Hiring guide in Portugal

What should I know about hiring in Portugal?

Legal framework

Types of employment contracts

Portuguese labour law outlines two primary types of contracts: fixed-term contracts (contrato a termo certo) and open-ended contracts (contrato por tempo indeterminado).

Open-ended contracts, commonly known as indefinite-term contracts, are the predominant form of employment agreement in Portugal. Distinguished by their lack of a set duration, these contracts continue indefinitely without a specified end date.

Under an indefinite-term employment contract, both the employer and the employee have the authority to terminate the employment relationship, provided they comply with the stipulated notice periods and other legal obligations outlined in the Labour Code (Código do Trabalho).

Within the scope of Portuguese labour legislation, indefinite employment contracts are the norm, posing greater challenges in terminating employees under these arrangements.

Content of an employment contract

The primary form of employment in Portugal is through an employment contract, which defines the legal relationship between the employer and the employee. Key elements of an employment contract in Portugal include the identification, signatures, and addresses or registered offices of the parties involved; the specification of the employee’s role and corresponding remuneration; the designation of the workplace and standard working hours; the commencement date of employment; the indication of the agreed-upon term along with the rationale behind it; and the dates of contract conclusion and, if applicable, termination upon expiration.

Download a free employment contract for Portugal through Native Teams.

Oral, written or electronic employment contracts

In Portugal, employment contracts must be written to be legally valid, underscoring the necessity of formalising terms in a clear, legally recognised format. This ensures both employers and employees have a definitive record of their rights, duties, and obligations, minimising misunderstandings. 

Written contracts serve as crucial reference points, fostering accountability and legal compliance throughout the employment term. While not always mandatory by law, certain Portuguese regulations outline formal requirements. 

Despite this, many leading Portuguese companies opt for written agreements as a best practice, even when not strictly obligatory. Importantly, the absence of a written contract does not invalidate the employment agreement.

Working hours

According to Portuguese labour regulations, the standard working period is capped at eight hours per day and forty hours per week, with any deviations requiring careful monitoring and justification to maintain legal standards and safeguard employee rights. 

Typical working hours in Portugal are from 9:00 AM to 5:00 PM or 9:00 AM to 6:00 PM, including a customary one-hour lunch break. Part-time contracts limit working hours to 75% of full-time positions, allowing for reduced daily or fewer workdays per week. 

Employers and employees can mutually agree on flexible schedules, such as compressed workweeks or adjustable start and end times, provided these arrangements comply with legal requirements and collective bargaining agreements(CBAs) to ensure fairness and compliance.

Breaks and night work

Portuguese labour laws specify breaks during the workday and rest periods between work periods. Breaks typically range from one to two hours, ensuring employees have sufficient time to rest and recharge. 

Additionally, employees are entitled to at least eleven consecutive hours of rest between daily work periods to promote well-being. Weekly, employees must have at least one day off for relaxation and personal activities, with flexibility in choosing the rest day, not necessarily on a Sunday, based on mutual agreement or operational needs. 

Night workers are identified by working at least three hours between 10 p.m. and 7 a.m., with maximum shift limits set at 8 hours to prevent extended nighttime labour. However, specific job requirements may restrict night work opportunities.

Annual leave

In Portugal, the minimum annual leave entitlement is 22 days, allowing employees ample time for rest and personal activities. During the first year of employment, employees accrue two days of leave per month, up to a maximum of 20 days, which can be used after completing six months of employment. 

Holidays must generally be taken within the calendar year earned, but there is flexibility to use accrued leave until April 30 of the following year. This flexibility, agreed upon by both employer and employee, facilitates efficient holiday planning and ensures that accrued leave is used effectively.

Public holidays

Portugal has 13 national holidays throughout the calendar year. These holidays are widely recognised and observed nationwide, allowing individuals to celebrate important cultural, historical, or religious events.

Salary

The salary specification is a fundamental aspect of the employment contract, allowing both parties to agree on the compensation for services rendered. Remuneration represents the payment from the employer to the employee, reflecting the quantity and quality of work performed.

Salaries must meet minimum thresholds set by national collective agreements for each job category and qualification level. The government periodically adjusts these minimum wages to align with factors such as cost-of-living changes, national productivity, and economic conditions.

Typically, salaries are paid monthly, though other payment frequencies can be arranged through mutual agreement, ensuring compliance with legal standards.

To calculate the salary and taxes in Portugal, click here.

Sick leave

Portuguese law protects employees by providing sick leave as a safeguard during illness. Employees must inform their employer of their illness. Within 15 days of notification, the employer may request proof of illness within a reasonable timeframe.

As the law requires, medical certificates issued by hospitals, health centres, or qualified medical professionals typically serve as evidence of illness. Employers may also conduct medical examinations to verify the employee’s health status per legal provisions.

Generally, sick leave can extend up to 18 months, possibly extending to 36 months for certain severe illnesses. If an employee cannot work beyond this period, they may apply for disability retirement, subject to confirmation by the medical board of CGA (Caixa Geral de Aposentações).

Parental and maternity leave

In Portugal, both mothers and fathers are entitled to paid parental leave to care for their children until the age of three. This leave allows parents to actively participate in their child’s upbringing and balance work commitments with caregiving responsibilities. Parental leave can be full-time or part-time, and the parents usually agree upon its duration based on their circumstances.

Depending on their income, parents may receive partial financial assistance from social security during this period to ease the financial burden. Parental leave options include initial parental leave for both parents, maternity leave for mothers to recover from childbirth and bond with their newborn, and paternity leave for fathers to bond with their child and support their partner. 

Maternity leave includes 30 days before childbirth for preparation and six weeks postnatal for recovery and newborn care. Mothers must notify their employer in advance if taking leave before childbirth and provide a medical certificate. Breastfeeding mothers are also entitled to additional leave to prioritise their child’s nutritional needs.

In addition, fathers are required to take 15 working days of leave within 30 days of the child’s birth, with five days immediately after childbirth, and can take an additional ten working days, which can coincide with the mother’s leave.

Termination of the employment relationship

In Portugal, employment contracts can be terminated for ordinary or extraordinary reasons, each with specific rules and procedures. The main methods of ending a contract include expiration (when the contract reaches its end date), revocation (mutual agreement to terminate), dismissal for employee misconduct (due to severe employee behaviour), collective dismissal (for operational reasons), dismissal due to the end of employment (cessation of the job), and dismissal due to incompetence (employee’s inability to perform duties).

Employees can also terminate their contracts. They can do so through resolution (for specific legal reasons) or by simply choosing to end the contract for legally specified reasons. Just cause for dismissal involves severe employee misconduct, making the continuation of the employment relationship impractical.

Ordinary dismissal by employer

The termination of employment contracts is governed by the Constitution and the Labour Code, which establish strict protocols for employers. Before terminating an employment contract, employers must provide written notice to the affected party, allowing time for preparation. Termination cannot occur unilaterally without valid justification.

Employers must issue a formal termination letter to the employee, which can be sent electronically, such as via email, outlining the reasons for termination and the procedural details. If an employee representative is involved, they must also be informed according to legal requirements. Confirming receipt and acknowledgement of the termination letter is essential to fulfilling procedural obligations.

Notice period and challenging the dismissal

In Portuguese labour law, notice refers to the period between the notification of dismissal or resignation and the employee’s final day of work. Collective bargaining agreements or employment contracts typically define this timeframe.

For fixed-term contracts, termination must be communicated in writing by either party: 15 days before the expiration date for the employer and eight days for the worker.

In indefinite contracts, the employer must provide notice of termination ranging from 7 to 60 days in advance, depending on the duration of the employment: up to six months, six months to two years, or longer.

The notice period during the probation period varies. For less than 60 days, no notice is required; for between 60 and 120 days, seven days’ notice is necessary.

Rights and obligations of unemployed individuals

The Social Security system provides unemployment benefits to support individuals, including Portuguese citizens and foreign nationals, who have contributed to the system. Eligibility for these benefits is contingent upon an individual’s work history and contributions to Social Security.

For employed individuals facing involuntary unemployment, eligibility requires a minimum of 180 days of documented work within the preceding 12 months. However, if unemployment stems from the expiration of a fixed-term contract, the requirement is reduced to 120 days of employment within the same period.

Severance pay

The amount of severance is calculated based on the employee’s tenure and monthly salary, ensuring fair compensation proportional to their service. Unlike involuntary terminations, voluntary resignations generally do not qualify for severance pay unless specified otherwise in contractual agreements. Severance payments are structured to reflect years of service, typically ranging from 12 days to one month of salary per year, capped at a maximum of 12 months’ salary, thus aligning compensation with an employee’s length of service and salary progression.

Probation period

The probationary period in Portugal typically lasts for 90 days, equivalent to the first three months of employment. For fixed-term contracts, the duration of the probationary period depends on the contract length: contracts lasting six months or more have a 30-day probationary period, and contracts shorter than six months, including indefinite contracts expected to last less than six months, have a 15-day probationary period.

In commission-based service contracts, a probationary period is specified. However, regardless of the contract’s duration, the probationary period in such agreements cannot exceed 180 days.

Prohibition of competition

According to the Portuguese Labor Code, employees are restricted from engaging in activities that directly compete with their employer or entering into employment with a similar business entity. Employers can include non-competition clauses in contracts to safeguard their interests, but they must be reasonable in scope, duration, and geographical extent. 

The employer’s legitimate concerns should justify the duration of such restrictions. Unfair limitations on an employee’s ability to find new employment after leaving their job are generally not enforceable and typically can only last up to two years after employment termination.

Remote working policy

The Portuguese Labour Code addresses remote work, telecommuting or telework to accommodate the increasing trend in modern workplaces. Telework involves working under the employer’s legal authority but in a location not specified by the employer, using information and communication technologies. This includes fully remote work and hybrid models that combine telework with on-site presence.

Teleworkers enjoy the same rights and responsibilities as other employees, including training, career advancement opportunities, commitment to standard working hours and other employment conditions, occupational health and safety measures and compensation for work-related injuries or illnesses.

A formal written agreement between the employer and employee outlining the specific terms and conditions of the teleworking arrangement is mandatory.

Responsibilities within a remote work arrangement

When included in the employment contract, remote work entails specific responsibilities for both the employer and the employee. Employees must adhere to the agreement’s terms, including work hours, assigned tasks, and performance expectations. 

They must use the equipment and resources provided solely for work-related purposes, following company policies and protocols. 

Data protection and confidentiality measures must be strictly observed when handling sensitive information, focusing on cybersecurity to prevent unauthorised access and corporate data breaches.

Health and safety at home

Employees in Portugal are guaranteed working conditions that prioritise their safety and health in all aspects of employment. According to the Portuguese Labour Code (articles 281-284), employers are obligated to implement and enforce conditions that safeguard the health of their employees.

This includes providing workers with relevant information on health and safety measures and instructing them on preventive actions implemented by the employer.

Employees are responsible for ensuring a secure and ergonomically suitable workspace at their remote location to minimise the risk of injuries. They must also report any health and safety concerns to their employer promptly.

Intellectual property rights

Portugal’s intellectual property (IP) framework, supported by national laws and international treaties, offers robust protection across various categories. Trademarks are signs like words, logos, or shapes that distinguish goods or services, protected for ten years with indefinite renewal.

Patents safeguard new inventions, granting exclusive rights for up to 20 years, while utility models protect simpler inventions for ten years. Copyright protects original works automatically, lasting 70 years after the author’s death, with optional registration for legal benefits.

Trade secrets, valuable and confidential information, are protected under specific laws against unlawful acquisition, use, and disclosure.

Employee data privacy

Employee data protection in Portugal has grown in line with advancements in labour law and data privacy regulations.

Governed by both national legislation and the EU’s General Data Protection Regulation (GDPR) since May 2018, employee data processing must adhere to strict principles of legality, fairness, transparency, and security. These principles are further detailed in Portuguese laws such as the Labour Code and the Portuguese Data Protection Law (Law no. 58/2019).

Under these regulations, personal data processing must meet criteria including lawfulness, purpose limitation, data minimisation, accuracy, storage limitation, and integrity and confidentiality. 

Employers must obtain informed consent from employees before processing their personal data and ensure its accuracy and secure storage. Employees have the right to access, rectify, and seek redress for their personal data.

What are the advantages of hiring employees from Portugal vs other countries?

Hiring employees from Portugal offers several distinct advantages over candidates from other countries. Firstly, Portuguese professionals are often highly skilled and well-educated, benefiting from a robust educational system emphasising theoretical knowledge and practical skills. 

Their proficiency in languages, mainly English, is notable, enabling smooth communication in international business environments. Moreover, Portugal’s strategic geographical location provides easy access to both European and global markets, improving logistical and operational efficiency for businesses with international aspirations. 

Culturally, Portuguese employees are known for their strong work ethic, reliability, and adaptability, making them valuable assets in diverse industries. Additionally, Portugal offers competitive labour costs compared to many other Western European countries, presenting cost-effective hiring solutions without compromising quality or expertise.

Why use Native Teams for hiring in Portugal?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.