Portugal is a country in the Iberian Peninsula located in southwestern Europe. Its territory also includes the archipelagos of the Azores and Madeira in the Atlantic. It features the westernmost point in continental Europe and shares a border with Spain.

Portugal is a high-income, developed country with a bustling tech scene growing in Lisbon. The country's booming tech scene and growing startup ecosystem means many companies are now hiring talent in Portugal.

Job Title Restrictions

There are no restrictions on job titles that we can hire in Portugal.

Working Hours

The maximum number of working hours in Portugal is 40 hours per week. Any hours worked beyond the maximum will be paid in overtime as follows:

• 1st hour of overtime: an additional 25%
• 2nd+ hour of overtime: an additional 37%
• On weekly rest days: an additional 50%

Note: If the Employee works on Sunday (mandatory rest day) even for just 1 hour, by law, the employee is entitled to 1 day of paid rest, to be enjoyed in the next 3 days.

Work performed between 10 pm and 7 am the following day is considered night work and these hours are paid with a 25% increase (hour paid to 125%).

Minimum Wage

The minimum wage in Portugal is EUR 760 per month.

13th/14 Salary

The annual remuneration in Portugal is divided by 14, corresponding to:

• 12 months salary
• 1 month Vacation Allowance (13th Salary), usually paid in July
• 1 month Christmas Allowance (14th Salary), usually paid in November

In the hiring year, the Christmas Allowance is distributed on a daily basis from the hire date until the end of the calendar year.

Employees can opt to spread the 13th/14th salaries through the year to receive a consistent monthly amount.

Probation Period

There is a 30 day maximum probation period for Short-Term Employment Contracts, which can be ended at any time, as long as the project ends.

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Taxes & Local Employment Costs

Employee Taxes

Social Security Tax: 11% of gross salary

IRS Tax (Income tax): varies depending on different variables, such as:

• employee’s monthly salary amount and the sum of other remunerations in the month
• civil status; if married, spouse employed or not employed;
• number of dependents and children;
• residence on Continental Portugal or Azores or Madeira Islands;
• any disabilities.

If the employee has some tax benefits regimes, the income tax has rules and those benefits will reflect on employee’s IRS tax:

• NHR “non-habitual resident” (20% income tax flat rate during 10 years),
• “IRS Young Program (50% income tax reduction in the first year; 40% income tax reduction in the second year; 30% income tax reduction in the third and fourth years and 20% income tax reduction in the fifth year”,
• Return Program (income tax applies only on half of remuneration for 5 years)

Employer Taxes & Contributions

• ‍Social Security Tax: 23.75%‍
• Compensatory Fund Tax: 1%‍
• Mandatory Remote Working Allowance (WFH): Minimum EUR 22 per month (note that any amounts above this are subject to tax)‍
• Work Accident/Injury Insurance: The amount depends on employee's salary, function, and whether the employee travels‍
• Hygiene, Safety, and Labor Medicine: EUR 65 per year‍
• Hygiene & Safety professional training: EUR 67 per year

Annual Leave

Employees are entitled to a minimum of 20 days of vacation in their hiring year (between the hire date and December 31st), accruing at a rate of 2 days per month worked. Any unused vacation days can be carried over to the following calendar year and must be used by the anniversary of the hiring date.

In subsequent years, employees are entitled to a minimum of 22 days, accruing at a rate of 2 days per month worked.

Any unused vacation days can be carried over to the following calendar year and must be used by April 30th. A maximum of 30 days is allowed in total when counting accrued days and carried-over days.

Employers wishing to provide more days off to employees should add these to the contract as leave days, which are a separate type to the statutory vacation days.

Sick Leave

Employees are entitled to sick leave if they provide a medical note (either from the national health system or the official “Health 24” service).

The first 3 days of sick leave are unpaid (though employers may choose to cover this); subsequent days are paid by social security.

Parental Leave

There are a number of options that employees can take for parental leave in Portugal.

The mother can choose one of the following:

• Parental Leave with 120 days of leave, 100% paid by Social Security
• Parental Leave with 150 days of leave, 80% paid by Social Security
• Shared Parental Leave “Licença parental partilhada” - Shared parental leave assumes that the period of 120 or 150 days of initial parental leave (taken by the mother) is immediately followed by the addition of 30 days taken in full by the father.

If the parents opt for Shared Parental Leave and the mother only takes the 120 days, then the mother receives 120 days with 100% paid through Social Security.

If the parents opt for Shared Parental Leave and the mother takes the 150 days, then the mother receives 150 days paid at 83% (and not 80%) by Social Security.

Fathers, if Shared Parental leave is not chosen, receive:

• 7 consecutive days (or 5 working days) obligatorily taken immediately after the birth, considering the day of birth. 100% paid by Social Security.
• 21 calendar days to be taken while the mother is on leave. 100% of salary is paid by Social Security.
• In addition, an optional leave of 7 further calendar days, to be taken while the mother is on leave; 100% paid by Social Security.

Public Holidays

Remote employees have the right to the City Holiday based on their home address.

Click here for a list of Portuguese holidays in 2024.

Process

Portugal has a probationary period where an employment contract can be terminated without cause, this period is typically 90 days or 180 days for employees in technical positions. Fixed-term contracts may have a 15-day probationary period.

After the probationary period, if the employer wants to terminate an employee they need to do so with just cause or provide a notice period.

Notice Period

During probation/trial periods, there is no notice period.

Out of probation, the employee may terminate the contract regardless of just cause, by writing to the employer with the following amount of notice:

• Less than 6 months = 15 days notice
• 6 months to 2 years = 1 month notice
• 2+ years = 2 months notice

Note that notice periods are counted from the day the employee receives the termination letter at their address.

Severance Pay

Regarding the vacation allowance and the Christmas allowance, if the employment contract ends after 1 year (on the client's initiative or the employee's own initiative), by law, there are still amounts to be considered that have to be paid.

Severance pay to be paid to the worker in case of termination of an employment contract that has lasted up to 12 months:

• Compensation (indemnity) for lapse of employment contract
• Vacation allowance for months worked
• Christmas allowance for months worked
• Vacation not taken
• Hours of training not completed.

Severance pay to be paid to the worker in case of termination of an employment contract that has lasted more than 12 months:

• Compensation (indemnity) for lapse of employment contract
• Full vacation allowance (1 salary) automatically acquired on January 1st of each year.
• Proportional vacation allowance (referring to months worked in the year of termination of contract) automatically acquired on January 1st of each year.
• Christmas allowance for months worked in the year of termination
• Vacation not taken (on January 1st of each year the worker is automatically entitled to 22 working days of vacation
• Proportionate vacation pay ( calculated proportionally in relation to the time worked in the year of termination
• Hours of training not completed during the employment contract.

Portugal has mandatory 13th and 14th salary payments, each equal to 1 month of salary.

These are paid out in June for the 13th month and December for the 14th month. Portugal also introduced their NHR Tax Benefit for non-habitual residents, but it was recently replaced by ITS as an incentive that aims to attract foreign professionals to work in Portugal.