An employer of Record in Portugal  enables you to hire talent in Portugal when you do not have a local entity in the country. Partnering with an EOR helps you access talent in the European country quickly. As the EOR dons the role of a primary employer, it absorbs all compliance risks while you manage the day-to-day affairs of the employee confidently.  The EOR takes care of all Portugal compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

Opening an entity in Portugal  for the purposes of hiring local talent,  can take anywhere between 2 to 3 months. You’ll also need to deposit a paid up capital of 50,000 euros.  This sets you back by many days and thousands of dollars and you may end up losing out valuable talent to your competition. By partnering with an EOR, you are set to hire in Portugal in a few days.

Besides the hassles of opening an entity, hiring in Portugal can be complicated owing to its labor laws with specific constraints on minimum wages, maternity laws and so on. Moreover, Portugal’s employment landscape is also influenced by labor unions making staying compliant a daunting task. 

With a SaaS-based EOR such as Gloroots, you can compliantly onboard, pay and manage employees in Portugal from a single window. This helps you retain your talent and saves the time you spend dealing with multiple insurance vendors.

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EORs usually offer two pricing options: a fixed monthly fee per employee or a percentage of the employee's payroll plus applicable taxes. In addition to these fees, there may be other charges for onboarding, administrative tasks, or additional features. It's important to note that companies don't need to use an EOR for their entire workforce and can opt to use it only for specific employees. This way, they will only be charged for the employees that they hire through the EOR.

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Key Metrics For Foreign Employers 

Portugal ranks 26th globally in the Global Talent Competitiveness index. The country is touted to be a leading provider of technology skills in the Europe.

Here we have pulled out some key indicators from the Global Talent Competitiveness Report for employers considering hiring from Portugal.

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Source: The Global Talent Competitiveness Index 2022

Through the Gloroots’ Recrew platform, you can discover amazing talent in Portugal.

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Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Portugal must have a local legal organisation and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Portugal demands compliance with employment laws.

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With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.

In Portugal, the issue of "employee misclassification" arises when employers wrongly classify workers, often categorizing them as self-employed or independent contractors to evade providing employment rights and benefits typically granted to permanent employees. This misclassification occurs even when the workers perform duties similar to those of permanent employees.

By partnering with a Professional Employer Organization (PEO) or Employer of Record (EOR) in Portugal, you can ensure accurate worker classification and the preparation of proper employment agreements. These experienced professionals are well-versed in labor laws and can provide guidance to ensure compliance. They handle precise payroll processing and offer comprehensive benefits, enabling your business to focus on core operations while entrusting employment-related obligations to seasoned experts. With their support, you can avoid the risks associated with employee misclassification and ensure a fair and compliant workforce.

There is no single statute that covers all aspects of Portuguese labour law. The Portuguese Employment Code and the Regulation of the Employment Code are the primary sources, along with European law, the Portuguese Constitution, which outlines essential rights and principles for employers and employees. Additionally, both individual and collective bargaining agreements are important.

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Additionally, both individual and collective bargaining agreements are important. The majority of the regulations outlined in the Portuguese Employment Code are absolute requirements that cannot be altered by collective bargaining or agreement between the parties. Portuguese employment law provides protection to all workers in Portugal.

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It’s important for employers to understand the intricacies of these programs before making a hire.

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This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in Portugal.

Employment contract

Portugal's employment contracts can take various forms based on labor regulations:

1. Indefinite Employment Contract: The most common type, without pre-set termination conditions.

2. Fixed-Term Employment Contract: Duration and termination terms are decided by both parties.

3. Unspecified Duration Employment Contract: Termination depends on work completion and can extend up to four years.

4. Part-Time Employment Contract: For those working less than the standard weekly hours.

5. Provision of Services: Collaborating with independent contractors or self-employed individuals for specific projects.

Portuguese labor laws mandate written contracts in specific situations:

1. Employing Non-EU Citizens

2. Indefinite-Term Contracts with Non-Competition Clauses

3. Remote Work or Teleworking Contracts

4. Fixed-Term, Part-Time, and Temporary Work Contracts

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These contracts must include:

1. Party Identification: Names, addresses, ID information, and company details.

2. Job Role and Duties Description

3. Commencement Date of Employment

4. Work Hours and Conditions

5. Holiday and Leave Entitlements

6. Salary Details: Payment frequency, calculation method, tax deductions, and social security contributions.

7. Applicable Collective Labor Regulations, if any

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Working time

In Portugal, a conventional work week consists of five eight-hour days.

After working for five hours straight in an eight-hour period, the employee is required to take a break of at least one hour, but no longer than two. 

An employee should have at least one rest day every week, and rest intervals between two working days cannot be less than eleven hours.

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Overtime

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Public Holidays

Apart from the 13 national holidays mentioned below, each of the 308 municipalities in Portugal has its own regional or local public holiday. Employees have the right to take time off on the local holiday that corresponds to their place of work, and the specific date of the holiday should be confirmed with the local authority.

If a public holiday falls on a weekend, it is typically not carried over to another day. In such cases, the holiday is considered lost for the year.

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Payroll Cycle

Employees in Portugal are required to be paid at least once a month. Pay dates, on the other hand, are determined by the employer.

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Minimum Wage

In Portugal, the National Minimum Wage stands at 760 EUR per month, calculated based on a 14-month period.

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Maternity Leave and Paternity Leave

Pregnant employees who meet the eligibility criteria are entitled to receive 100.00% of their regular salary, paid by Social Security, for a duration of 120 days. To qualify, an employee must have been employed for a minimum of 80 days during the 12 months preceding the expected due date.

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Under Portuguese law, parental leave is granted for the birth of a child. This leave can be shared between both parents, allowing for a total parental leave period of up to 180 days. During this period, the leave is paid at 83.00% of the employee's usual salary rate. The mother is entitled to take 30 days of parental leave before the delivery and a minimum of six weeks following the birth.

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Annual leave

In Portugal, employees are entitled to a minimum of 22 paid vacation days per year. During their first year of employment, employees accrue two days of leave for each month worked, starting from the completion of six months of service. However, the total number of vacation days within the first year is capped at 20 days.

Additionally, Portugal recognizes 13 public holidays, along with one optional holiday, and various municipal holidays that may apply in certain regions.

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Sick Pay

To be eligible for sickness benefits in Portugal, employees must be certified by a qualified doctor from a competent health service as temporarily unable to work and have completed a minimum of six calendar months of employment, whether consecutive or not. During the first three days of sickness, the employer is responsible for paying the employee their regular salary. Starting from the fourth day, Social Security takes over the payment of benefits. The daily benefit amount is calculated by applying a percentage to the employee's reference remuneration.

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The percentage of the reference remuneration depends on the duration and nature of the illness:

• Up to 30 days of illness: 55% of the reference remuneration
• Between 31 and 90 days of illness: 60% of the reference remuneration
• Between 91 and 365 days of illness: 70% of the reference remuneration
• More than 365 days of illness: 75% of the reference remuneration
  

The duration for which the benefits are provided depends on the length of the illness and is subject to maximum periods:

- Up to 1,095 days for employed workers, seafarers, and coastguard personnel

- Up to 365 days for self-employed individuals and scientific research grant holders

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Income tax

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Other Taxes and Social Security contribution:

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Employer Payroll Contributions

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Employee Payroll Contributions

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Termination Process

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In Portugal, the termination process follows a standard procedure that typically involves providing notice periods unless there are valid reasons for immediate dismissal, such as misconduct or disobedience. In cases where termination without notice is justified, it must be communicated in writing and submitted to the appropriate service under the Ministry of Labour, except in instances of disciplinary dismissal. This ensures that the termination process is properly documented and in compliance with the established regulations.

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Notice Period

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In Portugal, notice periods are typically determined by the terms outlined in the employment contract or collective agreement, taking into account the employee's length of service. The notice periods are as follows:

7 days' notice if the employee has been employed for less than 6 months or during the probationary period.

1 month's notice if the employee has been employed between 6 and 48 months.

2 months' notice if the employee has been employed for more than 2 years.

For fixed-term or temporary employment agreements, the notice periods are as follows:

15 days' notice for contracts with an agreed or expected duration of less than 6 months.

30 days' notice for contracts with an agreed or expected duration of 6 months or longer.

These notice periods ensure that both employers and employees have sufficient time to prepare for the termination of the employment relationship.

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Probation period

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In Portugal, the probation period for permanent employees is 90 days. However, for positions that involve high technical or complexity levels, the probation period is extended to 180 days. For management, directorate, and similar roles with significant responsibilities, the probation period is set at 240 days.

In the case of fixed-term contracts, the probation period is shorter. It is set at 15 days when the contract has an expected or fixed duration of less than 6 months. For contracts with a duration equal to or longer than 6 months, the probation period is extended to 30 days.

These probation periods allow employers to assess the suitability of employees for their roles and provide an opportunity for both parties to evaluate the working relationship before committing to a long-term employment arrangement.

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Severance Pay

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In Portugal, fair dismissals based on objective grounds, such as redundancy, or dismissals due to job unsuitability, entail severance payments ranging from 12 to 18 days' salary per year of service, up to a maximum of 12 months' base salary. These severance payments are partially funded (50 percent) by a social security-administered fund called FCT, to which employers are required to contribute. It is common to negotiate higher severance payments to avoid potential litigation.

Severance may also be required for dismissals that occur during the 91st to 180th day of the probation period.

In the case of terminations of fixed-term contracts, a compensation of 24 days of base salary per year of service is applicable.

These severance and compensation provisions serve to protect employees and provide financial support during periods of employment termination.

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When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If it is painstaking to set up infrastructure and kick starting your hiring, to monitor the everchanging compliance landscape is another uphill task. 

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Gloroots helps you minimise all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. They do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.