Employer of Record in Portugal

Businesses can only operate smoothly in Portugal if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Portugal below, to avoid any compliance issues.

Employment Contract Requirements

In Portugal, a written employment contract is legally mandated, specifying details such as:

• Employee's professional category
• Working hours
• Place of work
• Remuneration details

Onboarding Process

We can help you get a new employee started in Portugal quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Portugal

In Portugal, the probationary period for permanent employees spans 90 days. However, for roles with high technical or complexity requirements, this period extends to 180 days. Management, directorate, and equivalent responsibility roles have a probationary period of 240 days.

• For fixed-term contracts, the probation period is 15 days when the contract is anticipated to last less than 6 months.
• If the contract duration is equal to or longer than 6 months, the probationary period extends to 30 days.

In Portugal, employers must comply with strict labor laws regulating working hours and overtime. Full-time employees are limited to 8 hours per day and 40 hours per week, with mandatory rest periods, including an 11-hour daily rest break and meal breaks after five consecutive hours of work. Certain industries, such as healthcare and emergency services, have specific exceptions, often governed by collective agreements. Managerial and exempt employees may have flexible working arrangements but must still adhere to reasonable working time limits.

Overtime is allowed under specific conditions, with a maximum of 2 extra hours per day and an annual limit ranging from 150 to 200 hours, depending on company size and agreements. Overtime compensation varies: on weekdays, employees receive 125% for the first hour and 137.5% for subsequent hours, while work on rest days and public holidays is paid at 150% of the regular hourly rate. Alternatively, employees may opt for compensatory rest. Employers who violate these regulations risk penalties, including fines and legal sanctions. Adhering to these labor laws is essential to maintain compliance and workforce satisfaction.

As of 2025, the national minimum wage is set at €870 per month, with slightly higher rates in Madeira (€915) and the Azores (€913.50).

These rates apply to full-time employees, while part-time workers receive proportional wages. Interns and trainees may have different entitlements depending on their program structure. Expatriates are generally subject to the same minimum wage laws as local employees. The Portuguese government continues to increase wages to improve living standards, with a commitment to reaching €1,020 per month by 2028. Employers in Portugal must stay informed about the latest minimum wage regulations to ensure compliance and fair compensation.

Employers in Portugal must navigate a structured system of payroll taxes, including income tax withholding, social security contributions, and levies such as the Work Compensation Fund. The progressive income tax rates (ranging from 14.5% to 48%) and mandatory contributions (11% for employees and 23.75% for employers) are critical for compliance. Adhering to deadlines, such as the 20th of the following month for most submissions, is essential to avoid penalties.

Leveraging payroll management software can significantly streamline the calculation, payment, and reporting of these taxes, helping employers consolidate payroll data and maintain compliance with Portuguese regulations.

In Portugal, work permits and visas are essential for employers hiring foreign workers from non-EU/EEA countries. The process involves obtaining a job offer, submitting applications, and meeting specific eligibility criteria. The key visa types include the Short-Term Work Visa for assignments up to 90 days, the Temporary Residence Visa for Work for stays longer than 90 days, the Highly Qualified Activity (Tech Visa) for skilled professionals, and the EU Blue Card for highly qualified workers. Additionally, Portugal offers a Digital Nomad Visa for remote workers. Employers must ensure compliance with Portuguese immigration laws and provide the necessary documentation when sponsoring foreign employees.

Mandatory Leave Entitlement in Portugal

The annual leave entitlement in Portugal is 22 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Portugal

In Portugal, there's no substitute holiday system, but it's usual to have extended weekends, giving employees longer breaks without using vacation days. Some mandatory holidays may be observed on the following Monday if specified by official legislation. This allows for more flexibility and a better work-life balance.

Paid Time Off in Portugal

Employees in Portugal are entitled to a minimum of 22 paid vacation days per year. During their first year at the company, employees receive two days of leave for each month worked. However, this accrual is capped at 20 days within the initial year, and it begins after completing six months of service.

Maternity Leave In Portugal

Expectant mothers in Portugal who meet eligibility criteria are entitled to 100% of their regular salary, covered by Social Security, for a period of 120 days. To be eligible, an employee must have been employed for a minimum of 80 days within the preceding 12 months before the expected due date. Included in the above, the mother is granted a maximum of 30 voluntary days prior to the birth and 42 days compulsory leave after the birth.

Paternity Leave In Portugal

Fathers are entitled a paternity leave lasting 28 days within the 42 days following the birth of their child. Seven of these days must be taken consecutively immediately after the birth. After completing the initial leave, fathers are still entitled to an additional seven days of leave. These seven days can be taken concurrently with the mother's initial parental leave.

Sick Leave In Portugal

In Portugal, the first three days of sickness are unpaid. After that, if the illness lasts:

• Up to 30 days: 55% of the salary is paid.
• Between 31 and 90 days: 60% of the salary is paid.
• Between 91 and 365 days: 70% of the salary is paid.
• More than 365 days: 75% of the salary is paid.
• To qualify for these payments, the employee needs a doctor's certification and at least six months of employment. The first three days are self-declared to the employer, and from the fourth day onwards, Social Security covers the payments.

Parental Leave In Portugal

In Portugal, after the initial six weeks of maternity leave and 28 days of paternity leave, the couple can decide how to use the next 78 or 108 days. If they take a total of 150 days, they receive 80.00% of their usual pay, and for 120 days, they get 100.00% of their regular salary.

Marriage Leave

In the case of an employee getting married, they are entitled to 15 consecutive days of paid leave.

Care Leave

Employees have the right to 30 days of paid leave per year for providing urgent and essential care for a family member under the age of 12. They are also entitled to 15 days of paid leave for providing care to an older family member.

Family Bereavement

Employees are entitled to 20 days' bereavement leave in the case of the death of a spouse, and 5 days' bereavement leave in the case of the death of a parent.

Employers in Portugal are mandated to provide benefits such as social security contributions, annual leave, public holidays, maternity and paternity leave, sick leave, workers' compensation insurance, and meal allowances. To attract and retain top talent, many employers also offer supplemental benefits, including meal vouchers, health, dental, and vision insurance, additional paid time off, private pension plans, flexible working hours, transportation allowances, and life insurance.

It's essential for employers to stay updated on Portuguese labor laws to ensure compliance and to consider offering supplemental benefits to enhance employee satisfaction and well-being.

Termination Process in Portugal

Termination procedures in Portugal adhere to standard protocols, involving notice periods unless an employer can demonstrate substantial grounds for immediate dismissal, typically attributed to misconduct or disobedience. Termination can occur due to:

• Misconduct
• Unsuitable for their job position
• Disciplinary process
• Changes in job requirements

Notice Period in Portugal

Notice periods depend on the type of contract,

• Open-Ended Contracts: 7 days if you've worked less than 6 months or during probation.

• Open-Ended Contracts: 1 month if you've worked between 6 and 48 months.

• Open-Ended Contracts: 2 months if you've worked for more than 2 years.

• Fixed-Term Contracts: 15 days if the contract is for less than 6 months.
• Fixed-Term Contracts: 30 days if the contract is for 6 months or longer.

Severance in Portugal

Employees facing termination due to redundancy or unsuitability for the job are eligible for severance pay, based on the type of employment contract:

• Indefinite-term Contracts: Severance pay is equivalent to 14 days of salary per year of service, capped at 12 months of base pay.
• Fixed-term Contracts: Severance pay is calculated at 24 days per year of service.