Currency, Euro

10.24 million


331.64 billion



Ease of Doing Business




Payroll Cycle

Grow your team in Portugal

Benefits of hiring in Portugal

Portugal may be smaller in size compared to most European countries, but its economy is similar to other Western European countries as it is dominated by services. Portugal has a booming manufacturing industry, low labor costs, and a large English-speaking population, which are attractive features for businesses looking to expand internationally.

The Portuguese government is comparatively stable to others and helps businesses grow by simplifying bureaucracy and offering tax breaks.

Portugal is constantly finding new ways to attract highly skilled migrants and entrepreneurs. The country has transformed itself into one of the most attractive destinations for foreign workers and foreign direct investments in the world, according to Boston Consulting Group’s 2021 Decoding Global Talent report.

Portugal has achieved high shares of renewable energy, which covered 30% of energy demand in 2019. Portugal was among the first countries in the world to set 2050 carbon neutrality goals. The country aims to be climate-neutral by 2050 and cover 80% of its electricity consumption with renewables by 2030, allowing for immense growth in this sector.

Portugal was among the first countries in the world to set 2050 carbon neutrality goals.

Challenges of hiring in Portugal

The Portuguese government has a poor reputation for slow-functioning legal systems and dense bureaucracy, which frustrates employers and employees. To avoid dealing with this frustration, use an EOR in Portugal that specializes in these legal systems.

The Portuguese government faces pressure from investors and European partners to address Portugal’s structural economic problems of a deepening infrastructure gap, poor quality of bank portfolios, and high debt rates.

Numerous experts and international bodies have identified Portuguese labor market flexibility as a challenge and the need for structural policy changes.

Numerous experts and international bodies have identified Portuguese labor market flexibility as a challenge and the need for structural policy changes.

Cultural nuances of doing business in Portugal

Generally, conversations tend to be informal. The Portuguese are open and welcoming to strangers, and they are keen to discuss various topics. The golden rule for business communication is to start in a formal manner and gradually proceed to a more casual mode of conversation.

In Portugal, it is common for people to have several first or second names. Usually, the first in the list is the first name, the rest are family names. When addressing colleagues, use formal gendered titles and family names to greet colleagues.

A handshake with a smile and enthusiasm is the usual form of greeting in Portugal. It is a matter of courtesy to shake hands with colleagues upon meeting, even after meeting them many times before.

Portuguese business culture tends to be relaxed in regard to punctuality. When doing business in Portugal, meetings and processes are not always timely.

Refrain from forceful negotiation and understand a deal may take more time than expected to finalize. Citizens tend to refrain from verbal directedness and confrontation.

Portuguese business culture places a great emphasis on establishing the best connections for the company and building strong, longstanding relationships.

The golden rule for business communication is to start in a formal manner and gradually proceed to a more casual mode of conversation.

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Hiring in Portugal

When hiring employees in Portugal, the terms of employment are usually agreed to in writing. However, it is not legally required.

  • Employment agreements in Portugal

    The following arrangements between employer and employee are legally required in a written agreement:

    • The professional category into which an employee’s work falls
    • The employee’s working hours
    • The employee’s place of work
    • Remuneration

    An employment contract must be made in writing if it falls into any of the following categories of contract:

    • Employment contract made with a non-EU citizen
    • Fixed-term or part-time employment contract
    • Temporary work contract or intermittent employment contract
    • Teleworking employment contract
    • Employment contracts with multiple employers
    • Employment contract that contains non-competition clauses
  • Probationary periods in Portugal

    In Portugal, probationary periods depend on the employment contract. Portuguese law allows permanent contracts a probationary period of:

    • 240 days for management positions
    • 180 days for employees performing functions of high responsibility or complexity, first job seekers, and the long-term unemployed
    • 90 days for the rest of the employees

    For fixed or unfixed contracts, the probationary period is 30 days for contracts over six months and 15 days for contracts less than six months.

    During the probationary period, the employer and employee may terminate the employment contract without justification or notice.


Easily navigate payroll laws, contributions, and requirements in Portugal

August 31

Tax due date in Portugal

The Portuguese tax year is the calendar year. The deadline for submitting income tax returns is August 31


Payroll cycle in Portugal

The payroll cycle in Portugal is biweekly by check, money order, or direct deposit. 


Average working hours in Portugal

The normal working hours cannot exceed eight hours per day and 40 hours per week.

  • Minimum wages and salaries in Portugal

    In Portugal, all employees are entitled to a nationally applicable minimum salary, which is fixed annually by the law. For 2022, it is EUR705 per month for a full-time employee. In addition, employees are entitled to receive a holiday allowance and a Christmas allowance each year, which are each equal to one month’s salary. 

    In total, it is mandatory to pay each employee the equivalent of 14 months’ salary. These allowances bring the minimum monthly wage to EUR882.50. Collective bargaining agreements can set higher minimum wages in Portugal that apply to employees falling into specific professional categories.

  • Bonus payments in Portugal

    Both contractual and discretionary bonuses are possible in Portugal. It is common to reward employees with bonuses based on an employee’s individual performance or on the company’s business results. However, there are no legal requirements related to an employer being obliged to pay bonuses. The granting of a bonus depends on the employee’s industry, level, and type of position.

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Taxes and social security in Portugal

Individuals are considered tax residents in Portugal if one of the following conditions are met:

  • An individual remains in Portugal for 183 days or more in any 12-month period
  • An individual has a household and habitual residency in Portugal
  • An individual is a crew member of a ship or an aircraft owned by a Portuguese tax resident entity

Non-tax resident employees are liable to pay Portuguese personal income tax on their Portugal-sourced income. Portugal-sourced employment income obtained by non-tax resident employees is subject to a tax rate of 25%. This tax rate may be reduced or eliminated if a double tax treaty applies.

Non-tax residents working in Portugal who are residents in another European Union (EU) country can request a full or partial refund of the tax if their EU country’s tax rate is higher than Portugal’s tax rate.

Portuguese tax residents are liable to pay income tax on their worldwide income. Portugal grants a tax credit for foreign taxes paid on foreign-source income.

Tax thresholds in Portugal

In Portugal, income is charged on a progressive tax rate scale that varies from 14.5% to 48%. The tax brackets are as follows:

  • €0 – €7,112: 14.5%
  • €7,113 – €10,732: 23%
  • €10,733 – €20,322: 28.5%
  • €20,323 – €25,075: 35%
  • €25,076 – €36,967: 37%
  • €36,968 – €80,882: 45%
  • More than €80,882: 48%

On top of this, an additional solidarity tax is charged at a rate of:

  • 2.5% for taxpayers with income exceeding EUR80,000 and up to EUR250,000
  • 5% for taxpayers with income exceeding EUR250,000

The corporate income tax rate in Portugal is 21%.


Social security contributions are payable on employees’ gross annual earnings. The contributions are shared between the employer and the employee. The employer withholds the employees’ share from the gross salary, and the employer’s share comes on top of the gross salary. As of 2022, Portugal’s current social security rate charged on income for employees is 34.75% in total: 11% paid by the employee and 23.75% paid by the employer.

Health insurance in Portugal

The Portuguese healthcare system is based on the National Health Service (Serviço Nacional de Saúde, SNS), which was founded in 1979. The SNS includes all Portuguese medical institutions and services that provide healthcare under the Ministry of Health. The SNS is characterized as providing universal healthcare coverage, usually free to its users, and guaranteeing equal access. The following individuals are entitled to SNS coverage:

  • All Portuguese citizens
  • EU citizens
  • Residents residing in Portugal
  • Citizens requesting asylum or refugee status
  • Stateless citizens residing in Portugal

Pension in Portugal

In Portugal, the statutory retirement age is 66 years and seven months. After a minimum of 15 years of earnings registrations and 144 months of earnings recorded, employees are eligible to receive their old-age pension from the Portuguese Social Security system. Retirees receive monthly payments for their old-age pension in value depending on the amount of their yearly contributions to the Social Security system. The minimum contribution-based pension rate is €329.30 per month with 15-20 years of contributions. It increases to €363.38 per month with 20-30 years of contributions and €454.23 per month with 31 years or more of contributions.

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Leave entitlements in Portugal

  • Annual leave in Portugal

    The statutory number of annual paid leave is 22 working days, excluding public holidays. Employees are free to negotiate more paid leave per year. Collective labor agreements may specify additional leave provisions.

  • Parental and maternity leave in Portugal

    Individuals who are employed or self-employed are eligible for parental leave in Portugal. There is the initial parental leave and the extended parental leave. With initial leave, mothers must take 90 days of leave after childbirth, and the remainder may be used before or after childbirth, totaling 120 days paid at 100% of their wages. Mothers must take six weeks’ leave right after childbirth.

    Fathers are entitled to 20 mandatory working days of paid leave after birth. The first five days can be taken right after birth, and the other 15 must be taken within six weeks of the birth but are not required to be taken consecutively.

    After initial parental leave, parents can extend the leave to 180 days by adding three months, a period that is shared between the two parents at a rate of 83% of their total pay. Parents can also choose to extend their maternity leave in Portugal to 150 days with no shared period at a rate of 80% of their total pay.

    In 2019, the Portuguese parliament deemed LGBT+ couples to have parental leave rights. Same-sex couples who have a baby through adoption or biologically will be paid for 120, 150, or 180 days, either at 100% or 80% depending on the amount of time.

    Parents may be eligible for benefit allowances from Portugal’s Social Security system. The prenatal family allowance starts in the 13th week of pregnancy and lasts up to six months. The amount varies according to income, but it’s usually between €96 and €148 per week.

    Social protection for maternity, paternity, and adoption also encompasses the following benefit allowances:

    • Relocation to a hospital outside of the mother’s resident location
    • Termination of pregnancy
    • Case of clinic risk during pregnancy
    • Care of the child in case of illness or accident
    • Care of the child with a disability or chronic illness
    • Care of a grandchild

    In certain cases, employees are entitled to take unpaid leave for childcare. An employee may request unpaid leave for a period of up to two years to take care of a child under the age of six. This request may be extended up to three years if the employee has up to three children. The right to grant this unpaid leave is at the employer’s discretion.

  • Sick leave in Portugal

    In cases of illness or injury, employees are entitled to take paid sick leave in Portugal. Employees are provided with a sickness allowance, paid by the Portuguese Social Security system, as follows:

    • Up to 30 days: 55% of the employee’s pay is provided
    • Between 31 to 90 days: 60% of the employee’s pay is provided
    • Between 91 to 365 days: 70% of the employee’s pay is provided
    • More than 365 days: 75% of the employee’s pay is provided

    The maximum time an employee can receive sickness allowance is three years.

    An employee must meet all of the following requirements to receive sickness allowance:

    • Receive a Certificate of Incapacity to Work, issued by a doctor from the National Health Service
    • Paid at least six months of social security contributions
    • Worked for at least 12 days during the first four months of the previous six months before the sick leave is taken

    Employees can be absent from work for up to 30 days a year to provide immediate and necessary assistance where their child, grandchild, spouse, partner, or another member of their household is ill or has been involved in an accident. Employees are entitled to receive a social security allowance for 65% of their salary.

  • Regional and national holidays in Portugal

    Portugal has the following 13 public holidays, which are not included in the minimum paid leave entitlement. However, employers generally give their employees all of Portugal’s public holidays off work. The 13 national holidays in Portugal are:

    • New Year’s Day (January 1)
    • Good Friday (April, the specific day fluctuates each year)
    • Easter Sunday (April, the specific day fluctuates each year)
    • Freedom Day (April 25)
    • Labor Day (May 1)
    • Portugal National Day (June 10)
    • Corpus Christi (June, the specific day fluctuates each year)
    • Assumption of Mary (August 15)
    • Republic Day (October 5)
    • All Saints’ Day (November 1)
    • Restoration of Independence Day (December 1)
    • Immaculate Conception Day (December 8)
    • Christmas Day (December 25)

Employment benefits in Portugal

According to the Portuguese Government Public Service Portal, “Social Security is the system that ensures people’s basic rights and equal opportunities, through access to a set of benefits and support in terms of illness, parenthood, unemployment, disability, among others.” The system is valid both for Portuguese citizens and residents who make tax contributions in Portugal.


Termination and notice period in Portugal

Portuguese law only allows dismissals on the grounds of just cause, such as an employee’s gross misconduct and breach of the employment contract, or for objective reasons, such as unsuitability for the role. The unilateral termination of an employment contract by the employer is heavily regulated by Portuguese law, and it can only occur on those grounds. Employers can only dismiss employees without any justification during the probationary period and employees can also terminate the employment contract with no reason during the probationary period.

If an employer dismisses an employee for just cause, the following disciplinary procedure must be carried out:

  • The procedure must be initiated within 60 days after the employer has become aware of the infraction
  • The right to dismiss the employee expires one year after the infraction has been committed or within the time limits provided for by criminal law, if the infraction also constitutes a crime
  • The procedure expires one year after it commenced if the employee has not been notified of any dismissal decision
  • The employer must give notice to the employee of the decision within 30 days after the end of the evidence stage or after the opinion of the employee’s representative has been received

Employees can immediately terminate an employment contract with just cause where the employer acts in a way where it becomes impossible to continue the employment relationship, such as in cases of harassment. Where an employee terminates the employment contract, one of the following notice periods must be provided to the employer:

  • For permanent employment contracts of up to two years: 30-day notice period
  • For permanent employment contracts of more than two years: 60-day notice period
  • For fixed-term or temporary employment contracts: 15-day notice period

Where the relevant notice period is not provided, the employee must compensate the employer with an amount equivalent to their base pay for the duration of the relevant notice period.

If an employee is lawfully dismissed with just cause, no severance payment is due. However, if a court rules that the dismissal of an employee was unlawful, the employee can choose between:

  • Being reinstated with the employer
  • Receiving a severance payment of between 15 and 45 days of base salary plus a length of service bonus


  • What is an employer of record in Portugal?

    An employer of record (EOR) in Portugal is a third-party organization that becomes the full legal employer of your in-country workforce. The EOR compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.

  • How does an employer of record in Portugal help hire talent?

    An EOR enables you to hire in Portugal without going through the complexities and restrictions of setting up a legal entity. As an EOR, Velocity Global acts as the legal employer, hiring your new team members through local, compliant employment contracts—you get back the time and flexibility to focus on your growing business.

  • Can an employer of record run payroll in Portugal?

    When you work with Velocity Global’s EOR solution in Portugal, our experts compliantly handle all payroll and benefits for your team members in the country.

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