Your Guide to Hiring Employees and Contractors in Portugal
Ease of doing business
All employee payments will be made in equal monthly installments on or before the last working day of each calendar month, payable in arrears.
In Portugal, employees get 14 months of salary payments each year:
12 months of work
1 Holiday allowance
1 Christmas allowance
The allowances are paid with the same amount as a full month’s salary.
Minimum Wage Requirements
Minimum Wage: €822,50 per month in 12 payments; €705 per month in 14 payments for all employees.
Individual Income Tax
Up to EUR 7,112
Tax rate: 14.5%
Between EUR 7,112-10,732
Tax rate: 23%
Between EUR 10,732-20,322
Tax rate: 28.5%
Between EUR 20,322-25,075
Tax rate: 35%
Between EUR 25,075-36,967
Tax rate: 37%
Between EUR 36,967-80,882
Tax rate: 45%
Above EUR 80,882
Tax rate: 48%
Portugal collects an additional solidarity rate between 2.5-5% on income that exceeds €80,000.
The employer cost is generally estimated at 27.9% of the employee salary:
- Social Security: 23.75%
- Compensation fund: 1.0%
- Work insurance policy: 1.4%
- Labor accident insurance: 1.75%
- Health at work: €120
- Safety at work: €30
Monday to Friday.
Overtime Pay & Maximum Hours
Overtime pay is mandatory and is not included in the salary. Worked hours outside of standard work hours are considered overtime. Employees can work a maximum of 2 hours of overtime per day.
For overtime hours, employees are paid:
- 125% of the hourly rate for the first hour.
- 5% of the hourly rate for the following hours.
- 150% of the hourly rate for weekends and bank holidays.
Termination of the employment relationship can happen in the following ways:
- Voluntary termination by the employee (resignation);
- Retirement as per the employment contract;
- Non-renewal of the employment contract or expiry;
- Termination with just cause and no indemnity, for example in the case of theft or any other serious misconduct;
- Collective dismissal due to economic reasons (f.ex. bankruptcy, restructuring, etc.); or
- Termination by mutual consent.
For an employee that has worked for less than 6 months, the notice period is 15 days, for between 6 months and 2 years, and it is 30 days and for employment longer than 2 years it is 60 days.
The duration of probation periods depends on the contract type. For contracts of indefinite duration, the statutory standard is 90 days.
For positions that are technically complex, with high levels of responsibility, require special qualifications or in a position of trust it may be extended to 180 days.
For fixed-term contracts probation periods are 30 days if contract duration is longer than 30 days and 15 days if shorter than six months.