Severance Pay Calculator

Severance Pay Guide 2025: Know your rights and plan confidently!

Losing a job can be one of the most difficult and uncertain periods in life. At such times, the question of financial stability becomes crucial. This is exactly why the Hungarian Labor Code provides for the institution of severance pay, which offers a kind of financial safety net for employees whose employment is terminated by the employer.

But who is eligible for severance pay? How is its amount calculated, and what will the net, take-home amount be?

This guide and the accompanying Severance Pay Calculator were created to clear things up. With its help, you can get an accurate picture of what to expect in the event of a possible employer termination, allowing you to plan your next steps more confidently.

What is Severance Pay and who is entitled to it? The most important things to know

Before we dive into the numbers, it is essential to clarify the most important legal conditions. Severance pay is not automatically due upon the termination of every employment relationship.

You are entitled to severance pay if:

1. Your employment is terminated by the employer through ordinary dismissal.
2. Your continuous employment with the employer reaches a minimum of 3 years.

It is important that you are NOT entitled to severance pay if:

• You resign (employee-initiated termination).
• The employment ends by mutual agreement (although a similar benefit may be part of an individual agreement in such cases).
• The employer dismisses you with immediate effect due to serious breach of obligations.
• The employment ends during the probationary period.

The Calculation Logic: How do years turn into forints?

The amount of severance pay is determined by two main factors: the time spent in employment and the employee's age. The basis of the calculation is in all cases your last monthly gross salary (referred to in the law as absence fee).

The Tiered System: The more years, the more months

The Labor Code applies a tiered system that links the number of months payable to the number of years worked.

• After at least 3 years: 1 month's gross salary 5 years
• After at least 2 months' 1 month's 10 years 5 years
• After at least 3 months' 1 month's 15 years 5 years
• After at least 4 months' 1 month's 20 years 5 years
• After at least 5 months' 1 month's 25 years 5 years
• After at least 6 months' 1 month's 6-month 5 years

The Special Rule for Protected Age: Extra Benefit Before Retirement

Legislators provide special protection for experienced employees who are already close to retirement. If the employer's notice of termination is given when you have less than 5 years left until the old-age retirement age, then the above base amount increases significantly.

• In the 3-9 year bracket by an additional 1 month
• In the 10-14 year bracket by an additional 2 months
• In brackets over 15 years by an additional 3 months the severance pay is supplemented.

For example, if you have worked at the company for 16 years and fall into the protected age category, then the 4-month base severance pay is supplemented by +3 months, so you will be entitled to a total amount equivalent to 7 months of gross salary.

The Question of Taxation

It is important to know that severance pay is not a tax-free benefit. It is taxed the same way as regular wages: the following must be deducted from it: 15% personal income tax (PIT) and 5% social security contribution (SSC). The total deduction is therefore 33,5%. Our calculator also performs this automatically so that you can plan with the net amount you will receive.

Using the Calculator: Quickly and Easily

Our calculator is designed so that by entering just a few data points, you get an immediate and accurate result.

1. Last monthly gross salary: Enter your gross salary according to your contract here. This will be the basis for the calculation.
2. Number of years in employment: Enter how many full years you have worked continuously at the company.
3. Protected age checkbox: Check this box only if, on the day the notice is given, you have less than 5 years left until retirement age.

As soon as you fill in the fields, the calculator immediately shows the results:

• Severance pay amount: How many months of salary you are entitled to.
• Gross severance pay: The total amount before deductions.
• Deductions: The exact amount of taxes and contributions.
• Net (take-home) severance pay: The most important number – the amount that will actually be at your disposal.

Plan for the Future with Confidence!

Ending an employment relationship is never easy, but knowing your rights and financial options can give you strength and confidence. Use this calculator to see your situation clearly! With the results obtained, you can more easily get through the period between two jobs, plan your expenses, and focus more calmly on job hunting. Knowledge is in your hands.

Legal disclaimer: This calculator performs calculations for informational purposes based on the rules of the Hungarian Labor Code in effect in 2025. The information provided here does not constitute legal or tax advice. In case of an employment dispute or a unique situation, always consult with a labor lawyer!