Country Information

Portugal is a European country on the Iberian Peninsula, neighboring Spain. It includes two island groups: the Azores and Madeira. Lisbon, its capital, is known for its seafood. Portugal has more than 10 million people with a diverse culture influenced by the Celtic, Lusitanian, Phoenician, and Germanic people. Portuguese is the sixth most spoken language in the world. Cars, automobile auto parts and processed petroleum are its main exports. The primary trading partners are European Union (EU) member states. There are no legal restrictions on foreign investment in Portugal, and to open a new business, foreign investors follow the same rules as domestic investors.

Employment Contracts

Employment contracts can be either written or verbal. It must be in the local language and must contain the following stipulations, among others determined by the law or both parties:

  • The workplace
  • Probation period
  • Salary details
  • Working hours
  • Termination details
  • Time of notice period
  • Employee’s duties
  • Signatures

Some of the common types of contracts are:

  • Fixed-term employment contracts, which cannot be more than three years
  • Permanent or indefinite-term contracts
  • Contract of unspecified duration to replace an absent employee
  • Short-duration contracts for seasonal or event work lasting no more than 70 days
  • Intermittent contract for full-time, irregular work
  • Part-time contract where working hours are less than regular working hours

A pre-employment medical test is required. The doctor is required to submit the medical report to the employer directly. After permission from the National Commission of Data Protection, the employer can do remote surveillance.

Working Hours

The standard work period is 40 hours a week and eight hours a day. Limitations on work hours and overtime depend on the size of the business and may be governed by collective bargaining agreements. However, overtime is limited to no more than 150 hours a year for large businesses and 175 hours a year for smaller operations.Overtime is paid at at a percentage over the regular wage for the first hour and higher for the following hours. Overtime on a Sunday or holiday is paid at a percentage over the daily wage.

Sick Leave

Employees receive up to 1,095 days of sick leave through Portugal’s social security system. The pay is generally at a sliding percentage of the employee’s salary after a three-day waiting period The percentages increases over time on the following schedule:Day four to 30Day 31 to 90Day 91 to 365Day 365 up to 1095

Maternity/Paternity Leave

Female and male employees are entitled to initial parental leave for the birth of a child of 120 or 150 days, which can be extended for another 30 days. The 30-day extension can be taken by one parent or shared in consecutive 15-day increments by both parents. The pay rate varies from 80% to 100% of the employee’s salary.Female employees must take at least six weeks of leave following the birth and can take up to 30 days of leave before the birth. The male employee must take a leave of 20 working days, consecutive or not, within six weeks of the birth of the child, five of which must be taken immediately after the birth.


Employees receive 13th- and 14th-month bonuses. One is paid in the summer months (vacation), and the other must be paid by Dec. 15.

Vacation Leave

In addition to public holidays, employees receive 22 days of paid annual leave after one year of service. In the first year of an employment contract, employees receive two days of leave for each month of service up to 20 days. The leave can only be taken after completing six months of service. If the calendar year ends before the first year of employment, leave can be carried over into the next year and used by June 30 but no more than 30 days of leave can be used within a calendar year. Some collective bargaining agreements secure additional leave. Employees with a fixed-term contract receive two days of vacation a month up to 20 days. Accrued but unused vacation leave must be paid upon separation of service.

Public Holidays
  • New Year’s Day
  • Good Friday
  • Freedom Day
  • Labor Day
  • Corpus Christi
  • Portugal Day
  • Assumption Day
  • Republic Day
  • All Saints’ Day
  • Restoration of Independence
  • DayImmaculate Conception Day
  • Christmas EveChristmas Day
Health Insurance Benefits

The state provides universal healthcare and employers must enroll employees in the healthcare system. Employers also offer supplementary private healthcare insurance, meal and car allowances.

Employment / Termination / Severance

Employment contracts may be terminated at the end of the contract term (if for a fixed duration), by the employer, by the employee, or by mutual agreement between the parties. Employers can terminate an employment contract for just cause or misconduct by the employee, pursuant to a collective dismissal, for redundancy, or failure of the employee to adapt to the job. An employer may terminate an employee for misconduct without paying severance. Misconduct includes threatening other employees or the employer, damage to employer property or financial interests, unreasonable disobedience, continuously conflicting with co-workers, failing to meet job requirements, lying about absences from work, kidnapping or other restrictions against personal freedom, or conscious breach of safety rules. Misconduct also includes unjustified absences from work resulting in damage to the employer, missing work for five consecutive days without a reason or missing work for 10 days in a year without cause.

While notice is not required when dismissing an employee for misconduct, employers must follow certain procedures, which include initiating action within 60 days of learning about the issue, notifying the employee in writing about the reason for dismissal and allowing the employee to respond.

Employers may terminate employees during the probation period but may be required to provide notice as follows:

  • No notice is required if the probation period is six days or less
  • If the probation period is more than 60 days, seven days of notice is required
  • If the probation period is more than 120 days, 15 days of notice is required

In general, the probation period for permanent contracts cannot exceed:

  • 90 days for regular employees
  • 180 days for complex activities, such as managers
  • 240 days for directors and high-level executives

For fixed-term contracts, the probation period is 15 days for contracts up to six months of duration and 30 days for one-year contracts.

Outside the probation period, employers must provide notice as follows:

  • 15 days for employees with less than one year of service
  • 30 days for employees with one to five years of service60 days for employees with five years or more and up to 10 years of service
  • 75 days for employees with more than 10 years of service

Employers must also pay severance. Severance is generally 12 days of wages for every year of service. Different rates apply for work performed prior to Oct. 1, 2013.Employers may be liable to pay severance if the court deems the termination unlawful in the amount of 15 to 45 days of wages per year of service, depending on the reason for termination.

Local Laws & Regulations

We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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Partnering with Atlas when expanding into Portugal, can dramatically reduce the standard brick and mortar processes of doing business in foreign markets and allow you to focus on what you do best, growing your company! To discover more about how Atlas can simplify your ability to expand globally, please feel free to contact us.
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