Employer of Record in Portugal

Using an Employer of Record in Portugal

An Employer of Record (EOR) in Portugal allows foreign companies to hire local talent without establishing a Portuguese legal entity. The company sources the candidate and manages the employee’s day-to-day work, while the EOR acts as the legal employer. The EOR provides an employment contract, handles onboarding and registrations with authorities, and ensures compliant payroll processing and HR administration throughout the employment.

The three pillars of Rivermate’s EOR services are:

• Local HR experts who understand the market and employment laws.
• A network of Portuguese partners for competitive benefits.
• The Rivermate platform that simplifies every aspect of the employment relationship.

By using an EOR, companies can focus on their core business, while being sure that adherence to local employment laws is being handled compliantly.

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Portugal labor market: At a glance

The hiring market
Greatest hiring activity:	Lisbon and Porto
Hiring timelines:	Local: 3 days Foreign national: 3-4 months
In-demand sectors:	Technology, engineering, tourism, renewable energy, shared services.
Sectors with skills shortages:	Health professionals, metal and machinery workers.
The salary market
Employer tax contributions:	Total employer social security contributions are levied at a rate of 23.75% of the gross salary and paid on top of it.
Minimum wage:	€920 for 2026 for a 14-month schedule; certain sectors have different minimum wages per CBAs
Average gross monthly salary for Portugal:	€1,696 gross/month
Income tax brackets:	Progressive rates from 12.5% - 48% based on annual taxable income. 25% is levied for employment income of non-tax-residents. An additional 2.5%-5% solidarity tax applies to high earners.

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What employment really costs in Portugal?

Portugal is a competitive employment market, with skilled talent and typically lower wages compared to other EU countries. However, companies need to budget for employer social security contributions on top of the gross salary, as well as account for Portugal’s 14-month salary structure.

Base salary

Salaries in Portugal vary by industry, role, experience and location, with Lisbon and Porto generally offering higher salaries. While the current statistics show an average gross of €1,696/month, international employers should be aware of the frequently misunderstood 14-month salary structure, which must be factored into compensation discussions with potential hires, as well as into annual payroll budgeting and monthly cash flow planning.

In addition to regular monthly remuneration, Portuguese employees are entitled to a Christmas bonus equivalent to one month’s pay (payable by 15 December) and a holiday bonus - commonly referred to as the 13th month payment - which is generally paid before the employee’s annual leave. This means employers should assess compensation annually rather than monthly and plan for months of higher employment costs when additional Christmas and holiday payments are due.

Employer taxes and contributions

In addition to the specific 14-month structure, Portuguese employment costs also include statutory employer social security contributions payable on top of the gross salary and levied at a rate of 23.75%. There is mandatory work accident insurance that the employer must purchase.

Statutory benefits

In addition to the two extra payments (Christmas and holiday) each year, foreign companies should also be familiar with certain other benefits that must be provided to employees in Portugal.

Working time in Portugal is generally limited to 8 hours per day and 40 hours per week, and employees are entitled to a minimum of 22 working days of paid annual leave. Portuguese employment legislation includes mandatory premiums and limits for overtime work beyond the 40-hour standard weekly working hours, as well as double pay for working on one of the 13 public holidays. Other statutory premiums and benefits, among others, include:

• Overtime pay: Generally capped at 150-175 hours per year; the premium for the first hour of overtime is 25% of the base hourly wage, with subsequent hours of overtime paid at a premium of 37.5%. Overtime on a rest day or public holiday is paid at a premium of 50%
• Work on public holiday: Paid at a 100% premium.
• Paid sick leave: supported by a medical certificate; from the 4th day onwards, paid by Social Security at a rate of 55%-75% of regular earnings, depending on the duration of the leave.
• Parental leave: 120-180 days of shareable parental leave, also funded by Social Security.
• Family care leave: Up to 30 days for a child under 12; up to 15 days for an older child or another family member.

Additional benefits

Beyond the statutory benefits, supplementary benefits are generally offered by companies as a way to increase employee satisfaction and make compensation packages more attractive. Common competitive benefit packages in Portugal include private health insurance, meal allowances, transportation support, flexible work options and supplementary pension plans. Multinational companies and companies in the technology sector generally offer the most comprehensive packages.

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Calculate employment costs in Portugal

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What hiring in Portugal involves

Portugal offers foreign employers access to skilled and multilingual talent, particularly for technology, digital roles and shared services, with strong international worker experience in a convenient time zone for cross-continent collaboration. While the local labor market highly values job security, employment costs are generally lower than in other EU countries, making Portugal an attractive and cost-competitive hiring market.

The hiring market in summary

Market condition	What an employer needs to know
Talent availability	Strong, particularly for certain sectors. Portuguese workers are fluent in English, internationally experienced and highly professional. French, Spanish and German are also widely spoken.
Top-paying sectors	Technology and digital talent are particularly attractive. Upward pressure on wages in lower-paid sectors due to the government's commitment to increase the minimum wage.
Workplace culture	Workers traditionally value relationships, hierarchy, diplomacy and job stability though the influx of international employers has shifted the focus to flexibility.
Key employer challenge	Correctly planning for Portugal’s 14-month salary structure, mandatory contributions and detailed contract requirements.

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What you should know when hiring expats in Portugal

Beyond its slower pace of life and lower cost of living, Portugal’s Non-Habitual Resident (NHR) Tax Regime is also of particular interest to expats. With the first version of the regime phased out several years ago, NHR 2.0 (also known as Tax Incentive for Scientific Research and Innovation) takes a more restricted approach than the previous scheme.

Mostly focused on highly-qualified professionals and scientific researchers, the restrictions have been put in place to safeguard against the growing housing market crisis in the country. The regime generally offers preferential tax rates on foreign income and a flat rate on locally sourced income for the first 10 years.

Employers in Portugal (including EORs) can only hire individuals with a legal right to work, so they are required to verify the validity of a residence permit or a visa-authorized employment right.

In general, EU/EEA or Swiss nationals can live and work in Portugal without a visa or work permit but for longer stays they must register with the local authorities and obtain a Residence Certificate.

Portugal also offers several routes for work authorizations for non-EU nationals which can be supported by an EOR such as Rivermate, depending on the role and reason for working in Portugal. The process for obtaining them can take up to 3-4 months, particularly in larger cities. They include:

• Standard Work Visa (D1): For employees hired by a Portuguese employer under an employment contract. Long-term residence, with initial validity of up to two years, renewable for up to three more years. The job position must be advertised in Portugal and the EU before being offered to a non-EU national. Can be supported by an EOR.
• Highly Qualified Activity Visa (D3): For highly qualified professionals in roles such as technology, engineering, research and medicine. Certain additional criteria apply including higher education degrees or experience as well as above-average salary offers (around 1.5 times the national average is required). Can generally be supported by an EOR if criteria are fulfilled.
• EU Blue Card: For highly skilled non-EU employees meeting specific qualifications and salary levels (1.5x national average salary) who have a binding job offer in duration of at least one year. A combined work and residence permit providing certain mobility within the EU after the first 18 months. Typically issued for one or two years, the renewable card provides benefits similar to those of domestic nationals. Can generally be supported by an EOR.
• Seasonal Work Visa: For temporary employment in specific sectors such as agriculture, tourism or hospitality. Can potentially be supported through an EOR, under conditions.

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Correctly determining probation periods in Portugal

Probation periods in Portugal vary by contract and employee category and can range from 15 to 240 days. Use the guide below to figure out the maximum probation period allowed by law for different types of contracts:

Contract Type	Role	Maximum Probation Period
Indefinite	Senior management	240 days
Indefinite	Complex or high-responsibility roles	180 days
Indefinite	General employees	90 days
Fixed-term (6+ months)	All roles	30 days
Fixed-term (less than 6 months)	All roles	15 days

During the probation period, both parties can terminate the contract without prior notice unless the contractually-defined period is longer than the statutory one, in which case a notice is required.

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Where compliance can become a challenge in Portugal

Worker misclassification

As in many other countries, using an independent contractor in Portugal is allowed but carries an inherent risk of misclassification. The Authority for Working Conditions and Social Security in Portugal is the monitoring institution which reviews indicators that may determine a relationship to be one of disguised employment. Such indicators include subordination, hierarchy integration, fixed schedule, place of work and use of equipment. In cases where the relationship between a company and a contractor is deemed to be one of employment, back pay of social security contributions and taxes as well as penalties may be due.

Fixed-term contracts

Portugal has stringent requirements around the level of detail that goes into employment contracts. However, unlike in other countries in the region, fixed-term contracts are allowed in Portugal, providing employers more flexibility. However, they must be legally justified and should generally be used only for temporary projects, seasonal work, new ventures or replacing absent employees. The local legislation has strict rules regarding duration and renewal in order to prevent the abuse of fixed-term contracts for permanent roles.

Terminations

Termination requirements depend on how employment ends. Beyond the expiry of a fixed-term contract, parties can also mutually agree on a termination. For unilateral terminations, employees resigning from indefinite-term contracts generally give 30 days’ notice with up to two years’ service and 60 days for longer service. Employer-initiated termination is subject to statutory procedures and requirements and can broadly be divided into cases of termination with cause and termination without cause.

Terminations with cause may include disciplinary incidents, breaches and lack of productivity (if previously given an opportunity to improve), while terminations without cause are only allowed in specific cases. Those may include collective dismissal and dismissal due to elimination of a position. Both termination routes require a structured process with specific steps and notice periods ranging from 15 to 75 days, depending on the employee’s seniority. Certain terminations without cause require the payment of severance as compensation for termination.

In cases where severance is a requirement, it is generally less expensive compared to some countries in the region, with typically half a month’s pay due per year worked. The basis for calculation is the average pay (base salary plus any seniority allowances) received in the last 12 months. A cap on the severance pay is applicable.

Remote work documentation

Remote work in Portugal must be formalized through a written “telework” agreement, either as part of an employment contract or as a separate agreement. Details that must be defined include, among others, the remote work location, the ownership and maintenance of work equipment and any arrangements for in-person contact. Expense coverage should also be documented and the employer must compensate for additional costs due to remote work, such as internet costs or equipment maintenance.

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How an Employer of Record can help you in Portugal

Finding the right candidate in Portugal and negotiating a compliant compensation package is only the first step to hiring in the country. One option is setting up a legal entity in Portugal and navigating immigration procedures, employment laws, and correct payroll processing. However, it can add both time and cost, particularly when hiring only a few employees.

Partnering with an EOR, like Rivermate, can be a better option for international employers. Rivermate hires employees through an existing infrastructure and manages the employment relationship from onboarding through termination based on local expert knowledge. This includes handling payroll, taxes, benefits and ongoing compliance with Portuguese regulations.

For you, as a foreign employer, this changes the hiring experience in Portugal. You can hire compliantly without your own entity and focus on your business while Rivermate handles the local employment administration.

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Ready to hire in Portugal?

Hiring in Portugal involves much more than finding the right candidate. From managing payroll, taxes and benefits to ensuring full compliance with complex Portuguese Labor legislation, Rivermate handles all aspects so that you can hire with confidence.

Talk to a Portugal Hiring Expert

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Sources:

Labor Market Information Portugal (EURES)
Statistics Portugal - Average gross monthly earnings
Portugal taxes on personal income (PwC)
Register as non-habitual resident
Labor Law - Article 112 on probation periods
Labor Law - Articles 263, 264 on duodecimos payments
Law on telework contract requirements