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Hiring in Portugal
When hiring employees in Portugal, there are a few details to be aware of.
Employment contracts in Portugal
When hiring in Portugal, it’s best to put a strong, written contract in place, which spells out the terms and conditions of employment. Employers are required to provide certain information to employees regarding the employment relationship including the place of work, job duties, date of execution of the contract and the date it takes effect, duration of the contract (if it is a fixed-term agreement), holiday period, notice period, working hours, compensation, and any applicable collective bargaining agreement. An employment contract in Portugal must always state the annual salary and any compensation amounts in euros rather than another currency.
All employees receive the annual salary divided into 14 installments, with 2 installments known as the 13th- and 14th-month salary or Holidays and Christmas Allowance, which are normally paid in June and November.
Working hours in Portugal
The standard workweek is 40 hours, up to 8 hours per day. Anything beyond 8 hours a day or above the hours agreed in the employment contract is considered overtime. Typically, the workday starts at 9 a.m. and ends at 6 p.m., with a lunch break from 1 p.m. to 2 p.m., normally from Monday to Friday.
Holidays in Portugal
There are 15 public holidays in Portugal:
- New Year’s Day
- Carnival
- Holy Friday
- Easter
- Freedom Day
- Labor Day
- Body of God
- Portugal Day
- Lisbon Municipal Holiday or other local public holiday
- Assumption of Our Lady
- Republic Implantation
- All Saints’ Day
- Restoration of Independence
- Immaculate Conception
- Christmas
Employers must give employees these days as paid leave. However, if employees are required to work on a holiday, they can be compensated with days in lieu or overtime pay. Overtime pay is an employee’s normal salary plus 50%.
Vacation days in Portugal
The statutory minimum is 22 paid vacation days. During the first 6 months of employment, employees receive 2 vacation days per month and are only entitled to schedule accrued days at the end of the 6th month, unless the employer agrees otherwise.
Scheduling holidays is usually completed by April 15 of each year. Employees must take at least 10 consecutive days of annual leave and are encouraged to distribute it throughout the year.
Employees can carry over 12 days of vacation time to the next year but must use them by April 30. Employers cannot offer employees additional pay to forfeit paid-leave days.
Portugal sick leave
To justify a work absence, employees are required to provide a sick leave certificate from a medical institution. Portugal Social Security covers this absence but does not provide compensation for the initial 3 days. Sick leave is remunerated starting from the 4th day onwards. This implies that if an employee is absent for 3 days with a certified justification from a medical professional, the company deducts those 3 days from the salary while the absences remain justified. However, keep in mind that it is common practice for employers in Portugal to provide paid sick leave during the initial 3 days regardless.
Employees can receive sick pay for up to 1,095 days. Typically, the sick pay ranges from 55% to 75% of the employee’s salary.
Parental leave in Portugal
Parents are entitled to up to 180 days of shared parental leave. The amount of leave and the percentage paid depends on how the leave is divided:
- If pregnant employees take 120 days, and their partner takes 30 days, the leave is paid at 100% of their salary.
- If pregnant employees take 150 days, and their partner takes 30 days, the leave is paid at 80% of their salary.
- Parents can take this shared time simultaneously or separately.
- Pregnant employees can take up to 30 days before delivery and must take at least 42 days after.
Non-birthing parents receive a mandatory parental leave of 28 days to take during the first 42 days after the child’s birth — 7 consecutive days immediately after the birth, and 21 days, consecutive or not, in the 6 weeks following the birth. Adoptive parents receive the same parental leave.
An extended parental benefit may be granted for a period up to 3 months as long as it is taken immediately after the granting period of the initial parental benefit or the extended parental benefit of the other parent. If employers approve this request, the employee is entitled to 25% of their salary during this time.
Health insurance in Portugal
Basic insurance is provided through the national system.
Portugal supplementary benefits
Supplementary health insurance may be provided to employees as a fringe benefit. It is common nowadays to offer additional health insurance, or a financial allowance for this purpose.
Many employers in Portugal also offer meal allowances.
Bonuses
In Portugal, bonuses are not mandatory. However, companies in certain industries offer a percentage of the worker’s regular salary as a bonus for specific achievements.
Termination and severance in Portugal
The probationary period in an employment contract in Portugal is typically 90 days and can be extended to 180 days for employees who hold positions of a highly technical nature or a high level of responsibility. For senior executives and managers, the probationary period may be extended to 240 days. Fixed-term contracts under 6 months may have a probationary period of 15 days with the option of increasing to 30 days if the engagement is extended. Although probationary periods are considered statutory in Portugal, they may be excluded by written agreement by both parties or reduced by Collective Bargaining Agreements (CBAs).
In general, dismissals in Portugal must be based on either disciplinary or objective reasons, which need to be preceded by a formal procedure.
A disciplinary reason occurs when an employee commits a serious offence that makes it practically impossible for the employment contract to remain in force. An objective reason occurs in cases of redundancy, via collective dismissal or job position termination procedure, or poor performance.
In the case of a disciplinary dismissal, no advance notice is needed. At the end of the formal procedure, the employee is officially considered dismissed once they are informed of the decision.
In case of an objective dismissal, the required notice period depends on the employee’s seniority:
- Less than or equal to 1 year: 15 days’ notice
- 1 year to less than 5 years: 30 days’ notice
- 5 years to less than 10 years: 60 days’ notice
- 10 years or more: 75 days’ notice
The severance payment, in case of permanent contracts must be equal to 14 days of basic pay for each year of employment.
Fixed-term employment contracts, on the other hand, expire at the end of the stipulated term, provided that the employer or the employee notifies the other party in writing of its desire to terminate either 15 or 8 days before the deadline expires, respectively.
If the employer declares a fixed-term contract expired, the employee is entitled to receive severance corresponding to 24 days of base salary and seniority for each full year of work.
Paying taxes in Portugal
Employees are entitled to social security coverage in Portugal. Both employers and employees contribute. Employees pay 11% of their salary, and employers pay approximately 23.75%, plus 1% for compensation and warranty funds.
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