Portugal’s employment law sits firmly on the side of the employee. The Labour Code (Código do Trabalho) sets out detailed rules on notice periods, severance, and the grounds on which a contract can be ended, and the Authority for Working Conditions (ACT) enforces them. For foreign employers managing Portuguese staff directly or through a local entity, understanding these rules before you act is essential. Getting the process wrong doesn’t just expose you to a tribunal claim: it can mean reinstatement orders, penalty payments, and reputational damage.
This guide covers every major termination scenario: probation, dismissal for cause, redundancy, fixed-term contract expiry, and mutual agreement. It also explains what goes into the final pay packet and what you need to do for non-EU employees.
Probation periods
Portugal allows either party to end a contract during the probation period without notice, severance, or a stated reason in most cases. However, the rules shift depending on how the contract is structured and how long the probation runs.
Fixed-term contracts
- Contracts of six months or less: 15-day probation period
- Contracts of more than six months: 30-day probation period
Indefinite contracts
- General hires: 90 days
- Management and trust roles: 180 days
- New hires brought on for a newly created activity: 240 days
Notice requirements during probation
If the employer terminates during a probation period longer than 60 days, they must give the employee 7 days’ written notice. For probation periods longer than 120 days, that rises to 15 days. No severance is owed in either case. If you terminate within those thresholds and the probation is 60 days or under, no advance notice is required from either side.
Termination with just cause
Just cause dismissal (despedimento por justa causa) applies when an employee commits serious misconduct: theft, serious insubordination, violence, repeated unexplained absences, or similar behaviour that makes continuing the employment relationship unreasonable. No severance is owed for a valid just cause dismissal, but the procedural requirements are strict.
The process runs as follows:
- The employer serves the employee a written Accusation Note (nota de culpa) setting out the alleged conduct in detail.
- The employee has 10 working days to submit a written response.
- The employer reviews the response and issues a final written decision.
Skipping any of these steps, or compressing the timeline without legal basis, converts the dismissal into an unfair dismissal. There’s no shortcut here. Even if the underlying conduct is serious, courts won’t uphold a dismissal that bypassed the mandatory disciplinary process.
Termination for objective reasons
This category covers two situations: redundancy through job elimination (despedimento por extinção de posto de trabalho) and dismissal due to an employee’s inability to adapt to their role (despedimento por inadaptação). Both require genuine economic, organisational, or technical justification. You can’t use this route simply because the working relationship has soured.
Notice periods
Employers must give written notice based on the employee’s length of service:
| Length of service | Notice period |
|---|---|
| Less than 1 year | 15 days |
| 1 to 5 years | 30 days |
| 5 to 10 years | 60 days |
| 10 years or more | 75 days |
Severance
Severance for objective reasons is calculated at 12 days’ base salary per year of service. This is capped at either 12 times the employee’s monthly salary or 240 times the national minimum daily wage, whichever is lower.
Employee resignation
Employees who resign must give notice based on their tenure:
- During probation: 0 to 15 days, depending on the probation duration
- After probation, with less than 2 years of service: 30 days
- After probation, with 2 or more years of service: 60 days
If an employee leaves without giving proper notice, the employer is entitled to compensation equal to the base salary that would have been earned during the notice period.
Fixed-term contract expiry
Fixed-term contracts don’t automatically terminate at the end of the agreed period; they renew unless the employer acts. To prevent renewal, you must give the employee at least 15 days’ written notice before the contract’s end date.
If the contract expires or you choose not to renew it, severance is owed at 24 days’ pay per year of service. This is a higher rate than applies to redundancy, which reflects the fact that the employee was hired knowing the role was time-limited.
Mutual termination agreement
Both parties can agree to end the employment relationship at any time through a mutual termination agreement (acordo de cessação). The agreement must be executed in writing and signed before a notary or the relevant employment authority; a simple email exchange won’t satisfy Portuguese law.
Statutory notice periods apply unless both parties expressly waive them in the agreement. Severance is negotiable, but the agreed amount can’t fall below the statutory minimums that would apply in the relevant termination scenario.
Unfair dismissal
If an employee believes their dismissal was unlawful, they can file a complaint with ACT or bring a claim before the labour courts. Where a dismissal is found to be unfair, the employer faces one of two outcomes:
- Reinstatement of the employee, or
- Payment of severance plus compensation calculated at 30 days’ pay per year of service, with a minimum of €1,840
Courts can reduce the compensation amount if the employer demonstrates good faith, but that’s at the court’s discretion. The risk of an unfair dismissal finding is the main reason to get the procedural steps right at the outset, regardless of which termination route you’re using.
Final pay
All final pay must be settled by the employee’s last working day. The final payment includes:
- All outstanding salary for days worked
- A pro-rated vacation bonus
- A pro-rated Christmas bonus
- Compensation for any accrued but unused annual leave, where applicable
There’s no grace period for final pay under Portuguese law. Late payment can itself become a separate legal liability.
Non-EU employees
If you’re terminating a non-EU national, you must notify AIMA (the Agency for Integration, Migration and Asylum) of the termination. This matters because the employee’s work authorisation is tied to the specific employment relationship. Failing to notify AIMA doesn’t affect the validity of the termination itself, but it’s a compliance obligation you can’t overlook.
Working with an EOR in portugal
For foreign employers without a Portuguese legal entity, running terminations compliantly means managing a set of procedural requirements, deadlines, and documentation obligations that are easy to get wrong from a distance. An Employer of Record (EOR) handles employment on your behalf under Portuguese law, including terminations, final pay calculations, and regulatory notifications.
If you’re considering this model, it’s worth understanding what an EOR does in practice before committing. And if you’re evaluating providers, comparing EOR services by country coverage, compliance depth, and support quality will help you find the right fit for your Portugal headcount.
FAQ
Can I dismiss a Portuguese employee immediately for serious misconduct?
You can dismiss for serious misconduct without notice or severance, but you can’t do it instantly without process. You must serve an Accusation Note, give the employee 10 working days to respond, and then issue a formal decision. Skipping these steps makes the dismissal unfair regardless of how serious the conduct was.
Is there a minimum severance payment in Portugal?
There’s no universal minimum, but severance rates are set by law depending on the termination route. Objective reasons (redundancy or inadaptation) carry 12 days’ base salary per year of service. Fixed-term contract non-renewal carries 24 days’ pay per year of service. Unfair dismissal compensation has a minimum floor of €1,840.
What happens if I don’t give proper notice before ending a fixed-term contract?
If you don’t give at least 15 days’ written notice before the contract’s end date, the contract renews automatically for the same period. You’d then need to either let it run or take active steps to end it through the appropriate process.
Do mutual termination agreements need to be witnessed or notarised?
Yes. A mutual termination agreement (acordo de cessação) must be executed in writing before a notary or employment authority to be legally valid. It’s not enough for both parties to sign a document privately or confirm terms by email.
