Employment Law

Portugal Employment Contract

It is always important to provide your employees in Portugal with a formal employment contract that includes all relevant employment details such as wages and benefits. It should also be written in Portuguese and use Euros.

Fixed Term Contract

Probation	<6-month contract: 15 days > 6-month contract: 30 days
Termination notice period	Probation period: <60 days: No notice 60 to 120 days: 7 days notice >120 days: 14 days notice Post probation period: <1 year Hours of employment: Min. 1 to 5 years: at least 15 days and 30 days 5 to 10 years: at least 60 days > 10 years: at least 75 days
Severance pay	18 days of pay per year of service + 12 days of pay per year of service, max. 12 Months of Salary Note: Unlawful termination may require 45 days of salary per month
Special Note	The employer must demonstrate to the Labor Office why the employee should be employed on a limited contract rather than a permanent contract

Indefinitely (permanently)

Probation	High complexity jobs → Max. 180 days (6 months) Senior/Management → Max. 240 days (8 months) Recommended: 90 days (3 months)
Termination notice period	Probation period: <60 days: No notice 60 to 120 days: 7 days notice >120 days: 14 days notice Post probation period: <1 year Hours of employment: Min. 1 to 5 years: at least 15 days and 30 days 5 to 10 years: at least 60 days > 10 years: at least 75 days
Severance pay	Maximum 12 days salary per year of service 12 months salary Note: Unlawful termination may require payment of 45 days salary per month

Working Hours in Portugal

Normal working hours in Portugal are from 9 am to 7 pm, with a usual two-hour lunch break. Working hours are generally limited to 40 hours per week and 8 hours per day. Any time spent beyond this time shall be subject to overtime pay.

Holiday Policy

Vacation in Portugal

Employees in Portugal are entitled to at least 22 days of paid leave. During the first year of employment, the allowance is lower at 20 days. Up to 5 unused days can be carried forward to April of the following year. Employers cannot provide wages to people who give up their vacation time, so it is important that all vacation time is provided to employees.

Portugal Sick Leave

Employees in Portugal are entitled to sick leave benefits when absent from work due to illness. Their coverage lasts up to 1,095 days (about three years) at rates ranging from 55% to 75% of regular wages. These benefits are paid by the government, not the employer.

Parental Leave in Portugal

Mothers in Portugal are entitled to 120 days of leave, which must be taken at least 30 days before and 6 weeks after the birth of their child. During this period they are entitled to their regular wages. If they want, they can also choose to take 150 days of maternity leave, but the salary is 80% of the normal salary.

The father is entitled to 10 days of paid leave, which must be taken within 30 days of the child's birth, and at least 5 days of paid leave must be taken at the same time.

Termination and Severance in Portugal

Employees in Portugal who are not on probation are entitled to receive a dismissal notice. Notice periods vary depending on the length of time with the employer:

Employed for less than one year = 15 days notice
One to five years = 30 days notice
Five to ten years = 60 days notice
Over ten years = 75 days notice

In some cases, employees may be entitled to severance pay upon termination. The usual rate is about 20 days' pay per year.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Portugal PEOs can reduce risk for foreign companies and provide guidance during the process.

Portuguese Taxes

In Portugal, employees and employers are required to contribute to social welfare funds. For employees, contributions are approximately 10% to 15% of salary, and for employers, contributions are approximately 25%.

Progressive income tax rates range from 14.5% to 48% of wages, depending on income. Portugal's corporate tax rate is 21%.

Health Insurance in Portugal

Healthcare in Portugal is nationalized, so employers are not required to provide private health insurance. However, some employers may choose to offer coverage as part of their benefits package.

Salary and Benefits

Portuguese Compensation Law

As of mid-2020, the minimum wage in Portugal is €740.83 per month. Most employees are also entitled to two annual bonuses, usually paid in June and December, equivalent to one month's salary.

Minimum wage country comparison chart	(in USD per month)
Switzerland (Geneva)	$4,000
Italy	$2,255
Australia	$1996
Algeria	$156
Uzbekistan	$22

Welfare Management in Portugal

If you're not familiar with complex labor laws, language and cultural differences, the process of setting up Portugal's benefits system can be confusing, so delays are common.

Remoly can help you avoid this complex part of the Portugal expansion process, saving you time and money and streamlining the entire process. Our team will advise and outsource the setup and management of your benefits system, allowing you to focus on the rest of scaling.

Work Visa and Skilled Visa Support in Portugal

Remoly provides comprehensive support to Portuguese companies wishing to facilitate employee recruitment through work visas or skilled visas. As a skilled visa-certified company, Remoly can help companies bring foreign technical talent to Portugal through a fast and cost-effective process.

Remoly, bringing it all together

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