Like many countries, Portugal enforces employment laws that cover minimum wage, paid leave, Social Security contributions, and other core protections for workers. When hiring employees in Portugal, it's essential to understand the mandatory benefits the Portuguese government requires.
While compliance with these legal requirements is the bare minimum of what's required of employers, many go a step further by offering additional employee benefits to attract and retain top talent.
Supplemental perks — such as private health insurance, meal allowances, flexible working arrangements, or professional development support — can help make your offer more competitive in the local job market.
To stand out and build a strong employer brand in Portugal, it's worth considering how these added benefits can enhance the overall employee experience and attract and retain workers.
Key takeaways:
- Proper worker classification is essential to know which benefits employees are entitled to in Portugal.
- Employers must comply with Portuguese laws governing wages, paid leave, and Social Security contributions.
- Offering supplemental benefits like private health insurance, meal allowances, and flexible work arrangements can help attract and retain top talent.
Which Workers Qualify for Benefits in Portugal?
Full-time employees are entitled to specific benefits mandated by Portugal's labor laws. Part-time employees are also entitled to benefits, though typically on a prorated basis depending on how many hours they work. Independent contractors are not entitled to benefits.
If your company is found to have misclassified an employee as an independent contractor, you could be held liable for back pay, unpaid taxes, and any benefits the worker should have received.
Misclassification can also result in legal consequences, including fines and potential audits, for failing to meet employee entitlement obligations.
Minimum Wage & Overtime Pay
Portugal's standard work week is 40 hours, and minimum wage is calculated on a monthly basis. As of January 1, 2025, the monthly minimum wage in Portugal is EUR 870 for most of the country, a 6.1% increase over the prior year. Two regions (Azores and Madeira) have a slightly higher minimum wage.
Employees who work more than 40 hours per week are entitled to overtime pay at 125% of their regular hourly rate. For overtime on weekends or public holidays, the rate increases to 150%.
The maximum number of hours an employee can work per week is 48, and employees have the right to refuse requests for overtime.
13th-Month & 14-Month Salary
In Portugal, employees are entitled to two yearly bonus payments, typically paid in June and December. Known as 13th-month and 14th-month pay, these payments are the same amount as the employee's standard monthly salary.
For example, if an employee earns the minimum wage of EUR 870 per month, the 13th- and 14th-month payments would also be EUR 870.
Social Security Contributions
In Portugal, employers must contribute to the country's Social Security system, Segurança Social, which covers benefits like healthcare, unemployment, pensions, sick leave, and parental leave.
Employers contribute 23.75% of the employee's gross salary to Segurança Social, and employees contribute 11%. Employers are responsible for deducting the proper amounts from an employee's paycheck and remitting the contributions to the government every month.
For a more detailed overview, check out our article: Portugal's Social Security System: What Global Employers Need to Know.
Pension Plans
While Portugal's Social Security system funds pensions, many companies also offer employer-sponsored retirement plans. Typically, both the employer and the employee contribute to the retirement account.
These plans, especially those offered through Plano Poupança Reforma (PPR), have some tax benefits for both the employer and the employee. Additionally, private retirement plans have investment flexibility and are portable from one employer to another.
Health Insurance
Portugal has universal healthcare through Serviço Nacional de Saúde (SNS). However, the public healthcare system can have long wait times, especially for specialized care. Because of this, many people opt for private health insurance to access services faster and with more flexible options.
Many employers offer private health insurance plans, including dental and vision care coverage. Private health insurance is viewed as a valuable employment benefit by employees.
Depending on company policy, additional coverage may apply to the employee only or extend to their family members, with the employee potentially being required to contribute to family coverage costs.
Unemployment Insurance
Employees who become involuntarily unemployed, aka laid off, are covered by unemployment benefits within the Social Security scheme.
To be eligible, employees must be available for employment and register as job seekers in their area. They must also meet a minimum qualifying period of 360 days of paid employment within the previous 24 months.
Unemployment benefits pay 65% of the person's former salary, calculated as a daily amount. The benefit period depends on the beneficiary's age and number of months of earnings.
Beneficiaries receive a minimum of 150 days of unemployment benefits and can qualify for up to 540 days.
Workers' Compensation Insurance
Workers' compensation insurance pays employees injured in a workplace-related accident or who develop an illness related to their working conditions.
It covers the employee's medical expenses and provides financial support to cover loss of wages. Workers' compensation insurance can also pay disability benefits, which vary based on the severity of the disability, as well as death benefits to an employee's family should the worker pass away.
Employees on leave due to injury or illness are legally protected from dismissal.
Employers must maintain workers' compensation insurance, and failure to carry the insurance can result in fines. The cost of coverage varies depending on the industry and level of risk.
Leave Entitlements
Portuguese employees are entitled to several paid leave benefits, including annual leave, holidays, family leave, and sick leave. We've summarized leave benefits below, but you can read a more in-depth summary in Navigating Paid Leave Laws in Portugal: A Guide for Global Employers.
Annual Leave
Employees are entitled to a minimum of 22 paid leave days per year. If the employee has unused vacation days at the end of the year, they carry over to the following year. The employee must use any carried-over days by April 30.
Employers may provide more paid leave than the legally required minimum, and any additional days should be specified in the employee's contract.
Holiday Leave
In addition to an employee's paid annual leave, the country mandates several paid holidays. There are 13 nationally recognized holidays, including New Year's Day, Good Friday, Freedom Day, and Christmas Day. There are also a few regional holidays and an optional extra holiday (Carnival Day).
If employees have to work on a paid holiday, they are entitled to overtime pay.
Parental Leave
Employees have several options for parental leave in Portugal.
Mothers are entitled to 120 days of paid maternity leave (initial parental leave). Maternity leave is extended to 150 days for multiple births or health complications. Mothers receive 100% of their salary for 120 days, which the Social Security system pays. If the leave is extended to 150 days, mothers receive 80% of their salary.
Mothers may also take 30 days of maternity leave before the baby is born, which reduces the initial parental leave after birth. Six weeks of leave after the baby is born is compulsory.
Fathers are entitled to 28 days of paternity leave, with at least seven days taken immediately after the birth. The remaining 21 days must be taken within six weeks of the birth.
Parents may also opt for shared parental leave, with each parent separately taking 30 consecutive days of leave or two separate periods of 15 consecutive days at different times from one another. Shared parental leave is added to the initial parental leave.
Sick Leave
Portuguese employees are legally entitled to sick leave. The first three days of sick leave are unpaid (though some employers opt to cover this). If the sick leave extends longer than three days, it's paid by Social Security.
Employees receive from 55% to 75% of their standard earnings, depending on the length of the illness. Social Security will pay sick leave benefits for up to 1,095 days. To qualify for sick leave, employees must receive a certification from a doctor.
Optional Benefits Employers Can Offer in Portugal
To hire compliantly in Portugal, you have to provide all mandatory benefits. However, many companies opt to offer additional benefits above and beyond the minimum requirements to position their company as an attractive option to potential employees.
In fact, some optional benefits are so common that they're expected by employees, even though they're not mandatory.
In addition to private health insurance and pension plans, here are some other popular optional benefits to consider offering your Portuguese employees.
Meal Allowance
Offering a meal allowance — either through cash or vouchers — to cover the employee's daily meal expenses is common in Portugal.
Meal allowances are tax-exempt if they're provided through a card or voucher. This makes them an easy way to increase the employee's take-home pay without adding to the employer's payroll tax liabilities.
The tax-exempt limit for meal vouchers is EUR 10.20 per day. If provided as cash, the tax-exempt limit is EUR 6.00 per day.
Transportation Allowance
A transportation allowance helps reduce the financial burden of commuting to work. The transportation allowance can be used for public transit or to cover the employee's costs to use their own vehicle. Some companies may also provide the use of a company vehicle.
Life Insurance
Life insurance is a valuable addition to an employee's compensation, as it provides financial support to the employee's family in the event of the employee's death. Employers may choose to pay all or part of the premiums for supplemental life insurance coverage.
Childcare Vouchers
Companies can provide childcare vouchers to cover day care, preschool, and school costs for children up to age 7. Childcare vouchers offer financial support for families with young children, while also providing tax benefits to both the company and the employee.
Additional Health Benefits
In addition to private health, dental, and vision insurance, some employers offer wellness programs, such as mental health benefits or gym memberships. Employers can offer an allowance for wellness programs that allow employees to choose how they spend their money on additional benefits.
Additional Paid Time Off
Some employers offer paid time off (PTO) above the mandatory annual leave days and holidays. Companies may offer extended vacation, wellness, or special occasion days (birthdays or other milestones).
Sometimes additional PTO is offered as a reward, based on performance or tenure.
Flexible Working Hours
Employers may offer modified working hours or flexible working locations to help employees balance their personal and professional lives.
Notably, Portugal has a "right to disconnect" law, which requires employers to refrain from contacting employees outside their working hours. This became an issue during the COVID-19 pandemic, when remote work and flexible working arrangements rose considerably. The law was enacted in 2022 to protect the boundary between work and personal time.
Compliantly Offer Benefits in Portugal with RemoFirst
If you want to hire employees in Portugal, an Employer of Record (EOR) like RemoFirst will ensure that you follow all local laws, including providing mandatory benefits. RemoFirst helps companies hire in more than 185+ companies, including Portugal.
RemoFirst also assists companies in offering and managing an optional benefits plan so they can hire and retain top talent. For example, RemoFirst has private health insurance offerings through RemoHealth and RemoHealth Local, which are key benefits that help attract Portuguese employees.
To learn more about how RemoFirst can help you hire employees around the globe, you can schedule a demo.
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