Guide to employment, payroll and benefits in

Portugal

Rivermate offers complete payroll, benefits and compliance services for

Portugal

01. Overview

Last updated: 

August 19, 2021

Currency
Euro
Capital
Lisbon
Ease of doing business
76.5
Language
Portuguese
Population
10196709
GDP growth
2.68%

02. Grow your team in

Portugal

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Portugal

, particularly if you don't have established local relationships. You can hire employees in

Portugal

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Portugal, officially the Portuguese Republic, is a country in western Europe situated on the Iberian Peninsula. It is the westernmost sovereign state in mainland Europe, with the Atlantic Ocean to the west and south and Spain to the north and east. The Atlantic archipelagos of the Azores and Madeira, both autonomous territories with their own state governments, are also part of its territory. Portuguese is the official and national language. Since prehistoric times, Portugal's territory has been continually settled, conquered, and fought for, making it the oldest nation state on the Iberian Peninsula and one of the oldest in Europe. It was inhabited by pre-Celtic and Celtic peoples, and it was visited by Phoenicians-Carthaginians, Ancient Greeks, and Romans, who were preceded by Suebi and Visigothic Germanic invasions. The majority of the Iberian Peninsula became part of Al-Andalus after the Moors conquered it. Portugal was known as a nation during the early Christian Reconquista. The County of Portugal, established in 868, rose to prominence following the Battle of So Mamede. Following the Battle of Ourique, the Kingdom of Portugal was established, and the Treaty of Zamora recognised Portugal's independence from León. During the 15th and 16th centuries, Portugal established the first global maritime and commercial empire, becoming one of the world's main economic, political, and military forces. Portuguese explorers pioneered maritime exploration during this era, which is now known as the Age of Discovery, with the discovery of what would become Brazil. Portugal monopolized the spice trade, divided the world into hemispheres of dominion with Castile, and extended the empire with military campaigns in Asia during this period. However, events such as the 1755 Lisbon earthquake, the country's occupation during the Napoleonic Wars, and Brazil's independence erased much of Portugal's previous opulence. After the monarchy was deposed in 1910, the democratic but dysfunctional Portuguese First Republic was created, which was later superseded by the authoritarian Estado Novo regime. After the Carnation Revolution, which put an end to the Portuguese Colonial War, democracy was restored. Almost all of the country's overseas territories gained independence soon after. The handover of Macau to China marked the end of one of history's longest-lived colonial empires. With about 250 million Portuguese speakers and many Portuguese-based creoles, Portugal has had a profound cultural, architectural, and linguistic presence around the world. It is a developed nation with a high standard of living and an advanced economy. In addition, it ranks highly in moral freedom, security, democracy, press freedom, stability, social change, and development rankings.

04. Public holidays

05. Types of leave

Paid time off

The employee is entitled to two business days off every month of work done after six months of employment. Employees are not permitted to take more than 20 business days off during their first year of work. The employee may not take more than 30 business days off in the following year. From January 1st of each year forward, the employee will be entitled to 22 business days off plus the proportionate of the previous year.

Public holidays

Portugal has 13 mandatory public holidays.

Sick days

The minimum requirement is 4 days leave and is paid by Social Security as follows:55% – for first 30 days60% – between 31 and 90 days70% – between 91 and 365 days75% – up to 366 days

Maternity leave

The maternity leave is paid by social security.120 days (just mother) – pay 100%150 days shared leave (120 for mother +30 for father) – pay 100%180 days shared leave (150 for mother +30 for father) – pay 83%150 days – pay 80%

Paternity leave

Paternity leave is necessary for 20 days, with an extra 5 days available as an alternative. Social security pays leave at 100% of the employee's average wage for the previous six months.

Parental leave

The pair can choose who takes the next 78 or 108 days after the mandatory 6 weeks of maternity leave and 15 days of paternity leave. If the pair takes a total of 150 days off, they will be paid 80%, and if they take 120 days off, they will be paid 100%.

Other leave

Employees are entitled to five days of paid bereavement leave after the loss of a spouse, parent, stepparent, child, or domestic partner. Following the death of a sibling, grandparent, or grandchild, they are entitled to two days of paid leave.Employees are entitled to 30 days of paid leave per year to provide urgent and essential care for a family member under the age of 12 and 15 days for a family member above the age of 12.Marriage Leave: After getting married, employees are entitled to 15 days of paid leave in a row.On the day of an exam and the day before, take a study leave.

06. Employment termination

Termination process

Collective dismissal, dismissal owing to position abolition, unsuitability for the work, and disciplinary dismissals are all grounds for termination.


The procedure varies depending to the cause for dismissal, but in each case, the employee should be informed of the reason for dismissal prior to discharge. In the event of dismissal for misconduct, a hearing should be held to allow the employee to respond.


Notice of dismissal should be in writing. Notification of dismissal shall be sent to the competent Ministry of Labour service (except in cases of discipline dismissal) and to the workers' representative.


Accrued and unused vacation time is also owed to the employee, regardless of the reason for and manner of termination.

Notice period

A fixed-term employment contract terminates at the end of the specified term or at the end of its renewal period, whichever occurs first, provided that either the employer or the employee notifies the other party in writing 15 or 8 days before the deadline expires, respectively. Unfixed-term employment contracts expire when the employer anticipates the end of the term and notifies the employee at least seven, thirty, or sixty days in advance, depending on whether the contract is for up to six months, six months to two years, or a longer period of time.

Severance pay

When a fixed-term contract expires as a result of an employer declaration, the employee is entitled to compensation equal to 18 days of base salary and seniority for each full year of work.

Probation period

Each contract includes an evaluation period. The duration of the contract varies according to the type, ranging from 30 days to 8 months. The trial period for an indefinite employment contract may be as follows. 90 days for the majority of employees, 180 days for those in positions of technical complexity, high level of responsibility, or requiring a special qualification in trust positions, and 240 days for senior management employees. The trial period for a fixed-term employment contract may be as follows. 30 days if the contract is for six months or more; 15 days if the contract is for less than six months.

07. Working hours

General

The standard workweek is 40 hours and the day is eight hours. Work hours and overtime restrictions vary by business size and may be governed by collective bargaining agreements.

Overtime

Overtime should not exceed two hours in a day and 48 hours in a week. Employees at companies with at least 50 employees may perform overtime work for a maximum of 150 hours per year; employees at companies with fewer than 50 employees may perform overtime work for a maximum of 175 hours per year.


The first hour of overtime is compensated at a rate of 25% above the regular rate, and the subsequent hours are compensated at a rate of 37.5 percent above the regular rate. On rest days or holidays, overtime is paid at 150 percent of the regular rate.

08. Minimum wage

General

Portugal's minimum wage is now 665 EUR per month as of 2021. However, if an employee is protected by a collective bargaining agreement, their necessary minimum pay may vary.

09. Employee benefits

General

The national system provides basic insurance. Employees may be offered supplemental health insurance as a perk. Most top executives seek additional health and life insurance, although smaller businesses may choose to give a stipend instead of arranging insurance.

Many companies in Portugal provide meal and transportation subsidies.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Portugal

to hire a team takes time, money, and effort. The labor law in

Portugal

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Portugal

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Portugal

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Portugal

via our Employer of Record / PEO solution.

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