COUNTRY

Written Agreements

The Labor Code of Portugal recognizes the validity of written, oral, and implied (by specific facts in the absence of an agreement) contracts. If a written contract is used, the labor code states that an employment contract must be made in multiple copies for the employee and the employer. A written labor agreement must contain several terms prescribed by statute in the Labor Code, including the amount of remuneration, the place of work, and the expected duration of the contract.

Portuguese Labor Law permits the use of non-compete agreements that take effect after an employment contract ends, under these conditions:

• The agreement must be in writing, although it doesn't have to be part of the initial employment contract.
• There must be a specific risk that the employee's future work could harm the employer's interests.
• The employee must receive compensation for the period of restriction.
• The restriction period can't exceed 2 years after the contract ends. However, for employees with high trust roles or access to sensitive competitive information, this period can be extended up to 3 years.

Oral Agreements

The Civil Code of Portugal recognizes the validity of oral or verbal contracts. However, the Labor Code mandates that important information regarding the contract be presented in writing to the employee.

Implied Agreements

The Civil Code of Portugal recognizes the validity of contracts implied by specific facts in the absence of an agreement. However, the Labor Code mandates that important information about the contract be presented in writing to the employee.

The Labor Code of Portugal stipulates that the regular working hours may not go over eight hours per day and 40 per week. The maximum average hours of work per week (including overtime) cannot exceed 48 hours, measured over a reference period of four months.

Bill 790/XIV/2 guarantees right to professional disconnection. Bill 745/XIV/2 contains changes the legal and labor regime for teleworking, ensuring greater protection for workers.

New Year’s Day (January 1), Freedom Day (April 25), Labor Day (May 1), Portugal Day (June 10), Assumption of Mary (August 15), Republic Day (October 5), All Saints’ Day (November 1), Restoration of Independence (December 1), Immaculate Conception Day (December 8), Christmas Day (December 25), Good Friday (date may vary), Easter Sunday (date may vary), Corpus Christi (date may vary).

Portugal's labor law provides employees the right to paid annual leave of 22 working days. Employees can take leave after 6 months of working with the same employer and accrue 2 vacation days per month of work in the first year, up to 20 days. If the employee's contract is under 6 months, the employee is eligible for 2 vacation days per month worked and may use the days immediately before the employment contract terminates. The law prohibits compensation in lieu of vacation.

Leave should be taken the year it expires but can be taken until April 30th of the following year if the employee and employer agree.

Payments toward sick leave in Portugal come from the social security system, which is paid into by employees and employers. Employees receive a percentage of their regular wages while absent due to illness. The employee must have worked at least 6 months before the start of sick leave to qualify for the benefit. The 6-month requirement can be consecutive or cumulative, including the month the illness occurs. Payment of benefits begins on the fourth day of leave. The exact amount varies based on the amount of time an employee is unable to work:

• 55% of regular wages for an incapacity lasting 4 to 30 days
• 60% of regular wages for incapacity lasting 31 to 90 days
• 70% of regular wages for an incapacity lasting 91 days to 1 year
• 75% of regular wages for an incapacity lasting more than 1 year

The daily amount of the sickness allowance in situations of incapacity for work resulting from tuberculosis is calculated by applying 80% or 100%, depending on whether the beneficiary's household includes up to two or more dependent relatives.

The sickness allowance is increased by 5% for beneficiaries who earn less than EUR 500 weekly.

The Labor Code of Portugal provides 120 days of paid maternity leave. Parental leave benefits are funded by the social security system.

Expectant mothers are entitled to up to 30 days of initial leave before giving birth and 6 weeks of mandatory leave after childbirth. An employee who intends to use part of the leave before giving birth must inform their employer and submit a medical certificate stating the foreseeable date of delivery at least 10 days before their leave. If medical urgency makes it impossible, the employee must attempt to provide the employer with a medical certificate at the earliest time possible.

The Labor Code of Portugal grants fathers paid initial parental leave of 28 days, 7 of which must be taken consecutively and immediately after birth. The remaining days must be taken within 42 days of the birth. The father is entitled to 7 additional days of paid leave if it is taken at the same time as the mother's initial parental leave. For twin births, 30 days are added to the paternity leave for each child. An employer may also take up to 3 consecutive days leave for a pregnancy that ends in miscarriage.

Minimum Wage

Minimum monthly wage rates effective January 1, 2025, are as follows:

• National - EUR 870 (Euros)
• Autonomous Region of Azores - EUR 913.50
• Autonomous Region of Madeira - EUR 915

Non-payment of minimum wages is considered a serious offense and is punishable by a fine. Ensuring compliance with the Labor Code provisions, including those on the minimum wage, is the responsibility of the Labor Inspectorate.

Wages must be paid to employees at regular intervals - weekly, fortnightly, or monthly. In the case of variable remuneration with a calculation period of more than 15 days, the employee may demand payment in fortnightly installments.

Overtime, Holiday & Vacation Pay

In Portugal, regular working hours are set at 8 hours per day and 40 hours per week. Any additional work performed beyond those hours is considered overtime. An employee can complete no more than 2 hours of overtime in any single working day. Overtime cannot exceed 175 hours per year for small companies and 150 hours per year for medium or large companies. However, these annual limits can be varied by collective agreement. Overtime cannot exceed 80 hours per year for part-time workers. Minors may only engage in overtime work in extraordinary circumstances.

Overtime pay on a regular working day is calculated as 125% of the employee's standard wage for the first hour or fraction thereof and 137.5% of the employee's wage for every consecutive hour or subsequent fraction thereafter. On weekly rest days and holidays, overtime pay is calculated as 150% of normal wages. A collective labor agreement can vary overtime rates.

Portugal's labor law provides employees the right to paid annual leave of 22 working days. Employees can take leave after 6 months of working with the same employer and accrue 2 vacation days per month of work in the first year, up to 20 days. The law prohibits compensation in lieu of vacation.

Notice Period

Portugal's Labor Code requires the employer to give advance notice to employees who are being dismissed. The duration of the advanced notice period varies based on the seniority of the employee:

• 15 days for the service of under 1 year
• 30 days if the worker has been employed between 1 and 5 years
• 60 days if the worker has been employed between 5 and 10 years
• 75 days for service over 10 years

Employees on probation are also entitled to notice period for termination of their contract. If the trial period lasts more than 60 days, the termination of the contract by the employer requires 7 days' notice. If the trial period lasts more than 120 days, the notice must be at least 15 days.

Severance Benefits

Per the Labor Code of Portugal, severance pay for dismissed employees is 24 days of compensation per year of service.

In collective dismissals, severance pay is calculated as 14 days of base pay and seniority payments for each full year of seniority, limited to 240 times the guaranteed minimum monthly salary. The value of the worker's monthly base salary and seniority to be considered for calculating the compensation cannot exceed 20 times the guaranteed minimum monthly salary.

Pension

All employees are covered by a national social security system that provides funds upon retirement. The retirement age is 66 years and 4 months in 2024 and 66 years and 7 months in 2025. Employees must have paid contributions for 15 years. Early retirement may be available at the age of 57 years with at least 22 years of contributions.

The monthly pension is calculated as 2% of the average remuneration of the employee per year of contribution for less than 20 years of contribution. For contributions of 21 or more years, the amount of pension depends on the average remuneration relative to the social support index value. The maximum pension is 92% of the average salary. Pensioners are entitled to receive an additional bonus equal to the monthly pension in July and December every year.

Contributions to social security are paid by both the employees and employers.

Dependents/Survivors Benefits

Survivors of a deceased employee are entitled to benefits if the employee has made at least 36 monthly contributions. Survivors include spouses, ex-spouses, dependent children, and ascendants of the deceased employee. The pension paid to survivors is dependent on the old-age or disability pension the employee was entitled to receive or would have been entitled to receive. Pension is 60% for a spouse, 20-40% for children, and 30-80% for descendants (depending on the number of survivors). In addition, a lump-sum death grant is paid to the beneficiary's family members as EUR 1,527.78.

Employers are responsible for paying pensions to the survivors of employees who die due to work accidents or occupational diseases. The pension is 30-40% for the spouse, 20-50% for children, and 10-30% for descendants (depending on the number of survivors).

Invalidity Benefits

The National Social Security Scheme of Portugal provides life and disability benefits to insured employees who have permanently lost more than a third or the entirety of their ability to earn with at least 3-5 years of either collective or cumulative remuneration. The employee must also have exhausted sickness benefits and is subject to incapacity verification assessments.

Employees are also entitled to compensation from their employers for damages from a work-related accident or illness. Compensation depends on the type and degree of disability. Employers also cover expenses incurred in medical treatment.