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Last updated at June 16, 2022
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Key Country Facts


Portugal is a parliamentary republic and one of Europe’s oldest extant nations. The Portuguese are considered tolerant and modest people who have maintained a belief in traditional values alongside embracing contemporary life.


Portugal is the westernmost country in mainland Europe, bordering Spain along its eastern and northern sides, and the Atlantic to the west and south. Portugal covers an area of 92,000 square km with a population of 10+ million.


Portugal has a maritime temperate climate with average annual temperatures of about 16°C. The North is usually cool and rainy, whilst the South is generally warmer and drier.


The family is central to the Portuguese way of life, and takes precedence over all other relationships, including in business. Employing family members within a business is seen as the normal thing to do in Portugal, as it makes sense to them to surround yourself with the people you know and trust the most.


The majority of Portuguese are Roman Catholic. The Catholic Church still has some influence, even though the majority of Catholics say that they are non-practicing.

Official Language

The official language is Portuguese. The younger generations and a significant part of the labour market population also speak English.




Portugal HR at a Glance

Employment Law

Portuguese labour law is characterized by being governed by a large variety of legal sources and the high level of protection it grants employees. Its rules and principles apply both to individual employment relationships and to collective bargaining agreements, which gives trade unions an important role.


Most of the relevant regulation is consolidated in the Labour Code. Further to the Labour Code, several other laws regulate important issues, such as parenthood protection, work-related accidents and sickness and health and safety at work.

The main entity with responsibility for inspection and enforcement of compliance with the labour legislation is the Working Conditions Authority, which performs the duties of the Labour Inspectorate. Social security matters are dealt with by the Social Security Institute under the supervision of the Ministry of Employment and Social Solidarity. The Commission for Equality in Labour and Employment deals with matters related to equality, non-discrimination between women and men, and the protection of parental rights.




Portuguese law requires fixed-term contracts of employment, part-time, teleworking and certain top management contracts to be set out in writing. These contracts must include the following information:


  • identification, signatures and address/head office of the parties (employee/employer);
  • reasons for establishing the contract, specifically mentioning the facts concerned;
  • purpose of the contract, including profession/tasks to be performed;
  • salary;
  • place of work and normal working hours;
  • date of commencement of work;
  • date on which the contract comes into force, and the expiry date for fixed-term contracts.

Further, the employer has to fulfil mandatory information obligations and inform the employee about relevant aspects of the contract such as:

  • the notice periods to be observed by both parties in the event of termination,
  • entitlement to holidays,
  • the number of the occupational accident insurance policy, and
  • the applicable collective bargaining agreement.

The employee must inform the employer of any aspects that are relevant to the provision of labour.

Parties can amend or change the contract, unless it is expressly forbidden by law. For example, as a rule, the employer cannot unilaterally reduce an employee’s salary or demote him even with the employee’s consent.


Contract Terms

Under the Portuguese labour law, indefinite employment is the general rule. Fixed and unfixed-term employment contracts constitute exceptions to this rule (even if this type of contracts is widely used in Portugal).

Unless otherwise specified by the parties, employment contracts are deemed open-ended, and if there is no written contract, the employment will be deemed permanent.

Probation Period / Trial Period

Trial periods for permanent employees are 90 days, 180 days for high complexity, trust or responsibility roles and 240 days for management, directorate and equivalent responsibility roles (the average probation period is 90 days).

Fixed and unfixed term temporary contracts are subject to shorter probation periods:

  • 15 days if agreed for an expected or fixed duration shorter than 6 months;
  • 30 days for durations equal to or longer than 6 months.

Termination of a labour agreement by either of the parties during the probation period does not require any grounds of justification and no indemnification is due. For termination by the employer, no prior notice is required within the first 60 days. Where the probation period has lasted for more than 60 or 120 days, respectively, the employer is required to give a 7 or 15-day prior notice.

It is not possible to agree on longer probation periods than those legally foreseen, but it is possible to agree on shorter probation periods, as well as to fully exclude probation periods.

Working Hours

Maximum daily and weekly working hours are 8 hours per day and 40 hours per week. If the employee has a managerial position or a job of trust, or usually performs their work outside the company’s premises, an exemption regime may be agreed upon by the parties, in which case those limits shall not apply. Typically, employees under the exemption regime are entitled to an exemption bonus.



Overtime is allowed for dealing with an extraordinary increase in workload, or to prevent serious damage, or if due to force majeure. It is subject to maximum limits:

  • 2 hours when performed on a normal working day,
  • the equivalent to the daily normal working period when performed on a rest day or on a public holiday,
  • 150 (medium-sized and large-sized companies) or 175 (small-sized companies) hours per year.

Overtime must be compensated with additional payment (increase of hourly rates):

  • work on normal working days = 25% increase for the first hour and 37.5% increase for additional hours;
  • overtime on rest day or holiday is normal hourly rate plus 50%
  • overtime on the normal rest days (typically, Sunday) also entitles the employee to time off equivalent to 1 day.

CBAs may establish more beneficial treatment for employees.

Health and Safety in the Workplace

The employer has the obligation to permanently ensure employee health and safety conditions at work. To comply with such duty, the employer must follow a set of general principles focused on the prevention of work accidents and professional illnesses, and thus to comply with several duties. In general terms, the employer must put in place and ensure:

  • Technical work accident preventive measures;
  • Employee training, information and consultation on workplace safety;
  • Internal or external health and safety services.


Statutory – Employees are entitled to a holiday bonus (13th month), which includes basic pay and other payments representing consideration for the specific means of carrying out the work, equal to one-month salary and payable before the holiday leave period (usually paid in June).

In addition, employees are entitled to a Christmas bonus, equal to 1 month’s pay, which must be paid by December 15th each year (14th month).

Contractual / Discretionary – It is common in Portugal to reward employees through contractual or discretionary bonuses. The employer is free to define the scope and regime of the bonus plans or schemes through which bonuses are paid out to its employees, there being no specific restrictions or guidelines on what bonuses can be awarded, provided they are not discriminatory.


The employer can, under certain circumstances, terminate the contract with ‘just cause’. The concept of just cause includes disciplinary dismissal and other forms of dismissal, provided they are justified according to the law.

The Labour Code foresees the following types of dismissal:

  • dismissal based on unlawful conduct of the employee,

  • redundancies or dismissals resulting from the elimination of jobs,

  • dismissal for failure to adapt, where the employee is found to be incapable of adapting to the job and, because of the way in which the employee works, making it in practice impossible to maintain the working relationship.

Collective dismissal rules will be triggered if the dismissal involves at least 2 employees (in a company with up to 49 employees) or 5 employees (in a company with 50 or more employees) within a 3-month period.

When a contract of employment ends, the employer must provide the employee with a certificate of employment indicating the dates of commencement and termination and the post or posts occupied, and other documents for official purposes, particularly for Social Security.

If the notice period is not honored, payment in lieu of notice is required. Garden leave is possible upon agreement of both parties.

Unfair dismissal – The employee may challenge the validity of the dismissal before the labour courts. In case of unfair dismissal, irrespective of the cause, the employee is entitled to:

  • Payment of back wages (from the dismissal until the date of the court decision)

  • At the employee’s option, reinstatement or payment of severance compensation (varying from 15 days to 45 days of base salary per year of service).

Protected employees – Employee representatives and pregnant or nursing employees enjoy special protection rights regarding termination of employment.

Notice Period

The employee is free to resign, subject only to certain prior notice periods as follows.

For permanent employees:

  • 30 days for contracts which have been on force for up to 2 years;

  • 60 days for contracts which have been on force for more than 2 years;

For fixed (or unfixed) term(temporary) employment agreements:

  • 15 days for contracts, which agreed (or expected) duration is less than 6 months;

  • 30 days for contracts, which agreed (or expected) duration is equal to (or longer than) 6 months

Redundancy / Severance Pay

  • Fair dismissal based on objective grounds (redundancy) or dismissal due to unsuitability for the job: 12 days’ salary per year of service, up to 12 months’ base salary. The severance is partially (50%) paid by a fund (FCT) administered by Social Security, to which the employer has to make contributions.

  • Fair disciplinary dismissal: no severance.

  • Higher severance payments may be agreed and are usual as a way to avoid litigation.

Post-Termination Restraints / Restrictive Covenants

Post-termination restraints aimed to protect the employer’s legitimate business interests can be enforced, provided that the activity carried on by the employee may cause a potential loss to the employer. These types of obligations can be included in the initial employment contract:

  • An undertaking on non-competing and/or non-solicitation by the employee.

  • The scope of the obligation (activity, territory).

  • The period of the limitation (the legal maximum is 2 years, or 3 years in cases of jobs of trust or jobs with access to information of particular relevance).

  • The amount to be paid to the employee during the period of the limitation – the law does not provide any criteria, but usually it varies between 50% and 80% of the last monthly remuneration.

In case these legal requirements are not fulfilled, the employee shall not be validly bound.

Non-competes – Permissible under the above-mentioned rules.

Customer non-solicits – Permissible under the above-mentioned rules.

Employee non-solicits – Permissible under the above-mentioned rules.


In 2019, the European Court of Justice stated that companies must set up a system to record the working time of their employees. Thus, employers are obliged to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.


Trade Unions / Collective Agreements

Employee representative bodies are permissible, but not mandatory. The employees of a company may take the initiative to set up the following representative bodies:

  • Works council: the members are appointed by the employees and their purpose is to represent the interests of the employees of that company. In most companies in Portugal there is no works council, the practice is that they exist only in major companies.

  • Union delegates: elected by the employees affiliated with a specific union; there can be more than one union with representatives in a company.

  • Security and health representatives: to supervise issues related to security and health; they are not common in Portugal.

  • European Works Council (EWC).

Trade unions are prevalent in certain sectors. Industry-level collective bargaining agreements are common in almost all industrial sectors (such as automobile, chemical, transportation, automobile parts production, pharmaceutical, civil construction, metallurgy, etc.).

The employees’ representatives are entitled to time off to exercise their duties, with payment (with some time limits) and may convene general meetings of employees to take place outside or inside the working schedule (in the latter case, for a maximum 15 hours per year).

Fixed Term Contracts

Fixed-term contracts are only allowed if necessary, to provide for temporary staffing needs or for employment policies, such as to promote the hiring of certain categories of employees (first-time jobseekers and long-term unemployed) and the start-up of new enterprises or companies.

They are only renewable a maximum of three times and their duration is limited to:

  • 18 months if for an individual looking for a job for the first time.

  • Two years for launching a new activity of uncertain duration, starting up a new company or establishment belonging to a company with less than 750 employees or hiring a long-term unemployed person.

  • Three years in other situations.

  • Unfixed-term contracts are more commonly used whenever the duration of the staffing need is uncertain (for example, replacing a sick employee) and cannot exceed six years.

Tax and Social Security

Personal Income Tax

Taxable Income Bracket (EUR) Tax Rate (%) Deductible Amount (EUR)
< 7,112 14.5
Between 7,112 – 10,732 23.0 604.54
Between 10,732 – 20,322 28.5 1,194.80
Between 20,322 – 25,075 35.0 2,515.63
Between 25,075 – 36,967 37.0 3,017.27
Between 36,967 – 80,882 45.0 5,974.54
> 80,882 48.0 8,401.21

In 2020, an additional solidarity rate, which varies between 2.5% and 5%, applies to taxpayers with a taxable income exceeding EUR 80,000.


Both employer and employee have to pay contributions to the Social Security in Portugal to cover different protections (sick leave payment, maternity leave payment, unemployment benefit and retirement pension). The employer must withhold the contribution due by the employee and deliver both contributions (employer and employee) to Social Security every month.

Type of Insurance Employer Contribution (%) Employee Contribution (%) Total (%)
Social Security 23.75 11.00 34.75

*Portuguese residents and non-resident employees in Portugal are liable for social security contributions at a rate of 11% on their gross remuneration (9.3% for board members who are not “Administradores” or “Gerentes”). For the other side, the employers are liable for social security contributions at a rate of 23.75% on the same gross remuneration (20.3% for members of the board who are not “Administradores” or “Gerentes”).

**The above rates serve as a broad guideline. Actual rates charged will differ.


Salary Payment

Portugal has 14 salaries (see below ‘Bonuses’). Salaries/wages are usually paid by bank transfer. The employer is responsible for transferring the amounts withheld to the social security and tax authorities.


Irrespective of the form of payment, the employee is entitled to a payslip that shows the remuneration (gross pay, lunch allowance, etc.) and deductions (personal income tax [IRS], social security contribution to be made by the employee, and any other contributions the employee has authorised to be withheld, such as union dues).

The employer gives the employee a statement in January of the year after the money was earned. Employees require this for submitting their annual tax return to the tax authorities.

Annual Leave

According to the Portuguese Law, as a general rule, employees are entitled to a minimum 22 working days of holiday per calendar year. This right falls due on 1 January and relates to work performed in the previous year (CBAs may establish a longer holiday period, typically 25 days).

In the calendar year of admission, the employee is entitled to 2 working days of holidays for each month of the duration of the contract, up to a maximum of 20 working days. These days may be taken after 6 full months of execution of the contract but may be taken earlier by agreement between the employer and the employee.

In the year following the admission, the employee is entitled to 2 working days of holiday for each month of the duration of the contract up to 22 working days. In these two years, the vacation period is a reflection of the working time of each calendar year and not the previous year.

Specific stipulations exist for employees who have fixed-term contracts:

1. Employees who have been working under contract for less than one year, but more than six months are allotted two working days of leave for each month of their employment, up to 20 days.

2. If the calendar year ends before an employee works six months, the accrued leave may be used before the following June 30th, however, a maximum of 30 working days may be used in a single year.

3. Contracts that are less than six months, entitle employees to two days of paid leave for every full month stipulated in the contract.

Scheduling of annual leave is decided through an agreement between employer and employee. Annual leave is usually taken in full as an uninterrupted period, but it can also be broken up into periods of no less than 10 days.

Carry Over Rules

  • In the event that the calendar year ends and the days of holidays to which the employee is entitled, have not been taken, they may be taken further until April 30th of the following year, and in the same calendar year there may not be enjoyed more than 30 working days of holidays.

  • If the year of admission ends and the days to which the employee is entitled have not been taken, the holidays can be taken until June 30th of the following year.

Sick Leave

  • Employees are entitled to time off from work for illness or injury, which is paid by the state social security protection schemes, provided they meet all the eligibility requirements. In some cases, collective labour agreements provide specific rules covering employee illness or injury.

  • The state social security protection schemes pay sick pay to employees who are absent from work as a result of illness or injury. The employee can receive sick pay for a total of 1,095 days. Sick pay is calculated based on the employee’s remuneration reference for Social Security purposes and varies between 55% and 75% depending on the period of illness.

  • Employees have the obligation to communicate absences due to sickness as soon as possible and the employer may request medical documentation attesting the sickness within 15 days from the communication of absence.

  • The employer must continue to pay the salary during the first 3 days of absence, after which payment of the sickness allowance falls to Social Security.

Other Rights for Leave of absence

Training leave – The employer may grant the worker at their request unpaid leave for attending a training course administered under the responsibility of an educational or vocational training institution

Maternity & Parental Leave

Maternity leave

Employees who have been employed and made contributions to the social security system for at least six months are entitled to between 120 and 180 days of paid maternity leave, up to 30 days of which can be taken by the pregnant employee before childbirth. Mother and father can divide the leave between them as long as:

  • The mother takes six weeks of leave after childbirth and

  • The father takes five days of leave immediately after the birth and another 10 days within the next 30 days. (Fathers are also entitled to an additional 10 days of leave to be used during the time of the mother’s maternity leave).

If not shared, leave can be taken for 120 or 150 days; if shared, it can be increased to as much as 180 days. For leave to be considered “shared,” the parent taking the lesser amount must take at least 30 consecutive days or two periods of 15 consecutive days.

Parents who take 120 days of leave are entitled to compensation at 100 percent of their normal salary, whether the leave is shared or not. Parents who take 150 days of leave are entitled to 100 percent of compensation if the leave is shared, 80 percent if it is not.

For multiple childbirths (twins, triplets, etc.), parents can take an extra 30 days of paid leave for each additional child.

Maternity leave is borne by social security.

Employers must allow parents of children under the age of 3 to telework if such work is compatible with the employee’s duties.

Paternity leave

Fathers of a newborn can take paternal leave of up to 20 working days within 30 days of the birth of the child. 5 days shall be taken consecutively immediately after the birth of the child.

Fathers are also given the right to join the mother in three prenatal clinic sessions without loss of compensation.

Fathers are also entitled to an optional leave of 10 consecutive or non-consecutive working days, at the same time that the mother is taking her initial parental leave.

The pay is borne by the Portuguese Social Security.

Adoption leave

Adoption of a child under 15 years of age entitles the employee to adoption leave under the same terms as initial parental leave.

Childcare leave

Upon completing the complementary parental leave, parents are entitled to a child’s assistance leave, consecutive or intermittent, up to the limit of two years of duration. In the case of a third child or more, the license provided for in the previous number is limited to three years.

Public Holidays

At present, there are 13 public holidays in a calendar year. Public holidays are not included in statutory holiday entitlement.

Public Holidays

Employees are entitled to paid leave from work on public holidays. Local (Municipal or State) holidays may also apply, depending on where the company is based. If the employer demands the employee to work on a holiday, the remuneration paid with respect to the worked holiday must be at least double the regular compensation. Applicable collective bargaining agreements may establish a higher rate for the holiday remuneration.

Benefits to the Employee in Portugal

Statutory Benefits

Mandatory employee benefits in Portugal include:

  • Workers Compensation Insurance – All employees are covered for accidents at work and disability or death as a consequence of such accident, through insurance coverage;
  • Holiday Pay;
  • Meal Allowance for each workday.



Employers have no legal obligation to provide complementary/supplementary social benefits in addition to the social coverage provided for by the social public scheme. Popular supplementary employee benefits in Portugal include company cars, meal allowance cards, childcare vouchers, workplace canteens, bike to work, gym membership, health and pension schemes


Visas and Foreign Workers

General Information

Nationals of the European Economic Area (EEA) and Switzerland have the right to work in Portugal.

For a non-EU country national to obtain an employment residence visa, their potential employer must submit a formal preliminary employment offer to the relevant Employment Centre. If the position is not occupied by a Portuguese or EU candidate within 30 days, the potential employer can ask for a declaration from the Employment Centre allowing for the hiring of a foreign national.

The employer then sends this declaration to the applicant, so that they can file the employment residence visa application at the Portuguese Consulate of their place of residence, together with all the remaining necessary documentation. Applicants must have either:

  • A signed employment contract or employment agreement with their future employer.

  • Adequate and recognized qualifications and skills for performing their employment activities and a letter from the potential employer formally setting out an interest in hiring them.

After entering Portugal, the employee must:

  • Register with the local Tax and Social Security authorities.

  • Apply for a residence permit at the local delegation of the Immigration Authorities (Serviço de Estrangeiros e Fronteiras) (SEF), after the employer has notified the Authority for Working Conditions (Autoridade para as Condições do Trabalho) of the employment.

Cost – Employment residence visas are subject to an administrative fee of EUR 80.

Time frame – The process can take up to 90 days. The visa is valid for two entries into Portugal and a period of four months.

Residence Permits – Once the employee has registered with the above authorities and the employer has notified the Authority for Working Conditions, the employee must schedule an appointment with the Immigration Authorities in order to apply for the residence permit. Certain documentation required by law must be presented when the application is submitted.

Cost – Employment residence permits are subject to an administrative fee of EUR 75.

Time frame – There is no defined duration for the application process, although in practice it takes approximately three months on average.

Companies are under no obligation to keep a separate register of foreign national employees. However, these employees must be identified separately in the company’s annual report.

A company must electronically communicate a foreign national’s admission, or termination of contract, to the Working Conditions Authority.


The Portuguese tax identification number (Numero de Indentificacao Fiscal – NIF) is issued by the Portuguese Tax Authority. The NIF number can be applied for at these places:

  • local tax office of the Portuguese tax authority

  • at a local branch of a Citizen Shop

  • at a counter that provides the Citizen Card.

Applying for a NIF number is also possible without being physically present if an individual is not already living in Portugal. For applying from outside of Portugal, a temporary NIF number can be obtained via a Portuguese lawyer or a fiscal representative who agrees to act on the individual’s behalf.

It is not a legal requirement to obtain a NIF, however, it is required for taking up employment.

Public Holidays in 2022

S.No Occasion Date
1 New Year’s Day January 1st
2 Good Friday April 15th
3 Easter Sunday April 17th
4 Liberation Day April 25th
5 Labour Day May 1st
6 Portugal National Holiday June 10th
7 Corpus Christi June 16th
8 Assumption Day August 15th
9 Republic Day Portugal October 5th
10 All Saints’ Day November 1st
11 Restoration of Independence Day December 1st
12 Immaculate Conception Day December 8th
  Christmas Day December 25th

Several other holidays are observed, either unofficially at a national level or by official local public observance.

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