Employer of Record in Portugal

General Information

• Currency: Euro (EUR)
• Employer Taxes: 26.50%
• Payroll Frequency: Monthly
• Employee Costs: 11%
• Capital: Lisbon
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The national minimum wage in Portugal is €820 per month, calculated over 14 months.

In the autonomous region of the Azores, the minimum wage for 2024 is set at €861

Payroll

Payroll Cycle: The payroll cycle in Portugal is generally a monthly cycle, with wages paid before the last day of each month.

13th Salary

In Portugal, there are mandatory 13th and 14th salary payments. These are typically paid in June (for holidays) and December (for Christmas), though they can also be distributed across the 12 regular monthly salaries.

Working Hours

General: In Portugal, standard working hours are set at 40 hours per week, with 8 hours per day. However, the maximum weekly and daily working hours may vary based on the terms outlined in employment contracts or collective bargaining agreements.

Overtime: The first 100 overtime hours are compensated as follows:

• 125% of the regular salary for the first hour on weekdays.
• 137.5% of the regular salary for additional hours on weekdays.
• 150% of the regular salary for hours worked on weekends or public holidays.

For overtime beyond 100 hours:

• 150% of the regular salary for the first hour on weekdays.
• 175% of the regular salary for additional hours on weekdays.
• 200% of the regular salary for hours worked on weekends or public holidays.

Overtime on Sundays requires weekend overtime pay, plus a compensatory rest day within the following three working days.

Leave

Annual Leave (Vacation):

Employees are entitled to a minimum of 22 working days of paid annual leave after completing one year of service. During the first year, employees accrue 20 days of leave at a rate of two days per month.

Unused leave can be carried over into the following year but must be taken by April 30th. However, no more than 30 days of leave can be used within a single calendar year.

Public Holidays

In addition to the 13 national holidays listed below, each of the 308 municipalities has its own regional or local public holiday. Employees are entitled to take the local holiday corresponding to their workplace, and the specific date should be confirmed with the local authorities.

Public holidays that fall on a weekend are typically not compensated with an additional day off.

Sick Days

The first three days of sick leave are unpaid, and the employee can provide a self-declaration of illness to notify their employer. From the fourth day onwards, sick leave is paid by the Social Security Institute.

The daily benefit is calculated as a percentage of the employee’s reference salary, which varies depending on the length and nature of the illness:

• For illnesses lasting up to 30 days, the employee receives 55% of the reference salary.
• For illnesses lasting between 31 and 90 days, the employee receives 60%.
• For illnesses lasting between 91 and 365 days, the employee receives 70%.
• For illnesses lasting more than 365 days, the employee receives 75%.

The maximum duration for receiving sickness benefits is:

• Up to 1,095 days for employed workers, seafarers, and coastguards.
• Up to 365 days for self-employed workers and scientific research grant holders.

To qualify for sickness benefits from the fourth day, employees must have completed at least six calendar months of service, whether consecutive or not. Employees must provide a Certificate of Temporary Incapacity for Work (CIT) issued by a doctor, valid retroactively for up to 30 days. Alternatively, workers may self-declare incapacity via a digital service from the National or Regional Health Service, valid retroactively for up to 5 days.

Maternity Leave

Expectant mothers are entitled to 100% of their usual salary, exempt from Social Security and tax contributions, for a period of 120 days, paid directly by Social Security.

To qualify, the employee must have worked at least 80 days in the 12 months prior to the expected due date.

Under Portuguese law, parental leave is also available following the birth of a child and can be shared between both parents. When shared, the total parental leave period can extend to 180 days, paid at 83% of the usual salary. The mother is entitled to start parental leave 30 days before the expected delivery and must take a minimum of six weeks after the birth.

Paternity Leave

Fathers are entitled to paternity leave of up to 28 working days, with at least 5 consecutive days to be taken within the first 42 days following the child’s birth. This leave can be taken all at once or spread out over a series of days. After completing the 28 days, fathers are also eligible for an additional 7 days of leave, which must be partially used while the mother is on maternity leave.

Paternity leave is paid by Social Security at 100% of the father’s average salary over the last six months and is exempt from Social Security and tax contributions.

Parental Leave

Following the mandatory six weeks of maternity leave and 28 days of paternity leave, the couple can choose how to allocate the remaining leave, which is either 78 or 108 days. If they opt for a total of 150 days of leave, it will be paid at 80% of the usual salary. If they select 120 days, the leave will be paid at 100% of the usual salary.

Other Leave

Marriage Leave – Employees are entitled to 15 consecutive days of paid leave for their marriage.

Bereavement Leave – Employees can take up to 5 consecutive days of paid leave in the event of a family bereavement.

Urgent and Essential Care Leave – Employees are entitled to 30 days of paid leave per year to provide urgent and essential care for a family member under 12 years old, and 15 days for a family member older than 12 years.

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