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General Guidelines

Employment terminations agreed between the employer and employee are relatively simple, requiring just a written statement. Employees have seven days from the effective date to revoke the termination agreement unless executed in front of a public notary.

Terminations initiated by employers, on the other hand, are a bit more complicated and require a valid reason, disciplinary procedure and compensation corresponding to 12 days of basic pay and seniority allowances for each year of service.

The employer cannot unilaterally terminate employment without just cause.

Employers must provide employees with a notice period according to the number of years they have been working for the company. The process takes several weeks and, if not done correctly, the dismissal is considered unlawful and void. Reasons for termination include:

A business transfer is only a valid cause for termination by the employee in case such transfer represents serious damage to them.

In cases of disciplinary dismissal, the employer doesn't have to pay compensation for the termination of the employment contract or provide for a notice period. However, they must also always complete the dismissal procedure. The dismissal is in effect once the employer informs the employee of their formal decision to dismiss. This is the last step of the mandatory disciplinary process.

Employment contacts cannot establish different rules on termination, even if they are more beneficial to the employee. They also cannot set out in advance the value of the termination compensation.

Employees are exempt from paying taxes on the compensation they receive, up to the average of their regular taxable 12-month salary multiplied by the years of work. This does not include labour credits paid to the employee when of the termination date (allowances, retribution, etc.) The exemption does not apply for termination payments to directors and board members.

Employers should submit a Declaração de Situação de Desemprego form to the Social Security authorities indicating the reason for termination. Termination by the employer entitles the employee to severance pay where there has been termination for objective reasons.

Procedure guidelines

Employers must ensure to follow a standard and documented disciplinary procedure before terminating an employment contract (if employing ten workers or more). It comprises three stages:

  1. Accusation: the employer supplies a written description to the employee about their wrongdoing and extends a warning about the intention to dismiss
  2. Defence: the employee reviews the disciplinary file, responds to the accusation in writing and requests probative diligences, which the employer cannot refuse (unless an irrelevant or a delaying tactic).
    1. Employee representative bodies may issue a non-binding opinion on the dismissal, which the employer must take into consideration before reaching their decision
  3. Decision: the employer gives a detailed, written dismissal decision (the mandatory content of which depends on the specific procedure for termination)

The contract of employment ends upon receipt of the dismissal decision by the employee. The employee has five days to seek an injunction to suspend the effect of dismissal and 60 days to challenge it in court.

Disciplinary procedures must be initiated within 60 days upon the employer becoming aware of the wrongdoing and, within one year from the moment the offence took place.

If employing less than 10 workers, the formal steps are the same. What changes is the timeline as well as the need to communicate with  Unions and the workers' representatives.

Unfair Dismissal in Portugal

Superior protection against dismissal is extended to pregnant workers, employees who have given birth in the past 120 days, breastfeeding mothers, and those on paternity leave. 

Dismissed employees may file a claim before a labour court to challenge the dismissal. If the court decides that there was any illegal procedure or lack of reasons or formalities for a dismissal, employees are entitled to the salaries which they would have received if the dismissal had not taken place and to an eventual compensation for damages suffered ranging between 15 and 45 days of base salary plus a seniority bonus. They may also choose to be reinstated in the company.

Redundancy Procedure

Employees who are terminated due to collective dismissal or redundancy are entitled to severance. The amount an employee will be paid depends on their seniority within the company.

Collective dismissal happens when:

Collective redundancies are considered dismissal due to termination of a job position when the employer terminates an employment contract and justifies it on said elimination, if due to economic, structural or technological reasons related to the business.

Grounds for collective dismissal include:

Unions or Workers commissions may be involved in both collective dismissals and simple redundancies.

Resignation Procedure in Portugal

For employees who want to leave their jobs, they must inform their employers in a written letter of their desire to resign and respect the notice period, which varies according to how long they have been with the company:

The notice periods depend also on the type of contract:

Employees representing a union, as well as highly technical or executive level professionals may have a notice period of six months, according to their employment contract or collective bargain agreement. Employees who do not comply in whole or in part with the notice period must pay the employer compensation in an amount equal to base pay and seniority pay for the period in question.

If the employee has a just cause reason for resigning, they can include that in their letter and take it to the labour court (not obligatory), requesting compensation (15 to 45 days of base pay plus an extra remuneration for every year of service, minimum 3 months' wage). Just cause reasons are:

Regardless of the reason for resigning, it is an employee's right to get paid for unused annual leave and accrued Christmas pay.

The employee will also be entitled to unemployment subsidy but the amount depends on their salary levels and contributions profile.

Other End of Employment Guidelines in Portugal

Notice period

Notice periods depends on the number of years of service:

Severance

Employees are entitled to compensation calculated in the Labour Code terms, corresponding to 12 days’ salary for every year of work, with the following maximum limits:

Most employees negotiate more time than this, especially in the case of a mass lay-off.

Holiday Leave in Portugal

Employees are entitled to a minimum of 22 working days annual leave every calendar year. They can take their vacation until 30 April of the following year. Portugal has provisions that explicitly forbid employers from offering employees additional pay for forfeiting paid-leave days.

New hires are entitled to 20 days off in the first year working for the company. They incur two days of paid vacation each month and can only use them after six months of work. If the calendar year ends before six months, the vacation days are extended until 30 June the following year. If the employment starts on the first half of the year, the employee is entitled to eight days of vacation after completing 60 workdays.

The employer and employee may agree that:

Public holidays

Employers must give employees paid leave on bank holidays. Work assignments on those days are considered overtime and subject to additional pay. Holidays are observed on the days they fall and do not move to the following workday if they fall on a weekend.

Portugal Public Holiday Calendar 2022

DATEWEEK DAYHOLIDAY
1/1/2022SaturdayNew Year's Day
15/4/2022FridayGood Friday
17/4/2022SundayEaster Sunday
25/4/2022MondayLiberty Day
1/5/2022SaturdayLabour Day
10/6/2022FridayPortugal Day
16/6/2022ThursdayCorpus Christi
15/8/2022MondayAssumption Day
5/10/2022WednesdayRepublic Implantation
1/11/2022TuesdayAll Saints Day
1/12/2022ThursdayRestoration of Independence
8/12/2022ThursdayImmaculate Conception Day
25/12/2022SundayChristmas Day

Types of Leave in Portugal

Sick leave

Employees on sick leave are covered by the Portuguese social security system and can receive benefits for up to 1,095 days. Pay is as follows:

The employer covers the first three days of sickness, paying 89% of the employee wage. 

In some cases, collective labour agreements provide specific rules covering employee illness or injury.

Employees must meet the following conditions for benefit entitlement:

Parental leave

Initial parental allowance

The initial parental allowance is granted to the father or mother for between 120 and 150 consecutive days, equally extended to both.

The period can be taken simultaneously by both. In the case of a lifeless birth, only the 120 days are allowed.

The period may be increased by 30 days if:

If no declaration of sharing is submitted, the mother is entitled to the parental allowance.

Initial parental allowance if one parent is unable to take it

In case of physical or mental incapacity, or death of either parent, the initial parental allowance is granted to the other parent for the remaining period. If that is the case with the mother, the father gets a minimum of 30 days.

Maternity leave

Mothers are eligible for 30 days of maternity leave at full pay by Social Security before a child's birth (optional), and 42 days following the birth (mandatory). If the employee has twins, she's entitled to an additional 30 days.

Paternity leave

Biological and adoptive fathers are entitled to 20 mandatory working days of leave. Five of those have to be taken right after the birth or adoption and the remaining 15 within six weeks. There's an extra five optional workings days (consecutive or not) that can be taken immediately after the mandatory period, provided they are taken after the compulsory 20 working days. The leave is paid for by Social Security.

In the case of twins, each of the periods mentioned above is increased by two days for each child. They have to be taken immediately after each of the periods.

Carer's leave

Employees are entitled to the following carer's leave for ill or injured family members:

Bereavement leave

Employees are entitled to two days of paid bereavement leave but must provide the employer with the required documents.

Work-related injury

Employers are required to take out private insurance to cover employees in case of a work injury. During the first 12 months of disability, the worker receives 70% of their earnings and 75% after that. This benefit is paid until recovery, or permanent disability takes effect.

General Employee Pay Regulations in Portugal

Minimum wage 

Minimum monthly salary is €705.

Frequency

Payroll is monthly with employees receiving 14 salaries. Twelve are for each month of the year, the 13th payment is vacation pay, and the 14th is Christmas pay. Subject to agreement with the employee, half of the 13th and 14th payments can be spread over the 12 payroll payments but must be shown separately on the payslip.

Payday

Pay day is usually on the last working day of the month.

General

Standard hours

Monday to Friday, typically 9 a.m. to 6 p.m., with a one-hour lunch break, or 9 a.m. to 7 p.m. with a two-hour lunch break.

Maximum Working Hours & Overtime Laws in Portugal

Eight hours a day, for a total of 40 hours weekly.

Employers can put in place special flexible working schemes and may extend the work hour limitations to 12 hours daily and 60 hours weekly for a short period. Cases that permit that are:

Whatever the regime of operation, the average working time cannot exceed 48 hours (including overtime) per week. 

Opt-out

Employees may opt-out of working-time upper limits and choose to be paid extra instead. Employees in management roles have the option of waiving the right to receive an additional wage.

Overtime compensation

Overtime can only be provided when the company has to cope with a possible and transitory increase in work, and the admission of a worker is not justified overtime may also be provided in case of force majeure or when it is indispensable to prevent or repair severe damage to the company or its viability.

Employees must do overtime work if requested unless they ask to be exempted for extenuating reasons.

Employees working over the maximum hours daily or weekly must receive the following overtime compensation:

Employees can opt-out of overtime compensation and must do so in writing. 

Overtime should not exceed two hours daily (for a maximum of 48 weekly) or 150 hours yearly for employees at companies with 50+ employees and 175 hours for companies with fewer than 50 employees. The limit per year increases to 200 annually if within a collective labour agreement or for force majeure reasons.

Break rights

Employees are entitled rest periods of at least one hour and cannot work longer than five consecutive hours. EThey are also entitled to at least 11 consecutive hours of daily rest and at least 24 hours of uninterrupted weekly rest.

Night workers

An employee is considered a night worker when they work at least three hours of their typical shift between 10 p.m. and 7 a.m. the next day. The maximum night work shift is 8 hours.

The remuneration for night shift work is 25% higher than the daytime shift. It may be offset by collective regulation, by an equivalent reduction in the standard working period, or by a fixed increase in basic remuneration, provided that this does not represent a less favourable form of treatment for the employee.

Employee Time Tracking Obligations in Portugal

Employers must keep records of employee working time, even for employees exempt from working hours. They can track it either automatically or manually and should store the records in an accessible place to allow immediate consultation. This will enable labour authorities to check the work performed, per employee, per day.

On May 14 2019, the European Court of Justice (ECJ) created a law that requires employers in every EU member country to set up an objective, reliable and accessible system to time track employees' working hours. The implementation of such systems and the form they take is up to the member states to determine. The objective is to control how many employees work overtime and the state of their health, and to make sure they are paid accordingly, while not exceeding the maximum hours worked. 

The employer may leave time-tracking to the employee. However, if an employer notices that this does not work, they must intervene.

Penalties

Violation of this provision may constitute a grave offence.

As for the new ECJ ruling, it remains to be seen whether further and stricter sanctions will be imposed in the future if employers do not introduce a working time recording system.

General Guidelines

In Portugal, telework or remote work is defined as work performed under a regime of legal subordination, in a place not determined by the employer, through the use of information and communication technologies, including work done in a mixed/hybrid regime, where telework and on-site work are alternated. It requires a written agreement between the employer and employee and a teleworking contract outlining the remote work clauses and policies. This can also be directly added to the employment contract.

Employees with young children and ones who are victims of domestic violence have the right to telework, given that the job performed and resources available allow so.

For employees who are already employed and changing their work location from an office to their home, the teleworking agreement can be entered into for a fixed or indefinite period of time. If it's for a fixed term, it cannot exceed 6 months and will be automatically renewed for equal periods, as long as neither of the parties asks it's not renewed up to 15 days before the expiry. If the agreement has an indefinite duration, any of the parties may terminate it by written notice, which takes effect after 60 days. Either party can end the new arrangement within the first 30 days. When the teleworking contract ends, the worker resumes the work previously agreed upon.

Working from Home Policy in Portugal

For employees to be allowed to work from home, there needs to be a written telework contract containing the following details:

Employers have the following obligations:

Employees have the following obligations:

If the proposal for a telework agreement comes from the employer, the employee's opposition does not have to be justified, and the refusal cannot constitute grounds for dismissal or the application of any sanction.


In the event that the activity agreed with the employee is, by the way it is integrated in the functioning of the company, and taking into account the resources available to it, compatible with the telework regime, the proposal of agreement made by the employee may only be refused by the employer in writing and with an indication of the reasons for the refusal.

The employer may define, by publicized internal regulations, and in compliance with the General Data Protection Regulation, approved by Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, the activities and the conditions under which the adoption of telework in the company may be accepted by it.

Health & safety at home

Employers have the same health and safety responsibilities to the employees working remotely as they do to those working from the office. There's a particular emphasis on the employee's mental welfare, and an obligation for employers to avoid remote workers' isolation. Employees are entitled to regular health and eye exams and appropriate equipment to protect their eyes.

Employers must conduct a risk assessment and prevention, and inform employees of risks they might be exposed to when working from home. Due to the limitations of access to the employee's home office, they must comply with the health and safety provisions and instructions. They have to inform their employer of an accident immediately.

Employees working from home are protected against work-related accidents and illness. The worker's compensation insurance that applies to the office premises is extended to remote workers. It requires that the company communicates the telework arrangements to the insurance provider, including the employee's address, which needs to be included in the insurance policy.

Security of information

Companies are responsible for ensuring they have sufficient data security and data protection practices for homeworking, protecting their data and personal information. The same level of security applied at an office should be applied in a remote environment. Companies should provide employees with a company computer if an employee's personal computer imposes information confidentiality risks. Employees must also ensure information confidentiality, preventing potential threats, such as leaving the equipment unattended in public places.

The application of any sanction to employees for the use of equipment and systems beyond the needs of the service, when such use is not expressly conditioned under the terms of the internal regulations or under the terms of the telework agreement, constitutes a serious administrative offence.

Best practices to ensure security include:

Workspace Guidelines in Portugal

Employers must take all reasonable steps to ensure the employee's workstation is correctly set up, safe, comfortable and easy to use to reduce potential injuries as indicated in the health and safety measures. In turn, employees must care for their health and safety and follow any reasonable policies or directions their employer gives them.

An appropriate workstation will include the following:

Working conditions

Employees working from home have the same rights and duties as those working from the office. Remote employees should not be impacted with limitations to their career, promotions and professional training. Health & Safety Safety at work, protection in the context of accidents at work and occupational diseases and regular working hours must also be respected.

Employers are not allowed to use remote surveillance through a computer application or any other means to control their performance. Surveillance is only accepted if the purpose is to protect and secure people and goods or when particular requirements inherent to the activity's nature justify it, and National Data Protection Commission must approve it. Furthermore, the employer must inform the employee about the existence and purpose of the surveillance means used. Tracking an employee's time on a task, websites accessed, the employee's real-time location, forcing an employee to use their camera during calls or capturing photos of the employee's screen are forbidden.

Visit to the workplace can only take place during working hours and requires the agreement of the employee and prior notice at least 24 hours in advance.

Recommendations for employees working from home:

Terms & Conditions of Employment in Portugal

Probation period

Probationary periods are typically 90 days but can be extended to 180 days for highly technical positions or carry a high degree of responsibility. For senior executives and managers, the probationary period may be extended to a maximum of 240 days.

General Employee Rights in Portugal

Employment agreement

Generally, Portuguese employment contracts do not need to be in writing. However, for some types of arrangements (fixed-term, part-time, and secondment contracts, as well as agreements with foreign employees) the law requires a written document.

Within 60 days from the start of the employment, the employer has to inform the employee in writing about working conditions that include: 

Restrictive covenants are not enforceable under Portuguese labour law, and non-compete agreements or clauses are enforceable only if the activity of the employee is likely to cause harm to the employer. Payment of a non-competition compensation amount should be agreed in advance and complied with.

Payslip

Employees are entitled to receive a monthly payslip from their employer (either hard copy or online) with details of their remuneration. The employer must keep payroll reports for at least five years and may be audited.

Working environment

Employees in Portugal have the right to work in healthy, safe and hygienic conditions, which must be guaranteed by the employer. The employer must comply with the preventative principles, guidelines and rules relating to safety, hygiene and health at work. 

Employers are obliged to ensure:

Each employee is entitled to a work accident risks insurance. The employer sets that up and informs the relevant regional service of the Authority for Working Conditions (ACT- Autoridade para as Condições do Trabalho).

The employer must implement appropriate company healthy and safety (H&S) activity at work. This includes organising and keeping appropriate H&S services and other preventive measures, like ensuring risk exposure assessments and the performance of tests and other actions on occupational risks and health monitoring.

The employer must have an internal structure that provides for:

Home Offices

Employees working from home have the same right to a healthy and safe environment, which their employer should provide. Employers are responsible for the installation, maintenance, and costs associated with home offices, such as workstation and tools.

Employees should make sure they work from an appropriate, safe and comfortable workstation that includes an ergonomic chair, footrest, elevated computer screen to meet the eyes, suitable light avoiding glares, a room exit without obstructions and cables, which are covered.

Regardless if working from home or the office, employees are entitled to regular health and eye exams, as well as appropriate equipment to protect their eyes.

Rights during pregnancy

Pregnant employees who have recently given birth and/or are breastfeeding are entitled to:

The daily amount of the allowances is 65% of the reference salary if the employer is unable to assign the employee other tasks. An employee who has been relieved of night work must be granted a compatible daytime work schedule whenever possible. If that is not possible, they must be relieved from work.

Violation of the provisions on parenthood constitutes a misdemeanour with the Labour Conditions Authority (ACT) acting in the private sector and the Ministries' Inspections in the public sector and cumulatively the General Inspection of Finance (IGF).

Employee Protections in Portugal

Protection from harassment

Employees are protected from any form of harassment during hiring or employment. Harassment is seen as any undesirable behaviour that either intends to or directly affects the person's dignity, as well as creates an intimidating, hostile, degrading, humiliating or destabilising atmosphere.

Particular attention is placed on extending protections from any form of sexual harassment. That is seen as any undesirable behaviour of sexual nature, whether verbal, non-verbal or physical, that has harassment as its purpose or result.

A candidate or employee can take a civil action to seek compensation for any act of harassment under the Portuguese Civil Code. In addition, the employer can be subject to an administrative proceeding and be fined.

Protection from discrimination

According to the Portuguese Labour Code, an employer cannot discriminate, directly or indirectly, based on:

A candidate or employee who has been a victim of discrimination will have to indicate who the individual/s that have discriminated them are. In turn, if any differences in the employee's working conditions are present, the employer will have to prove that they didn't result from discrimination and give an explanation. The protection against discrimination covers all parts of the employment contract - from hiring to training and promotion, and extend to work conditions, pay and termination. Employees who have been discriminated against are entitled to compensation for any damages.

Protection in the case of a business transfer

If the company undergoes a business transfer, existing employment contracts transfer automatically to the new employer. Employees retain the length of service provided to the former employer, which must be recognised by the new employer.

The employee retains the former employer's rights and obligations under the employment contract before the transfer. The employee has to agree to any changes to the terms and conditions of employment. 

Employees are protected against dismissal before and after a business transfer. However, if the employee refuses to perform work for the new employer, they are in breach of contract and could be dismissed. The only exception is if the new employer is not providing them with work, which gives employees the ability to resign with just cause and claim compensation.

Protection against dismissal

Pregnant workers, those given birth in the previous 120 days or ones breastfeeding, as well as employees on paternity leave, are protected from being dismissed.

In all other cases, employers must follow a standard and documented disciplinary procedure before terminating an employment contract, first informing the employee, giving them a chance to defend themselves to then issuing a dismissal decision letter.

Protection during pregnancy

Pregnant employees whose work duties might put the pregnancy at risk have the right to an alternate arrangement for work. The employer must:

Alongside the above, pregnant employees are also exempt from having to work night shifts, overtime or in concentrated working schedules. They also have the right to work leave to attend prenatal medical appointments, as well as breastfeed.

Personal information protection

The Portuguese Labour Code contains several provisions regarding employee's right to privacy, including data protection, biometric data, medical test and exams, remote surveillance and correspondence, and access to information using the company's means of communication.

Personal data of employees in Portugal is protected by the EU General Data Protection Regulation (GDPR). Under GDPR, employers must comply with the following principles when handling the personal data of employees:

Organisations should have a Privacy Statement, which employees can easily access explaining what data is held and what it is used for. Since employees are allowed to access their data, employers need to have in place a procedure for how these requests are handled within one month. 

Under GDPR legislation, employees have the right to:

Required Employee Benefits in Portugal

Professional training

Each year, employees have a right to receive a minimum of 40 hours of learning to enhance professional growth and relevance in their field. If hired on a fixed-term contract, employees are entitled to a minimum number of hours proportional to their agreement.

The employer may provide this annual training for up to two years in advance, or defer it, as long as the training plan so establishes. The employer must provide training to at least 10% of the company's employees each year.

Employees may use the hours of professional training not provided by the employer to attend professional training at their initiative (including during working hours). At the end of the training, the employee must receive a certificate. Depending on the type of training, the certificate may need to be added to the National System of Qualification (Caderneta Individual de Competências nos termos do regime jurídico do Sistema Nacional de Qualificações).

If an employer terminates an employment contract for whatever reason, they have to pay compensation for the number of missing training hours.

Christmas and holidays subsidies

In Portugal, annual salaries are divided into 14 payments instead of the standard 12. The extra two salaries are provided as a Christmas bonus paid by the 15th of December and a holiday bonus paid before the employee's annual leave (usually June).

Employers need to sign a written agreement with each employee stating that 50% of the Christmas and Holiday allowances will be paid in 12 times, along with the monthly retribution. The remaining 50% will still be due on the dates stated in the paragraph above. It is not possible to include the allowances 100% in the 12 months retributions.

Unemployment benefits

Workers who have contributed to social security are entitled to one of three kinds of unemployment benefits due to the involuntary loss of employment (initiated by the employer):

Unemployment benefits can be awarded for between 9 and 38 months, depending on the employee's age and the number of years they have worked and made social security contributions. To be eligible for unemployment benefit, an individual must have either worked at least 365 days consecutively or made voluntary contributions for two years. Those who are eligible will receive 65% of their average earnings for the first 180 days.

To qualify, the worker must meet the following conditions:

The social unemployment benefit comes into place if the individual doesn't meet the 365 days of work requirement. In that case, they can avail of the social unemployment benefit if they have worked 180 days in the past 12 months. The benefit is also awarded, at a later date, to people who are still unemployed when the period for payment of the unemployment benefit expires.

Partial unemployment benefit, on the other hand, is awarded if the individual has managed to find a part-time job after losing their full-time employment. It's paid from the time the part-time job begins until the end of the period during which the individual was entitled the full unemployment benefit. It corresponds to the difference between the unemployment benefit the employee was receiving plus 35%, and the pay for the new part-time job.

Dismissal during the trial period:

Redundancy payment

Employees who are terminated due to collective dismissal or redundancy are entitled to severance. The amount an employee will be paid depends on their seniority within the company.

Since 2011, severance entitlements have been reduced from 30 to 20 days of pay per year of service. The current severance maximum in place since 2013, is either 12 times the employee salary and seniority pay or 240 times the statutory minimum wage. In case of a fixed-term or temporary contract this is increased to 18 times the employee's salary and seniority pay. This means that when calculating severance, whether the employment existed before 2013 or 2011 respectively will impact the amount. The compensation can not exceed 20 times the minimum national monthly wage (€700 as of November 2019). 

The Compensation Fund (Fundo de Compensação do Trabalho) and the Guarantee Fund for Work Compensation (Fundo de Garantia de Compensação do Trabalho - FGCT) can be used to finance severance payments partly and is applicable in situations of both individual and collective dismissals.

Justified absences

Employees have the right to be absent from work for the following reasons:

These days are fully paid and come on top of the holiday entitlement. They are topped at 30 days per year.

To learn about all statutory benefits, as well as how leading employers top that, download our Portugal benefits benchmark infographic.

Job Security

Union

Although not mandatory, employees have the right to set up work councils.

Mandatory Employee Benefits in Portugal

Christmas and holiday subsidies

In Portugal, annual salaries are divided into 14 payments instead of the standard 12. The extra two salaries are provided as a Christmas bonus paid by the 15th of December and a holiday bonus paid before the employee's annual leave (usually June).

Employers need to sign a written agreement with each employee stating that 50% of the Christmas and Holiday allowances will be paid in 12 times, along with the monthly retribution. The remaining 50% will still be due on the dates stated in the paragraph above. It is not possible to include the allowances 100% in the 12 months retributions.

Basic insurance by the national system

Employees in Portugal contributing to social security are covered for basic insurance by the government. This includes healthcare, pension fund, unemployment aid and paid parental leave.

Wage guarantee fund

Employers are obliged to contribute monthly 1% of an employee's gross income to the Working Compensation Fund (Fundo de Compensação do Trabalho) and the Working Compensation Warranty Fund (Fundo de Garantia de Compensação do Trabalho). This protects employees from the risk of not receiving their salary in case the employer defaults.

Workers compensation insurance

All employees must be covered for accidents at work and on the way to and from work. Coverage insures employees with a temporary, permanent or partial disability or their families in case of death, including funeral grant, spouse or orphan's pension.

Non-Mandatory Employee Benefits in Portugal

Most common non-mandatory benefits in Portugal.

Meal vouchers

It is common to offer meal vouchers or lunch cards to employees. Meal allowances are tax-free up to €4.77 daily if paid in cash and €7.63 if paid through lunch tickets.

Public transportation allowance

Some companies offer monthly transportation allowance to and from work to employees.

Supplementary pension

Some companies offer private pension plans to employees.

Supplementary health & life insurance

Some employers offer supplementary health and life insurance to senior-level executives. Smaller companies usually provide an allowance in lieu of arranging insurance.

Commission

Depending on the nature of the job, some employees receive a cash bonus when fulfilling goals, quotas or targets. Same is valid for seniority bonuses.

Flexible working hours

Most tech companies offer flexible working hours to employees to accommodate their productivity.

Phone bills

Some companies offer smartphones to employees and cover the cost of their monthly phone plan. 

Hardware

Tech companies usually allow employees to select work equipment of their choice. 

Business travel allowance

For jobs that require business travel, companies usually offer a tax-free daily allowance of €50.20 (€69.19 for members of the board) for trips within Portugal and €89.35 (€100.24 for members of the board) for international trips.

Gym membership

Companies in the tech space usually offer gym membership or gym discounts to their employees.

Calculate the costs of hiring in Portugal

Learn more about benefits in Portugal

Employer Contributions in Portugal

Employers are responsible for deducting employees' contributions from their gross wage and transferring it monthly to the Social Security Administration.

Social insurance

Employers contribute 23.75% of the employee's gross income to social security (22.3% for nonprofit companies).

Other contributions

*Bonuses, allowances and 13th & 14th salaries are not subject to this contribution.

Contributions to the Working Compensation Fund (Fundo de Compensação do Trabalho) and the Working Compensation Warranty Fund (Fundo de Garantia de Compensação do Trabalho) are mandatory in order to protect employees in case of company insolvency or if the employer has difficulties paying salaries.

Employee Contributions in Portugal

Portuguese residents pay tax on their worldwide income, while non-residents are subject only to tax on their income generated in the country. To be considered a resident, the individual must spend more than 183 days a year in Portugal or have an abode in Portugal which they use as their permanent residence in any day of the year.

Income tax

The Portuguese income tax rates are generally progressive and vary according to the employee's situation involving marital status, number of children or dependent people and spouse's income.

Non-residents usually pay a 28% flat tax rate.

Portuguese income tax 2020

GROSS INCOMEPROGRESSIVE TAX RATE 
Up to €7,11214.5%
€7,112 - €10,73223%
€10,732 - €20,32228.5%
€20,322 - €25,07535%
€25,075 - €36,96737%
€36,967 - €80,88245%
More than €80,88248%

Solidarity charge

Residents earning more than €80,882 a year, pay a progressive solidarity tax which starts at 2.5% and goes up to 5% for income of €250,000 and above.

Social insurance

The general tax rate for employee’s social security contributions is 11%, which is deducted from their gross earnings.

Social Security benefits include sick leave, birth and adoption, disability, retirement, unemployment, death and work-related accidents or illness. It only applies to Portuguese nationals, qualifying European Union nationals, and those legally resident in Portugal as well as their spouses and dependents.

All individuals covered by social security also have healthcare benefits. Social security benefits are administered by the Social Security Institute (Instituto da Solidariedade e da Segurança Social), while healthcare benefits are mandated by the Ministry of Health (Ministério de Saúde)

Non-habitual tax regime

Created to incentivise high-value industries to operate in Portugal, non-habitual residents pay a flat 20% income tax rate for ten years on salaries earned in Portugal (other benefits apply on foreign income). Eligible employees must not have been a resident of Portugal in the previous five years and should perform high added value functions (generally scientific, artistic or technical).

Overview

CURRENCY
€ Euro
WORKING HOURS
40 hours / week.
PUBLIC/BANK HOLIDAYS
13 days per year
CAPITAL
Lisbon
LANGUAGE
Portuguese
REMOTE WORKERS
293,400
MINIMUM MONTHLY SALARY
€822.50
TAX YEAR
1st Jan - 31st Dec
DATE FORMAT
DD / MM / YYYY
MISCLASSIFICATION PENALTIES
Fines between €2,040 and €9,690 plus retroactive social security contribution and risk of director's personal liability for each employee misclassification.
FUN FACT
Portugal has a set list of approved names that parents can give their children.
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