On the southwest edge of Europe, Portugal is a cultural and economic wonder. Its well-developed education system makes it a great place for companies to source talent. Additionally, the government is actively promoting remote workers to base themselves in Portugal, so there's an influx of young workers.
Labor law in Portugal is not governed by a single law. Portuguese legislation, the Portuguese Employment Code, and the Regulation of the Employment Code are the main sources, which set forth fundamental rights and principles. Additionally, individual agreements and collective bargaining agreements are important.
Almost all rules spelled out in Portuguese employment law are mandatory and can't be modified by collective bargaining or agreements between the parties. Portuguese employment law protects all workers.
Before you hire employees in Portugal, you should know that Portugal has a 13th and 14th salary requirement. A 13th and 14th salary are two extra months of salary paid during summer and Christmas breaks.
Portugal's employment contracts are generally permanent and don't need to be in writing - except for fixed-term or part-time contracts. Regardless, if there's no written contract, employers have to provide their newly hired employees with a document outlining basic terms like:
Written employment contracts have similar minimum requirements. Employment contracts don't have to be in Portuguese, the contract can be written in a foreign language as long as the employee understands it.
The trial period for permanent employees is 90 days, and 180 days for high-complexity, trust, or responsibility jobs. For management, directorate and similar roles, the trial period is 240 days. 90 days is the average probation period.
There are shorter probation periods for temporary contracts, both fixed and unfixed:
Labor agreements can be terminated by either party during the probation period without justification or indemnification. If the employer terminates the contract within 60 days, no prior notice is needed. The employer must give a 7-day or 15-day notice if the probation period lasts more than 60 or 120 days.
Even if agreed on, longer probation periods aren't allowed. However, you can agree on a shorter probation period or exclude probation completely.
Working hours max out at 8 hours a day and 40 hours a week. Employees with managerial positions, jobs of trust, or who perform their work outside of the company's premises may be exempt. In these cases, the limits don't apply. Employees who qualify for exemptions usually get bonuses.
Working over 40 hours in a week is overtime, which is only allowed under certain conditions, like business emergencies. In cases where overtime is allowed, it should not exceed two hours a day and be compensated like this:
The minimum wage in Portugal is €822.50 per month, based on a standard workweek of 40 hours at 8 hours per day.
Every year, Portuguese employees get 14 months of salary payments:
Allowances are paid like a full month's salary. Holiday allowances and Christmas allowances are both taxed the same way as other payments to the IRS and Social Security. One allowance is paid around the summer, and the other around the winter holidays.
On the other hand, workers can choose to get paid 12 times ("twelfths"), with those two extra payments prorated throughout the year. You have to pay every month by the last working day of the period.
Employees' tax contributions depend on whether they are residents of Portugal. An individual must spend more than 183 days a year in Portugal or have a permanent abode there to be considered a resident. Non-residents pay only for their earnings in Portugal, while residents pay based on their year-long income.
The three main types of taxes employers pay are:
There are a few ways to end an employment relationship:
In Portugal, regular terminations require a notice period from the employer, depending on the worker's tenure.
Severance pay depends on the terms of the contract, the position/role of the employee, and the cause for termination. If the employee is not being terminated due to serious misconduct, negligence, theft, or something of that nature, a severance payment is due. The payment minimum is 18 days of wages per year for the first 3 years of service, and then 12 more days of wages for each year of service after that.
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