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Capital City
Lisbon
Currency
Euro
(
€
)
Timezone
GMT +0
Payroll Frequency
monthly
Tax Year
1 January- 31 December
Employer Tax
26.50%
Languages
Portuguese
Capital City
Lisbon
Currency
Euro
(
€
)
Timezone
GMT +0
Payroll Frequency
monthly
Tax Year
1 January- 31 December
Employer Tax
26.50%
Languages
Portuguese
Portugal's low employment costs, coupled with its strategic location in proximity to other EU markets, make it an appealing destination for international companies seeking to recruit remote workers, particularly in fields like engineering and business.
Despite its smaller size, Portugal's economy is comparable to other Western European countries. It has a booming manufacturing industry, low labor costs, and a sizable English-speaking population, making it attractive for international business expansion.
Employers in Portugal are required to contribute to the social security system on behalf of their employees, covering benefits such as health care, parental leave, and unemployment insurance.
Portugal actively encourages foreign direct investment, simplifying administrative processes and offering tax incentives to foster economic growth and attract international businesses.
Businesses can only operate smoothly in Portugal if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Portugal below, to avoid any compliance issues.
In Portugal, a written employment contract is legally mandated, specifying details such as:
We can help you get a new employee started in Portugal quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.
For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
In Portugal, employers must comply with strict labor laws regulating working hours and overtime. Full-time employees are limited to 8 hours per day and 40 hours per week, with mandatory rest periods, including an 11-hour daily rest break and meal breaks after five consecutive hours of work. Certain industries, such as healthcare and emergency services, have specific exceptions, often governed by collective agreements. Managerial and exempt employees may have flexible working arrangements but must still adhere to reasonable working time limits.
Overtime is allowed under specific conditions, with a maximum of 2 extra hours per day and an annual limit ranging from 150 to 200 hours, depending on company size and agreements. Overtime compensation varies: on weekdays, employees receive 125% for the first hour and 137.5% for subsequent hours, while work on rest days and public holidays is paid at 150% of the regular hourly rate. Alternatively, employees may opt for compensatory rest. Employers who violate these regulations risk penalties, including fines and legal sanctions. Adhering to these labor laws is essential to maintain compliance and workforce satisfaction.
As of January 2025, the national minimum wage in Portugal is €870 per month, with a bit more in Madeira (€915) and the Azores (€913.50). These amounts are for full-time workers, and part-timers get paid proportionally. Interns and trainees might have different pay depending on their specific programs. Expats usually follow the same minimum wage rules as locals.
The government is working to boost wages to improve living standards and aims to hit €1,020 per month by 2028. Employers need to keep up with the latest wage laws to make sure they’re paying fairly and staying compliant.
Global expansion shouldn't mean losing time to paperwork or dealing with complicated, country-specific HR systems. An Employer of Record helps you keep your focus on talent by handling the operational side of employment in Portugal. That includes onboarding, contract management, payroll processing, and statutory compliance, all aligned with local laws and best practices. The EOR guarantees that employees are legally employed and properly supported from day one.
This streamlined setup allows you to prioritize recruiting the best people and integrating them into your company culture. Your team stays lean, and you avoid getting caught up in the details of local processes or shifting regulations. For founders, global hiring managers, or HR teams working across borders, an EOR multiplies your impact, reducing admin time, preventing errors, and helping ensure that new hires have a smooth experience from the get-go.
With decades of experience in global compliance and deep local knowledge, we ensure smooth adherence to local laws and regulations across borders.
Unmatched coverage for employment across 180 countries.
An employee portal paired with dedicated, human support.
Reliable, cost-effective services with no annual commitments.
1 January- 31 December is the 12-month accounting period that businesses in Portugal use for financial and tax reporting purposes.
The payroll cycle in Portugal is usually monthly, with employees being paid before the last day of each month.
As of January 2025, the national minimum wage in Portugal is €870 per month, with higher rates in Madeira (€915) and the Azores (€913.50). These amounts are for full-time workers, and part-timers get paid proportionally. Interns and trainees might have different pay depending on their specific programs. Expats usually follow the same minimum wage rules as locals.
The government is working to boost wages to improve living standards and aims to hit €1,020 per month by 2028. Employers need to keep up with the latest wage laws to make sure they’re paying fairly and staying compliant.
In Portugal, there are mandatory 13th and 14th salary payments. The 13th salary is typically paid out in June, designated for holidays, while the 14th salary is paid in December, for Christmas. These additional payments can be distributed incrementally within the 12 regular monthly salaries.
Employer payroll contributions are generally estimated at an additional 26.5% on top of the employee salary in Portugal.
In Portugal , the typical estimation for employee payroll contributions cost is around 11%.
In Portugal, individual income tax is applied on an annual basis and follows a progressive rate structure, ranging from 13.25% to 48% as follows:
In Portugal, people receive old-age pensions when they reach the retirement age of 66 years and four months, applicable to both men and women. The pension amount is determined by their social security contributions and earnings history.
Employers in Portugal must navigate a structured system of payroll taxes, including income tax withholding, social security contributions, and levies such as the Work Compensation Fund. The progressive income tax rates (ranging from 14.5% to 48%) and mandatory contributions (11% for employees and 23.75% for employers) are critical for compliance. Adhering to deadlines, such as the 20th of the following month for most submissions, is essential to avoid penalties.
Leveraging payroll management software can significantly streamline the calculation, payment, and reporting of these taxes, helping employers consolidate payroll data and maintain compliance with Portuguese regulations.
Hiring in Portugal means taking on local payroll obligations, which often include unique tax rates, contribution rules, and strict documentation. If you're not familiar with the system, or don't have a local entity, it’s easy to make mistakes. That’s where an Employer of Record ccomes in. The EOR manages payroll for your team on your behalf, ensuring every process is accurate, timely, and legally compliant.
Key Ways an EOR Supports Payroll in Portugal:
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In Portugal, work permits and visas are essential for employers hiring foreign workers from non-EU/EEA countries. The process involves obtaining a job offer, submitting applications, and meeting specific eligibility criteria. The key visa types include the Short-Term Work Visa for assignments up to 90 days, the Temporary Residence Visa for Work for stays longer than 90 days, the Highly Qualified Activity (Tech Visa) for skilled professionals, and the EU Blue Card for highly qualified workers. Additionally, Portugal offers a Digital Nomad Visa for remote workers. Employers must ensure compliance with Portuguese immigration laws and provide the necessary documentation when sponsoring foreign employees.
The annual leave entitlement in Portugal is 22 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
In Portugal, there's no substitute holiday system, but it's usual to have extended weekends, giving employees longer breaks without using vacation days. Some mandatory holidays may be observed on the following Monday if specified by official legislation. This allows for more flexibility and a better work-life balance.
Employees in Portugal are entitled to a minimum of 22 paid vacation days per year. During their first year at the company, employees receive two days of leave for each month worked. However, this accrual is capped at 20 days within the initial year, and it begins after completing six months of service.
Expectant mothers in Portugal who meet eligibility criteria are entitled to 100% of their regular salary, covered by Social Security, for a period of 120 days. To be eligible, an employee must have been employed for a minimum of 80 days within the preceding 12 months before the expected due date. Included in the above, the mother is granted a maximum of 30 voluntary days prior to the birth and 42 days compulsory leave after the birth.
Fathers are entitled a paternity leave lasting 28 days within the 42 days following the birth of their child. Seven of these days must be taken consecutively immediately after the birth. After completing the initial leave, fathers are still entitled to an additional seven days of leave. These seven days can be taken concurrently with the mother's initial parental leave.
In Portugal, the first three days of sickness are unpaid. After that, if the illness lasts:
In Portugal, after the initial six weeks of maternity leave and 28 days of paternity leave, the couple can decide how to use the next 78 or 108 days. If they take a total of 150 days, they receive 80.00% of their usual pay, and for 120 days, they get 100.00% of their regular salary.
In the case of an employee getting married, they are entitled to 15 consecutive days of paid leave.
Employees have the right to 30 days of paid leave per year for providing urgent and essential care for a family member under the age of 12. They are also entitled to 15 days of paid leave for providing care to an older family member.
Employees are entitled to 20 days' bereavement leave in the case of the death of a spouse, and 5 days' bereavement leave in the case of the death of a parent.
Portugal mandates a minimum of 22 working days of paid annual leave for full-time employees, separate from the country’s 13 public holidays. Employees accrue leave at a rate of two days per month in their first year, with unused days eligible for carryover until April 30 of the following year. Employers must ensure that workers can take their entitled leave and comply with regulations on paid time off.
In addition to annual leave, Portugal enforces mandatory sick leave, maternity and paternity leave, bereavement leave, and unpaid parental leave. Sick leave is covered by social security for up to 1,095 days, while maternity leave lasts at least 120 days, with paternity leave set at 20 days. Employers must maintain clear communication regarding leave entitlements, apply policies fairly, and ensure proper record-keeping to align with labor laws.
Employers in Portugal are mandated to provide benefits such as social security contributions, annual leave, public holidays, maternity and paternity leave, sick leave, workers' compensation insurance, and meal allowances. To attract and retain top talent, many employers also offer supplemental benefits, including meal vouchers, health, dental, and vision insurance, additional paid time off, private pension plans, flexible working hours, transportation allowances, and life insurance.
It's essential for employers to stay updated on Portuguese labor laws to ensure compliance and to consider offering supplemental benefits to enhance employee satisfaction and well-being.
When hiring across multiple countries, maintaining consistency in how you deliver employee benefits quickly gets tricky. Each country, including Portugal, has its own legal rules, cultural norms, and contribution systems. An Employer of Record helps you strike the right balance between global structure and local compliance. They take over the complexity of delivering benefits that are aligned with Portugal’s legal requirements and competitive with local market expectations.
From ensuring statutory benefits are in place to managing local onboarding timelines and enrollment systems, the EOR provides a seamless experience for both employer and employee. This makes it easier to grow your team across borders without reinventing your benefits process in each new location. You stay in control of your overall benefits strategy, while the EOR takes care of executing it in a way that works legally and culturally in Portugal. It’s a smarter way to scale benefits globally without losing local relevance.
In Portugal, employment termination is governed by strict labor laws that outline valid grounds for dismissal, including just cause, redundancy, inadaptation, and collective dismissals. Employers must follow established procedures, such as providing written notice, adhering to the appropriate notice periods, and, in some cases, offering severance pay. Notice periods vary depending on the employee’s tenure, while severance pay is generally required for redundancies, collective dismissals, and inadaptation cases, amounting to 12 days of basic pay per year of service. However, employees dismissed for just cause due to serious misconduct are not entitled to severance compensation.
The termination process in Portugal involves several key steps, including formal notification, consultation with employee representatives (if applicable), compliance with notice periods, and settlement of final payments, such as unpaid wages and holiday bonuses. Employers are also required to provide essential termination documents, including a work certificate and final payslip. Employees have the right to challenge unfair dismissals in court, potentially leading to reinstatement or compensation. Given the complexity of employment laws, it is crucial for employers to carefully adhere to legal requirements to ensure fair and lawful termination practices.
Termination procedures in Portugal adhere to standard protocols, involving notice periods unless an employer can demonstrate substantial grounds for immediate dismissal, typically attributed to misconduct or disobedience. Termination can occur due to:
Notice periods depend on the type of contract,
Employees facing termination due to redundancy or unsuitability for the job are eligible for severance pay, based on the type of employment contract:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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As of January 1, 2025, Portugal's minimum wage rates are:
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