Key Takeaways for Hiring in Portugal
- Portugal uses a 14-month salary system: 12 regular monthly payments plus mandatory vacation and Christmas bonuses
- Employers contribute 26.5% to social security; employees contribute 11%
- Fixed-term contracts automatically renew if you don’t provide 15 days’ written notice before expiry
- Youth under 35 get partial income tax exemptions on earnings up to €28,737.50 for up to 10 years
Continent
Europe
Capital
Lisbon
Currency
Euro (EUR)
Language
Portuguese
Payroll Cycle
Monthly (12 payments + two statutory bonuses = 14-month system)
VAT
23%
Quick Facts For Hiring In Portugal
Portugal Employment Contract Overview
A clear written contract is essential when hiring in Portugal. Here’s a quick overview of the core terms that typically shape employment agreements.
Up to 6 months: 15 days
More than 6 months: 30 days
General roles: 90 days
Technical/trust roles: 180 days
Management: up to 240 days
≤ 60 days: No notice required
> 60 days: 7 days’ notice
> 120 days: 15 days’ notice
1-5 years service: 30 days
5-10 years: 60 days
10+ years: up to 75 days
What Do You Need To Include In A Portuguese Employment Contract?
Make sure your contracts include all of these to comply with Portuguese labor law:
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
Payroll
Average employer cost
26.50%
| Category | Details |
|---|---|
| 13th Salary | Mandatory; paid in June and December |
| Avg employer tax | 26.50% |
Tax Breakdown
Personal Income Tax (IRS)
| Category | Rate / Details |
|---|---|
| Up to €8,059 | 13% |
| €8,060 – €12,160 | 16.5% |
| €12,161 – €20,300 | 26.5% |
| €20,301 – €25,000 | 35% |
| €25,001 – €36,800 | 37% |
| €36,801 – €80,000 | 45% |
| Over €80,000 | 48% |
Corporate Income Tax (IRC)
| Category | Rate / Details |
|---|---|
| Standard Rate | 20% |
| Reduced Rate | 16% on the first €50,000 of taxable income for small and medium-sized enterprises (SMEs) |
Social Security Contributions
| Category | Rate / Details |
|---|---|
| Employee Contribution | 11% |
| Employer Contribution | 23.75% |
| Total Contribution | 34.75% |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 23% |
Onboarding Process
Onboarding in Portugal typically includes the following steps to ensure a smooth transition for new hires:
- Employment Contract — Must be in writing; include job title, duties, salary, working hours, leave entitlements, and termination conditions
- Registration with Authorities — Register the employee with the Social Security Institute (Segurança Social)
- Payroll Setup — Ensure accurate calculation and withholding of taxes and social security contributions
- Employee Documentation — Collect personal identification, bank account details, and tax information
- Workplace Policies — Provide access to company policies, health and safety guidelines, and any applicable collective agreements
- Pre-boarding — Pre-boarding Pre-boarding
Leave And Holiday Entitlement In Portugal
Annual Leave
Statutory annual leave (Férias) is 22 working days per year.
New employees can only start using accrued leave after six months of service, except by agreement. In the first year, leave accrues at two days per month, up to a maximum of 20 days, and is usable after six months. If the first calendar year ends before six months of service, the remaining leave can be carried until June 30 of the next year.
From year two onward, the full 22 days are granted as of January 1, based on the prior year’s service.
At least 10 consecutive days of leave must be granted between May and October. Unused statutory leave can be carried over until April 30 of the following year. No cash-out is permitted (it must be taken).
Public Holidays
There are 13 national mandatory holidays in Portugal, including New Year, Freedom Day (April 25), Labour Day, Portugal Day (June 10), Restoration Day (December 1), and Christmas. Regions may grant additional municipal holidays.
Sick Leave
Sick leave (Baixa Médica) begins after a three-day unpaid waiting period (which you may choose to pay). Social Security benefits begin on day four:
-
55% of reference salary for days 4-30
-
60% for days 31-90
-
70% for days 91-365
-
75% beyond 365 days, up to a maximum of 1,095 days (3 years)
To qualify, the employee must have contributed at least six months, with at least 12 days worked in four of the last six months. No waiting period is required in cases of hospitalization, chronic disease, or pregnancy-related conditions.
Maternity Leave
Options:
-
120 days at 100%
-
150 days at 80%
-
180 days shared at ~83% pay (when both parents share the leave)
Mothers must take at least 42 days after birth and may begin up to 30 days before.
Paternity Leave
Mandatory 28 working days: seven must be taken immediately after birth (consecutive). The remaining 21 days can be taken within the six weeks following birth, consecutive or not. An additional seven optional days may be taken within the first six weeks.
Other Types of Leave
-
Parental Leave: Additional shared leave may be granted, part-paid, extending beyond standard periods under Social Security rules
-
Bereavement Leave: 20 consecutive days for death of spouse or child; five days for first-degree relatives (parents); two days for second-degree relatives (siblings, grandparents)
-
Marriage Leave: 15 consecutive days
-
Care/Family Medical Leave: 30 days per year to care for a child under 12 or someone with disability/chronic illness; 15 days per year for older dependents
-
Study/Exam Leave: Up to four days per subject per year for exams (day of exam or day before)
Termination and Offboarding in Portugal
Ending employment in Portugal requires careful attention to notice periods, severance calculations, and documentation. Here’s how to handle each termination type compliantly.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
Portugal Employee Resignation
Notice
Form
Clear, written notice stating the intention to resign and the last day of employment
Notice period
-
During probation:
-
Less than 60 days: No statutory notice required
-
60-120 days: Seven days’ notice
-
120 days: 14 days’ notice
-
-
After probation:
-
Less than two years’ service: 30 days’ notice
-
≥ two years’ service: 60 days’ notice
-
Your employment contract or Collective Bargaining Agreement can require a longer notice period, but it can’t be shorter than the statutory minimum.
Payment in lieu of notice or notice waiver
You may waive notice.
End-of-Service Benefits
Severance/Gratuity
No statutory severance entitlement.
Other Benefits
-
Payment for accrued but unused annual leave
-
Any unpaid bonuses, holiday/Christmas subsidies (13th/14th salaries) for the year up to the last working day (pro-rated)
Termination Documentation
-
Written resignation notice with effective date
-
Final settlement statement (quitação) detailing payments and deductions
-
Certificate of employment (Certidão de Trabalho)
-
Social Security deregistration forms
Employer Termination With Cause in Portugal
Acceptable grounds
Serious breach of duties (insubordination, repeated failure of obligations, dishonesty, violating health & safety, theft, violence) that makes continuation intolerable.
Notice
Form
Dismissal letter specifying the grounds, referencing the disciplinary procedure followed, and providing legal justification
Notice period
None
Payment in lieu of notice or notice waiver
Not applicable
End-of-Service Benefits
Severance
Not applicable for dismissal with just cause.
Other Benefits
-
Accrued but unused annual leave
-
Outstanding salary up to the last working day
-
Pro-rated 13th and 14th month payments (holiday subsidy, Christmas subsidy)
-
Reimbursements or contractual entitlements accrued before termination
Termination Documentation
-
Stage 1: Accusation Note/Charge Note (Nota de Culpa) – detailed document outlining facts, evidence, and intended penalty
-
Stage 2: Employee Defense (within 10 working days) – employee’s written response
-
Stage 3: Final Dismissal Decision – conclusive letter confirming the justified cause and termination date
-
Final settlement statement (quitação)
-
Certificate of employment (certidão de trabalho)
-
Notification to Social Security
Employer Termination Without Cause in Portugal
Acceptable Grounds:
Termination must be based on objective reasons related to market, structural, or technological factors that lead to the extinction of the job position.
Form
Dismissal letter clearly outlining the objective reasons, selection criteria, effective date, and compensation details
Notice period
-
less than one year service: 15 days
-
One to five years: 30 days
-
Five to 10 years: 60 days
-
≥ 10 years: 75 days
Payment in lieu of notice or notice waiver
Possible—you may either waive the notice or pay in lieu
End-of-Service Benefits
Severance
Severance is mandatory at 12 days’ base salary (plus seniority) per year of service. This is capped at 12 times the monthly base salary or 240 times the monthly minimum wage, whichever is lower.
Other Benefits
-
Accrued but unused annual leave
-
Outstanding salary up to the last working day
-
Pro-rated 13th and 14th month payments
-
Reimbursements or contractual entitlements accrued before termination
Termination Documentation
-
Written dismissal letter specifying objective grounds, termination date, severance amount, notice or payment in lieu, and procedural steps followed
-
Any prior internal notifications validating the objective grounds
-
Final settlement statement (quitação)
-
Certificate of employment (certidão de trabalho)
-
Social Security deregistration notice
Mutual Termination Agreements in Portugal
MTAs are voluntary agreements signed by both parties to terminate employment by mutual consent.
Notice
Form
Must be in writing, signed by both employer and employee, including date of agreement and effective termination date. Must be executed in the presence of a public notary.
Notice period
-
Less than one year: 15 days
-
One to five years: 30 days
-
Five to 10 years: 60 days
-
≥ 10 years: 75 days
Waiver of notice
Parties may agree that notice is waived or reduced. If you want to incorporate statutory notice, specify the period or payment in lieu.
End-of-Service Benefits
Severance
No statutory minimum severance applies to MTAs. You may negotiate a severance amount. Commonly, compensation above statutory minimums is included in exchange for full release of claims.
Other Benefits
-
Accrued but unused annual leave
-
Outstanding salary up to the last working day
-
Pro-rated 13th and 14th month payments
-
Reimbursements or contractual entitlements
Termination Documentation
-
Mutual Termination Agreement
-
Final settlement statement (quitação)
-
Certificate of employment (certidão de trabalho)
-
Social Security deregistration notice
Offboarding Process for the End of Fixed-term Contracts in Portugal
If the Fixed-Term Contract Ends Normally:
Notice
You must provide written notice of non-renewal 15 days before the fixed-term end date. Failure to provide this notice results in the contract automatically renewing for the same term.
End-of-Service Benefits
Severance/Gratuity
Mandatory compensation is due on natural expiry: 24 days’ pay per year of service.
Other Benefits
- Accrued but unused annual leave
- Outstanding salary up to the last working day
- Pro-rated 13th and 14th month payments
- Reimbursements or contractual entitlements
If the Employer Terminates Early
Notice
You can only end a fixed-term contract early in specific cases allowed by law:
- Dismissal with just cause
- Dismissal due to objective reasons
End-of-Service Benefits
Severance/Gratuity
Statutory compensation applies: 24 days’ pay per year of service.
Other Benefits
- Accrued but unused annual leave
- Outstanding salary up to the last working day
- Pro-rated 13th and 14th month payments
- Reimbursements or contractual entitlements
Final Payment Timing & Immigration and Visa Compliance in Portugal
Final Payment Timing and Compliance:
Final Payment Deadline
All final amounts should be paid by the last working day.
Penalty
Administrative fines for non-compliance apply.
Visa and Immigration Compliance
For non-EU employees, you must notify immigration authorities about contract termination or resignation to cancel or update the work permit/residence permit status.
Supporting Guides
Frequently Asked Questions
What’s the 14-month salary system?
Portugal requires employers to pay 14 months of salary per year: 12 regular monthly payments plus a mandatory vacation bonus (typically paid in June) and a Christmas bonus (paid by December 15). This is statutory, not optional.
What happens if I don’t give 15 days’ notice before a fixed-term contract ends?
The contract automatically renews for the same term. You must provide written notice of non-renewal at least 15 days before expiry, or the contract continues.
What’s the Youth PIT Regime?
Taxpayers up to 35 years old get partial income tax exemptions on earnings up to €28,737.50/year for up to 10 years: 100% exemption in year one, decreasing gradually to 25% in years 8-10. This makes Portugal attractive for younger talent.
How much annual leave do employees get?
22 working days per year. New employees can only start using leave after six months of service (except by agreement). At least 10 consecutive days must be taken between May and October.
When do I owe severance pay?
For termination without cause based on objective reasons (market, structural, or technological factors), you owe 12 days’ base salary per year of service, capped at 12 times monthly salary or 240 times minimum wage. For fixed-term contracts that end normally or early, you owe 24 days’ pay per year of service.
What’s required for dismissal with cause?
You must follow a formal disciplinary procedure:
Grounds must be serious breaches like theft, violence, or gross insubordination.
Do mutual termination agreements require a notary?
Yes. MTAs must be executed in the presence of a public notary to be valid.
When must I pay final wages after termination?
By the employee’s last working day. This includes outstanding salary, unused leave, and pro-rated 13th and 14th month payments. Delays result in administrative fines.
