Hiring in Portugal means taking on a set of statutory obligations that go well beyond a basic salary. Portuguese labor law, governed primarily by the Labor Code (Código do Trabalho), mandates a range of leave entitlements, bonus payments, and social contributions that every employer needs to account for from day one. This guide covers each of those obligations clearly so you can build compliant, competitive employment packages for your Portuguese workforce.
Annual leave
Portuguese employees are entitled to 22 working days of paid annual leave per year. In the first year of employment, leave accrues at 2 days per month and becomes usable after 6 months of service.
A few rules apply to how that leave is taken:
- At least 10 consecutive days must be taken between May 1 and October 31.
- Any unused leave that isn’t taken by April 30 of the following year is generally forfeited. Employees can’t carry it over indefinitely, so it’s worth building systems to track and encourage timely usage.
Public holidays
Portugal observes 13 national public holidays per year. On top of that, each municipality may add one local public holiday, bringing the potential total to 14. When planning team schedules, it’s worth confirming the specific municipality your employees work in to account for any local additions.
Leave entitlements
Portugal’s Labor Code provides a range of protected leave types. Understanding each one helps you plan for workforce absences and avoid inadvertent non-compliance.
Maternity and paternity leave
Portugal frames parental leave under a shared model called licença parental inicial, which gives parents flexibility in how they split and structure their time.
Mothers have three main options:
- 120 days at 100% of reference salary
- 150 days at 80% of reference salary
- 180 days shared between both parents at approximately 83% of reference salary
There’s a built-in incentive for shared parental responsibility: if the father takes at least 30 days concurrently with the mother, the family qualifies for an additional 30-day bonus period. In all cases, Social Security funds the payments, not the employer directly.
Paternity leave is separate and mandatory. Fathers must take 28 working days in total. The first 7 consecutive days must begin immediately after the child’s birth, with the remaining 21 days taken within 6 weeks of birth. Social Security pays 100% of the father’s reference salary for this period.
Sick leave
Portugal’s sick leave system uses a 3-day waiting period. Days 1 through 3 are unpaid, and employers aren’t required to cover them. From day 4 onward, Social Security steps in with payments on a sliding scale based on duration:
- Days 4–30: 55% of reference salary
- Days 31–90: 60% of reference salary
- Days 91–365: 70% of reference salary
- Beyond 365 days: 75% of reference salary
Some collective bargaining agreements (CBAs) require employers to top up Social Security payments to bring the employee closer to full pay. Check whether a CBA applies to your sector or employee category.
Bereavement leave
Bereavement entitlements vary by the employee’s relationship to the deceased:
- 20 consecutive days for the death of a spouse, civil partner, or child
- 5 working days for first-degree relatives (parents or siblings)
- 2 working days for second-degree relatives
Marriage leave
Employees are entitled to 15 consecutive calendar days of paid leave when they marry.
Family care leave
Employees can take up to 30 days per year to care for a child under 12 or a dependent with a disability. This applies regardless of whether the care is for illness or other qualifying needs.
Study and exam leave
Employees enrolled in formal education are entitled to 4 days of study or exam leave per subject per year. This is a statutory entitlement that doesn’t require employer approval beyond standard notice.
Mandatory bonuses
Portugal requires two annual bonus payments, both set at one month’s base salary.
Vacation bonus (subsídio de férias)
The vacation bonus is paid in June before the employee takes their annual leave. It equals one month’s base salary and is entirely mandatory. There’s no opt-out, and it can’t be folded into a monthly salary arrangement to avoid the obligation.
Christmas bonus (subsídio de natal)
The Christmas bonus must be paid by December 15 each year. Like the vacation bonus, it equals one month’s base salary and is non-negotiable under Portuguese law.
Taken together, these two bonuses mean Portuguese employees effectively receive 14 months of base salary per year. Budget for this from the outset.
Social security contributions
Both employers and employees contribute to Portugal’s Social Security system (Segurança Social):
- Employer contribution: 23.75% of gross salary
- Employee contribution: 11% of gross salary (withheld and remitted by the employer)
These contributions fund access to the National Health Service (SNS), the state pension, and parental benefits. The employer’s 23.75% rate is a fixed obligation across most standard employment categories, though some special regimes may apply.
Irs jovem: a note on withholding
Employers should be aware of the IRS Jovem tax exemption, which applies to young employees who meet certain criteria. Eligible employees benefit from a partial income tax exemption, which affects the withholding (retenção na fonte) you’ll apply to their salaries. If any of your Portuguese hires qualify, you’ll need to adjust your payroll calculations accordingly. Confirm eligibility directly with the employee, as they’re responsible for declaring their status.
Managing portugal compliance with an EOR
For foreign companies hiring in Portugal without a local entity, working with an Employer of Record (EOR) is often the most practical path to compliance. An EOR becomes the legal employer of record in Portugal, handling payroll, Social Security contributions, leave administration, and bonus payments on your behalf. This removes the need to establish a local entity while keeping you fully compliant with Portuguese labor law.
If you’re evaluating providers, it’s worth comparing EOR services based on their depth of in-country expertise, not just price.
FAQ
Are the vacation bonus and Christmas bonus really mandatory, or can they be built into the monthly salary?
They’re mandatory under the Labor Code and can’t be substituted by inflating the monthly salary. Both bonuses must be paid as separate, identifiable payments at the prescribed times (June and by December 15, respectively). Attempting to absorb them into monthly pay doesn’t satisfy the legal obligation.
Does the employer pay anything during sick leave?
No, for the first three days employees receive nothing (employer and Social Security both stand aside). From day 4 onward, Social Security pays the applicable percentage of the employee’s reference salary. However, if a collective bargaining agreement applies to your workforce, it may require you to supplement those payments. Check your CBA carefully.
What happens if an employee doesn’t take their annual leave by the deadline?
Unused annual leave that isn’t taken by April 30 of the year following the one in which it accrued is generally forfeited. Employees can’t accumulate leave indefinitely. As an employer, you have a legal duty to facilitate leave-taking, so it’s good practice to send reminders and avoid situations where operational pressures prevent employees from using their entitlement.
Does paternity leave apply to adoptive parents or same-sex couples?
Portuguese law has been progressively updated to extend parental rights to adoptive parents and same-sex couples. The general framework of licença parental inicial and the associated Social Security payments applies, though specific eligibility conditions can vary by situation. It’s advisable to confirm current rules with a Portuguese labor law specialist or your EOR when specific cases arise.
