How to hire and pay employees in Portugal
With Instahirin, your business can easily hire employees in Portugal. No more worrying about local laws, complex tax systems, or managing international payroll.
Before hiring
EMPLOYEES IN The Portugal
Before hiring employees in Portugal, one key thing employers should be aware of is the country’s strict data protection regulations under the GDPR. You must ensure that employee personal data is collected, stored, and transferred securely especially across borders. Full compliance with these privacy laws is a legal requirement before making international hires.
Another important consideration is Portugal’s employee benefits and labor laws. Employers are required to contribute to social security, health insurance, and pension schemes. Employees are entitled to paid vacation, holiday bonuses (typically 14 months' salary per year), sick leave, and strong job protections. Portugal also has detailed rules around employment contracts, probation periods, and termination, so staying compliant is essential.
At a glance
CURRENCY
Euro (EUR)
OFFICIAL LANGUAGE
Portuguese
PAYROLL FREQUENCY
Monthly
EMPLOYER TAXES
26.63%
of gross salary
13th / 14th SALARY
N/A
Good to know
Portugal offers universal public healthcare through the Serviço Nacional de Saúde (SNS), which provides most services free or at low cost. Employees are automatically enrolled and funded through taxes. Many employers offer private health insurance as a benefit, which covers faster access, specialists, and additional services.
The standard workweek is 40 hours (8 hours/day, 5 days/week). Overtime is allowed but must be compensated at increased rates. The maximum legal working time is 48 hours per week, including overtime, averaged over a reference period. Employees are entitled to rest periods, paid leave, and at least one full day off per week.
Labor laws in Portugal
Working hours and overtime
In Portugal, employees work 40 hours per week, typically 8 hours per day. Overtime is allowed with limits and is paid at increased rates depending on the hours and days worked.
Employment contracts
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
Probationary period
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.
Calculate costs to hire internationally
Benefits and leave 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.
Sick leave
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.
Parental leave
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.
Holidays
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.
Employer tax
In Portugal, employers typically contribute around 23.75% of an employee’s gross salary to social security, covering pensions, unemployment, and other welfare benefits, with additional contributions possible for work accident insurance and labour compensation funds, depending on the employment contract.
Individual tax
In Portugal, individuals pay progressive income tax (IRS) ranging from 14.5% to 48% based on annual income, along with mandatory social security contributions of 11%, with total deductions varying depending on income level and personal circumstances.
Termination in The 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
Notice period
In Portugal, the notice period for employers to terminate a contract depends on the employee’s length of service, ranging from 15 to 75 days. Employees resigning must give 30 days’ notice if employed less than 2 years, and 60 days if longer. Different rules apply during probation and for fixed-term contracts.
Start hiring employees in
Portugal
Setting up a business entity in every country you want to hire isn’t scalable—it takes too long and legal costs add up quickly. In Portugal, understanding labor laws, social security contributions, tax obligations, and employee rights can be complex and time-consuming. Managing contracts, payroll, and compliance manually through spreadsheets and emails often leads to errors and inefficiencies.
With InstaHirin, you can easily manage HR, payroll, and automate compliance in Portugal and 180+ countries all from one user-friendly platform so you can hire quickly and confidently without setting up a local entity.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While InstaHirin yster strives to provide current and accurate information, InstaHirin makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
