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Compliantly hire and expand your business in Portugal

When it comes to employing and managing employees in Portugal, there are specific procedures and regulations that must be followed.
Portugal map
Portugal is a southern European country on the Iberian Peninsula, bordering Spain. Its location on the Atlantic Ocean has influenced many aspects of its culture: salt cod and grilled sardines are national dishes, the Algarve’s beaches are a major destination and much of the nation’s architecture dates to the 1500s–1800s, when Portugal had a powerful maritime empire.

Lisbon

Capital

$26,879

GDP per Capita

$276.4 billion

Total GDP

10,467,366

Total Population

0.866

Human Development Index

UTC (DST +/- 1)

Time Zone

Portuguese

Official Language

Euro

Currency

92,230 km2 (35,610 mi2)

Land Area

Here's what you need to know

Overall, employing workers in Portugal requires careful attention to the specific requirements and regulations. Working with a local expert in employment and payroll can help ensure that you’re meeting all the legal requirements and providing a positive employment experience for your staff.
Employment contracts are mandatory in Portugal and must be in writing (Portuguese language). They should clearly outline:

Job title, duties, and responsibilities

Salary and benefits

Working hours and overtime pay

Leave entitlements (annual leave, sick leave, etc.)

Termination terms (notice period, severance pay)

Confidentiality clauses (if applicable)

Minimum Wage

Portugal has a national minimum wage, currently set at €820.00 per month (variations exist for the Azores and Madeira).

Payroll Terms

Salaries are typically processed monthly and must be paid by the last day of the month. Payslips detailing gross salary, deductions, and net pay are mandatory for all employees (electronic or paper format).

Taxes

Portugal operates a progressive income tax system. Employees contribute towards social security through monthly deductions. Employers also contribute a portion to social security. Both employer and employee contributions go towards a central fund that covers benefits like pensions, unemployment insurance, and healthcare.

Employee Social Security Contribution:

11% (up to a capped amount)

Employer Social Security Contribution:

Varies depending on industry (typically between 22.3% and 23.75%)

Portugal has a standardized leave policy mandated by the Labour Code:

Annual Leave

Minimum of 22 paid working days per year, increasing with service duration.

Sick Leave

Up to 30 days per year with doctor's certification, extending to 180 days in specific cases.

Maternity Leave

Up to 4 months of paid leave, followed by an optional unpaid leave of up to 18 months.

Paternity Leave

Up to 20 days of paid leave.

Public Holidays

10-12 paid public holidays per year

Probationary Period

Probationary periods are not mandatory in Portugal, but contracts often include them. The typical duration is between 30 and 90 days. During this time, termination can be easier for both employer and employee.

Termination of Employment

Termination of employment should follow the terms outlined in the contract or the Labour Code. Notice periods vary depending on the employee's length of service and the reason for termination. Severance pay may also be required in certain situations.

Download the full Employment & Payroll Guide to Portugal

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