Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Portuguese and use the Euro currency (EUR).
Working Hours
The standard working hours in Portugal are 40 hours per week, 8 hours per day.
The maximum weekly and daily working hours can differ as stipulated in employment contract /collective bargaining agreements.
Overtime
The first 100 overtime hours are paid at a rate of:
- 125% salary for the first hour on week days.
- 137.5% salary for additional hours on week days.
- 150% salary on weekends public holidays.
Above 100 overtime hours are paid at a rate of:
- 150% salary for the first hour on week days.
- 175% salary for additional hours on week days.
- 200% salary on weekends and public holidays.
Public Holidays
In addition to the 13 national holidays listed below, each one of the 308 municipalities (counties) has its own regional or local municipal public holiday. Workers are entitled to take off the local holiday that corresponds to their place of work; the holiday date should be verified through the local authority.
Public holidays that fall on the weekend are usually lost.
For the year 2024:
- Jan 1 – Monday: New Year’s Day
- Mar 29 – Friday: Good Friday
- Mar 31 – Sunday: Easter Sunday
- Apr 25 – Thursday: Liberation Day
- May 1 – Wednesday: Labour Day
- May 30 – Thursday: Corpus Christi
- Jun 10 – Monday: National Day
- Aug 15 – Thursday: Assumption Day
- Oct 5 – Saturday: Republic Day
- Nov 1 – Friday: All Saints’ Day
- Dec 1 – Sunday: Independence Restoration Day
- Dec 8 – Sunday: Immaculate Conception
- Dec 25 – Wednesday: Christmas Day
Annual Leave (vacation)
Annual paid leave is a minimum of 22 working days, following completion of 1-year service. During the first year of employment, an employee is entitled to 20 days of leave, accumulated as two days per month.
The leave can be carried forward into the next year but must be used by 30th April; however, within the same calendar year there may not be more than 30 days of holiday taken.
Sick Days
The first 3 days of sickness are unpaid. The worker can issue a self-declaration of sickness and communicate it to the employer. From day 4 onwards, the sick leave is paid for by the Social Security Institute.
To be entitled to receive a sickness benefit from the 4th day, the employee must be duly certified by a doctor as temporarily unable to work and have a completed employment service of at least six calendar months, consecutive or otherwise. The daily benefit is calculated by applying a percentage to the employee’s reference remuneration. This percentage varies according to the duration and nature of the illness:
- if the illness lasts for up to 30 days, the employee is entitled to 55% of the reference remuneration
- if the illness lasts between 31 and 90 days, the employee is entitled to 60% of the reference remuneration
- if the illness lasts between 91 to 365 days, the employee is entitled to 70% of the reference remuneration
- if the illness lasts more than 365 days, the employee is entitled to 75% of the reference remuneration
The period for which the benefit is granted depends on the duration of the illness and is also subject to the following maximum periods:
- up to 1,095 days in the case of employed workers, seafarers, and coastguard
- up to 365 days in the case of the self-employed and scientific research grant holders
Maternity and Paternity
Maternity Leave
Expectant mothers are entitled to 100% of their usual salary rate excluded from Social Security and tax contributions, paid directly by Social Security for 120 days.
For an employee to be eligible, they must have been employed for at least 80 days of the preceding 12 months before the expected due date.
Parental leave is granted for the birth of a child under Portuguese law. This may be shared between both parents in which case the total parental leave period may be 180 days and paid at 83.00% of the usual salary rate of pay. The mother is entitled to 30 days of parental leave before delivery and a minimum of six weeks following the birth.
Paternity Leave
Fathers can take paternity leave of up to 28 working days. At least 5 consecutive days must be taken within the 42 days following the child’s birth. The leave can be taken as a single period or in a series of days. After taking 28 days, the father is also eligible to take an additional 7 days leave, which must be partly used at the same time that the mother is on maternity leave.
This leave is paid by Social Security at 100% of the employee’s average salary in the last six months, exempt from Social Security and Tax contributions.
Parental Leave
After the required six weeks of maternity leave and 28 days of paternity leave, the couple can decide who takes the next 78 or 108 days. If the couple takes a total of 150 days, the leave is 80% paid, and if they choose 120 days, they will receive 100%.
Other Leave
Marriage Leave – employees are entitled to 15 consecutive days of paid leave when getting married.
Bereavement Leave – employees are entitled to up to 5 consecutive days of paid leave in the case of a family bereavement.
Urgent and Essential Care leave – employees are also entitled to 30 days of paid leave per year to provide urgent and essential care for a family member younger than 12 and 15 days for an older family member.
Employee Severance and Terminations
Termination Process
Termination of employment by the employer unilaterally must be done with just cause, which can be either objective (economic-based) or subjective (disciplinary based). When disciplinary based, there should be a hearing to which the worker is entitled to reply in writing and may ask for a witness hearing, before being informed of the final decision from the employer.
If a termination is deemed to be unlawful, the worker could claim job reinstatement or monetary compensation as ruled by a court, typically between 15-45 days of base remuneration plus seniority payments per each complete year of service.
Notice Period
Notice periods in Portugal are generally stipulated within the Employment Contract/Collective Agreement and are linked to the employee’s length of service.
The statutory notice period for both employer termination and workers resignation is:
Indefinite Term/Open ended employment contracts
- 30 days’ notice when the contract lasts up to 2 years.
- 60 days’ notice when the contract lasts more than 2 years.
Fixed Term (certain or uncertain) employment contracts
- 15 days’ notice when the contract lasts up to 6 months.
- 30 days’ notice when the contract lasts more than 6 months.
- 8 days’ notice should be given when the employment contract approaches its full expiry date.
During the trial/probation period
- A Worker can terminate the employment contract without prior notice and without justifying cause just by informing the employer of intention to terminate.
- The Employer can terminate the employment contract without just cause or the right to compensate by providing a notice period of 7 days where the trial period lasted more than 60 days and a notice period of 30 days where the trial period lasted more than 120 days.
Severance Pay
For both indefinite or fixed term contracts, fair dismissal based on objective grounds (i.e. redundancy) or dismissal due to unsuitability for the job results in a required severance payment. Indefinite Term contracts require a payout of 12-18 days’ salary per year of service, capped at 240 times the national minimum monthly wage. Fixed Term contracts require a payout of 24 days of base salary and seniority allowances per year of service.
Higher severance payments may be agreed upon and are a typical way to avoid litigation. Severance might also be required for dismissals that occur during the 91st to 180th day of the probation period.
Probation Period
Portugal’s probation period for permanent employees is 90 days, 180 days for high technical/complexity roles, and 240 days for management, directorate, and equivalent responsibility roles.
For fixed term contracts the probation period is set to 15 days when the contract is agreed for an expected or fixed duration shorter than 6 months and 30 days probation for contracts with a duration equal to or longer than 6 months.
Payroll Cycle
The payroll cycle in Portugal is generally a monthly cycle, with wages paid before the last day of each month.
The National Minimum Wage in Portugal is 820EUR per month, based on a 14-months calculation.
For the autonomous region of Azores, the minimum wage per 2024 is 861 EUR.
13th Salary
There are mandatory 13th and 14th salary payments in Portugal, which are paid out in June (for holidays) and December (for Christmas), or can be paid within the 12 regular salaries.
Contributions
Employer Payroll Contributions
| Contribution Type | Rate |
|---|---|
| Social Security | 23.75% |
| Labor Accident Insurance | 1.75% |
| WGF (Wage Guarantee Fund) | 1.00% |
| Total Employment Cost | 26.50% |
Employee Payroll Contributions
| Contribution Type | Rate |
|---|---|
| Social Security | 11.00% |
| Total Employee Cost | 11.00% |
Employee Income Tax
| Income Bracket (EUR) | Tax Rate |
|---|---|
| Up to 7,703 | 13.25% |
| 7,703.01 to 11,623 | 18.00% |
| 11,623.01 to 16,472 | 23.00% |
| 16,472.01 to 21,321 | 26.00% |
| 21,321.01 to 27,146 | 32.75% |
| 27,146.01 to 39,791 | 37.00% |
| 39,791.01 to 51,997 | 43.50% |
| 51,997.01 to 81,199 | 45.00% |
| 81,199.01 and above | 48.00% |
Solidarity Surcharge
| Income Threshold (EUR) | Surcharge Rate |
|---|---|
| 80,000 to 250,000 | 2.50% |
| Above 250,000 | 5.00% |
Non-Habitual Resident tax (for expats)
The Non-Habitual Resident (NHR) tax regime is available for workers who have not been deemed resident on Portuguese territory during the 5 years prior to the year they intend to change residence to Portugal and who perform an activity considered as high added value of a scientific, artistic or technical nature (from a predetermined official list of activities). The net income from employment obtained in Portugal by non-habitual residents shall be taxed at 20% (flat rate). The non-habitual resident acquires the right to be taxed as a non-habitual resident for the period of 10 consecutive years. A tax residence certificate and proof of tax paid abroad are required. Having documents proving tax residency in previous years is crucial.
VISA
Any foreigners coming to work in Portugal for longer than six months need a Residence Certificate (Certificado de Registo). Most non-EU nationals will also need a Portuguese work permit before they can undertake employment in Portugal. In most cases, a Portuguese work permit is only granted when a job offer is confirmed, and once approved, they can continue the process of obtaining a Portuguese work visa or residence permit. After five years of residence in Portugal, you can claim Portuguese permanent residence, and after six years, Portuguese citizenship.
Portugal has quotas to limit the number of jobs that go to third-country nationals to improve employment opportunities for EU nationals. Most jobs need to be advertised to Portuguese and EU/EFTA citizens for 30 days before the Institute for Employment and Vocational Training in Portugal (IEFP) will classify them as jobs that non-EU employees can freely fill.
Remote Work
Remote working set ups are possible but there must be a written agreement in place to enact this remote work set up. In companies where there are 10 or more workers, employees with children up to 8 years old are entitled to work under a remote work regime (providing there is job and employer agreement). Employers must legally refrain from contacting employees during their rest period, except in cases of force majeure. This might include not contacting workers by phone, text or possibly even email. Work from home allowance is mandatory at a rate of 1 Euro per day worked, up to 22 EUR per month is exempt from tax.
VAT
The standard rates of VAT in Portugal are 23.00% in Continental Portugal, in Azores, it is 18.00% and in Madeira, it is 22.00%