Navigating Portugal’s employment laws is essential for companies looking to hire talent in this key European market. For businesses expanding without a local entity, an Employer of Record (EOR) in Portugal offers a streamlined solution for compliant hiring, payroll, and benefits administration.

As your EOR in Portugal, G-P uses its local entity to hire your chosen candidates on your behalf. We handle all employment-related legal and HR responsibilities, from generating compliant employment contracts to managing payroll and taxes. This allows you to build your team in Portugal quickly and compliantly, without the cost and complexity of establishing your own subsidiary.

Global hiring in Portugal

Understanding Portuguese labor law is the first step to successfully building a team in the country. An Employer Record in Portugal provides the necessary local expertise to ensure compliance with labor laws. Key employment considerations, including Portuguese labor agreements, must be thoroughly evaluated.

Employment contracts in Portugal

Portuguese law requires employers to provide a written employment contract that outlines the core terms of the employment relationship. The contract must be in Portuguese and state all salary and compensation amounts in euros (EUR). Essential information to include:

  • Employer and employee details

  • Place of work and job responsibilities

  • Contract start date and duration (if fixed-term)

  • Working hours and remuneration

  • Holiday and notice periods

  • Reference to any applicable collective bargaining agreements (CBAs)

Employees in Portugal are paid in 14 installments per year. This includes the standard 12 monthly payments plus a 13th-month holiday allowance (typically paid by June) and a 14th-month Christmas bonus (paid by December 15th).

Working hours in Portugal

The standard workweek is 40 hours, with a maximum of 8 hours per day. Work performed beyond these hours is considered overtime and must be compensated accordingly. A typical business day is from 9 a.m. to 6 p.m., Monday to Friday, with a one-hour lunch break.

Leave entitlements in Portugal

An Employer of Record (EOR) in Portugal assists companies in complying with leave entitlements by managing statutory public holidays, vacation accrual, sick leave , and complex parental leave.

Public holidays in Portugal

Portugal observes 13 mandatory national public holidays, during which employees are entitled to a paid day off:

  • New Year's Day (January 1)

  • Good Friday (moveable date)

  • Easter Sunday (moveable date)

  • Freedom Day (April 25)

  • Labor Day (May 1)

  • Corpus Christi (moveable date)

  • Portugal Day (June 10)

  • Assumption of Mary (August 15)

  • Republic Day (October 5)

  • All Saints' Day (November 1)

  • Restoration of Independence (December 1)

  • Immaculate Conception (December 8)

  • Christmas Day (December 25)

Carnival Tuesday is an optional holiday often granted by employers or through collective agreements. Additionally, each municipality designates a local public holiday. If an employee must work on a public holiday, they are entitled to their normal wage plus a 50% premium or a compensatory rest day with a 50% premium.

Vacation days in Portugal

The statutory minimum annual leave is 22 paid working days. In the first year of employment, an employee accrues 2 vacation days for each month worked, which can be taken after 6 months of service. Untaken vacation days can generally be carried over, but they must be used by April 30 of the following year to ensure compliance. Employers may not offer additional pay in exchange for an employee forfeiting their vacation days.

Portugal sick leave

Employees must provide a medical certificate to justify an absence due to illness, ensuring compliance with employment standards. Leveraging SaaS EOR services ensures companies meet social security and other employment obligations seamlessly. The national social security system offers sick pay benefits starting from the 4th day of absence, ensuring support for employees. For the first 3 days, there is no statutory obligation for the employer to pay the employee’s salary. However, many companies offer paid sick leave for these first 3 days as a competitive benefit. Social security benefits range from 55% to 75% of the employee’s reference salary and can be paid for up to 1,095 days, providing reliable financial support.

Parental leave in Portugal

Portugal offers comprehensive parental leave provisions, tailored to the global employment landscape. Key entitlements include:

  • Initial parental leave: Parents can share an initial leave of 120 days (paid at 100% of reference salary by social security) or 150 days (paid at 80%). The birth mother must take a mandatory 6 weeks (42 days) of leave immediately after the birth.

  • Shared leave bonus: If the leave is shared, benefits can be increased. For example, a 120-day leave shared between parents can be extended by 30 days, with all 150 days paid at 100%. A 150-day leave shared can be extended by 30 days, with all 180 days paid at 83%.

  • Father’s/Non-birthing parent’s exclusive leave: The non-birthing parent is entitled to 28 days of mandatory leave. Seven of these days must be taken consecutively immediately after the birth, with the remaining 21 days taken within the first 6 weeks.

Adoptive parents are entitled to the same leave provisions. Utilizing an EOR can streamline the management of parental leave processes, providing comprehensive HR support and reducing administrative overhead.

Health insurance and supplementary benefits in Portugal

Managing employee benefits in Portugal can be complex due to the country's robust labor laws and social security system. An EOR simplifies this process by ensuring compliance with all statutory requirements, such as social security contributions, and managing supplementary benefits like private health insurance and meal allowances. 

While Portugal's national health service (Serviço Nacional de Saúde - SNS) provides basic healthcare coverage for all residents, supplementary private health insurance is a highly valued and common employee benefit. Additionally, a meal allowance (subsídio de alimentação) is a standard benefit. When paid via a meal card instead of cash, the allowance is tax-exempt up to a certain daily limit, making it advantageous for both employers and employees. Additionally, AI-powered EOR services can optimize payroll processing, helping manage allowances effectively.

Termination and severance in Portugal

An Employer of Record (EOR) in Portugal assists companies with compliant employee termination by navigating the strict legal procedures required under Portuguese labor law. The EOR ensures that all terminations are based on valid disciplinary or objective grounds, such as redundancy, and adheres to the specified notice periods based on the employee's tenure. 

Terminating an employment contract in Portugal requires adherence to strict legal procedures and must be based on either disciplinary or objective grounds. The standard probationary period is 90 days but can be extended to 180 days for complex roles or 240 days for senior management.

For objective dismissals, such as redundancy, notice periods are based on the employee's tenure:

  • Up to 1 year of service: 15 days’ notice

  • 1 to 5 years of service: 30 days’ notice

  • 5 to 10 years of service: 60 days’ notice

  • 10+ years of service: 75 days’ notice

Employees terminated due to collective dismissal or job position extinction are entitled to severance pay of 14 days of base pay and seniority payments per year of service. If an employer ends a fixed-term contract at its conclusion, the employee is entitled to compensation of 24 days' pay per year of service.

Paying taxes in Portugal

Both employers and employees contribute to Portugal's social security system, which funds pensions, parental leave, and sick pay. Employees contribute 11% of their gross salary. The standard employer contribution is 23.75%. Employers also contribute an additional 1% to the Work Compensation Guarantee Fund (FGCT). An EOR in Portugal ensures businesses remain compliant in paying required employee taxes by handling all social security contributions. This reduces the need for your company to understand the intricacies of Portuguese tax law, minimizing compliance risks and potential penalties.

Selecting the right EOR partner in Portugal

Selecting an employer of record (EOR) in Portugal requires an assessment of their proficiency in handling various employment scenarios. Key factors to consider include the provider's proven history of assisting international businesses, their capability to deliver tailored solutions, and their deep understanding of Portuguese legal frameworks. An EOR that provides integrated, efficient processes and reliable support can significantly contribute to cost-effective global hiring strategies. Entering into a partnership with an EOR that aligns with your business objectives will ensure seamless employment operations in Portugal, while strictly adhering to local legal requirements. 

Read more on how to select the best employer of record.

Why choose G-P as your EOR in Portugal?

G-P EOR is the recognized leader in global employment, ranked No. 1 in every industry analyst report. G-P’s global employment platform delivers everything companies of all sizes need to manage the full employee lifecycle with its trusted Global HR Agent, G-P Gia, and AI-powered Employer of Record (EOR) and Contractor products. G-P supports teams in 180+ countries with more than a decade of global employment experience, the largest team of in-country HR, legal, and compliance experts, and its unmatched proprietary knowledge base.

G-P is also thepreferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.


Request a proposal today to start hiring in Portugal today.