severance pay NOT due?
A severance pay amount the employee is not entitled to it in the following cases:
- Employee resignation — if you resign yourself, the law does not provide severance pay
- Immediate termination during the probationary period — by either party, on any day
- Extraordinary termination — if the employer terminates due to the employee's serious breach of obligations (e.g., unauthorized absence, breach of confidentiality obligations)
- Mutual agreement — in this case, the parties may freely agree on severance pay, but there is no legal obligation
- Retirement — if the employee terminates the employment relationship due to eligibility for old-age pension, statutory severance pay is not due
Important warning: In the case of mutual agreement, the parties may agree on anything — if the employer offers a mutual agreement instead of termination, it is worth having the agreement reviewed by an expert (labor lawyer), because you may lose your entitlement to statutory severance pay. Always seek legal advice before signing a mutual agreement document!
Amount of Severance Pay in 2026 — How Much Do You Get Based on Length of Employment?
A severance pay amount depends on the time spent in the employment relationship. The Labor Code provides a clear table for how much severance pay is due after how many years of employment. The longer you worked for the same employer, the higher the amount you can expect.
Based on Section 77 of the Labor Code, the amount of severance pay is as follows:
| Length of employment | Amount of severance pay (monthly absence fee) |
|---|---|
| 3–5 years | 1 month |
| 5–10 years | 2 months |
| 10–15 years | 3 months |
| 15–20 years | 4 months |
| 20–25 years | 5 months |
| Over 25 years | 6 months |
What does absence pay mean?
A severance pay calculation is based on the absence pay. Absence pay is a concept under the Labor Code, which includes:
- The base salary (the amount specified in the employment contract)
- Regular wage supplements (e.g., shift premium, overtime premium)
- Other regular benefits
Therefore, absence pay does not always match the monthly gross salary, but for most employees, it is practically the same.
How can severance pay be calculated?
A severance pay calculation is done with a simple formula that anyone can easily apply:
Severance pay amount = Absence pay × Number of months due based on years worked
Example calculation
Suppose your monthly absence pay is gross HUF 500,000 and you have worked for the same employer for 14 years:
- Check the table: between 10–15 years 15 years absence pay is due
- Multiply: HUF 500,000 × 3 = HUF 1,500,000 gross severance pay
For an accurate calculation, use the szamologep.hu severance pay calculatorwhich calculates the amount due to you in seconds based on the 2026 rules.
Taxation of severance pay in 2026
A taxation of severance pay in 2026 also follows the rules of personal income tax and social security contributions. The most important points:
Personal income tax (PIT)
A severance pay is taxed similarly to wages. After the payment, 15% PIT must be paid. However, the law caps the amount of severance pay that can be taxed tax-free or at a reduced rate, so it is advisable to seek the help of a tax expert for an accurate calculation.
Social security contributions
A when calculating severance pay contributions must also be considered:
- Payable by the employee: Social security contribution (18.5%, which includes pension, health insurance, and labor market contributions)
- Payable by the employer: Social contribution tax (13%)
- Vocational training contribution: 1,5%
These contributions reduce the net amount received from the gross severance pay.
Concrete example: From gross to net
Let's calculate a specific case for the full picture:
Initial data:
– Monthly gross absence pay: HUF 500,000
– Length of employment: 14 years (3 months of severance pay)
– Gross severance pay: HUF 1,500,000
Deductions:
– PIT (15%): HUF 225,000
– Social security contribution (18.5%): HUF 277,500
– Net severance pay (estimated): HUF 997,500
Note: This is a simplified calculation. The exact net amount depends on tax benefits (e.g., family tax allowance, allowance for raising four or more children) and individual circumstances. For the exact amount, use the szamologep.hu severance pay calculatorabout.
Calculation examples — specific cases
Example 1: Short employment (4 years)
- Monthly gross salary: HUF 350,000
- Length of employment: 4 years (1 month severance pay)
- Gross severance pay: HUF 350,000
- Estimated net: HUF 232,750
Severance pay received after four years corresponds to one month's salary. This amount can help bridge the first month of job searching.
Example 2: Medium-length employment (8 years)
- Monthly gross salary: HUF 450,000
- Length of employment: 8 years (2 months severance pay)
- Gross severance pay: HUF 900,000
- Estimated net: HUF 598,500
After eight years, two months' worth of severance pay is due, which can provide significant financial security during the transition period.
Example 3: Long employment (22 years)
- Monthly gross salary: HUF 600,000
- Length of employment: 22 years (5 months severance pay)
- Gross severance pay: HUF 3,000,000
- Estimated net: HUF 1,995,000
This amount represents a substantial financial reserve that can cover living expenses for up to six months during job searching.
To calculate the exact net amount, use the szamologep.hu severance pay calculatorabout, which calculates based on 2026 tax rules.
Severance pay or sick pay — what's the difference?
Many people confuse severance pay with sick leave and sick pay, but these are completely different benefits. The comparison below helps clarify:
| Benefit | When is it due? | Who pays it? | Duration |
|---|---|---|---|
| Severance pay | Upon termination of employment | Employer | Lump sum |
| Sick leave | In case of illness (first 15 working days) | Employer | 15 working days per year |
| Sick pay | After sick leave expires | Health insurance fund | Indefinite period |
A severance pay is related to the termination of employment, not illness. If you are on sick pay and your employer terminates your employment, you may receive benefits under both entitlements — severance pay from the employer and sick pay from health insurance.
For detailed calculations related to sick leave and sick pay, see the szamologep.hu sick pay calculatorabout.
How to claim severance pay?
A severance pay does not need to be claimed separately, and no separate application is required. If the eligibility conditions are met, the employer is obliged to pay it upon termination of employment, together with the salary. The payment is due on the day of termination of employment.
Practical notes:
– Severance pay must be paid on the day of termination of employment
– The employer pays it in a lump sum together with the salary
– If the employer does not pay it, the claim can be enforced before the labor court
– The limitation period for the claim is 3 years
FAQ — Frequently asked questions about severance pay
Is severance pay due in the case of mutual agreement?
In the case of mutual agreement, the law does not require severance pay, but the parties are free to agree on it. If the employer offers a mutual agreement, be sure to record the terms in writing, including any severance amount.
Is severance pay due upon retirement?
No. Statutory severance pay is not due when the employment relationship ends due to old-age retirement. This should be taken into account when timing your retirement.
How is the length of employment calculated?
All time continuously spent with the given employer counts toward the employment period. If you worked there without interruption for 10 years, you fall into the 10–15 year bracket and are entitled to 3 months' severance pay. Time spent with a legal predecessor also counts, for example in the case of a company transformation or acquisition.
What happens if the employer does not pay the severance pay?
The employee may turn to the court. Severance pay is a labor law claim that can be enforced in the labor court. The limitation period is 3 years, but it is advisable to take the necessary steps as soon as possible.
Is severance pay required when a fixed-term contract expires?
In the case of a fixed-term contract, no severance pay is due upon the expiry of the contract. However, if the employer terminates the fixed-term contract prematurely, severance pay may be due in certain cases.
Does part-time work affect the amount of severance pay?
No. The severance pay amount is based on the actual absence fee, which is determined based on your part-time salary. The calculation formula and the number of months due based on the length of employment are the same.
Can severance pay be combined with the notice period?
Yes, but they are not the same concept. The employer may exempt the employee from work during the notice period, and must still pay the absence fee for this period. This amount is not is the same as severance pay — you may be entitled to both benefits if the conditions are met.
Summary — what is worth remembering?
A severance pay rules for 2026 have not fundamentally changed compared to previous years, but it is worth being aware of the exact conditions, as the amount can even be several million forints.
The most important points in brief:
- Only employer-initiated termination entitles you to it (unless the employee's conduct is the reason)
- A the amount depends on the length of employment (1–6 months' absence fee)
- A taxation of severance pay in 2026, 15% personal income tax + 18.5% social security contribution
- In the case of mutual agreement, there is no statutory obligation — it depends on the parties' agreement
- Do not sign a mutual agreement without consulting a labor lawyer
- Use the severance pay calculator at szamologep.hu to calculate the exact amount
If you are changing jobs or your employer gives you notice, be sure to calculate how much severance pay you are entitled to. Knowing the exact amount helps with conscious financial planning — and ensures that the end of your employment does not come as a surprise.
Tip: If you have questions about severance pay, it is advisable to consult a labor lawyer, especially if the employer offers a mutual agreement instead of termination. Losing statutory severance pay can have serious financial consequences.