Employment laws in Portugal

Employment laws in Portugal are primarily governed by the Labor Code (Código do Trabalho). The Labor Code establishes a comprehensive framework to protect both employer and employee rights in Portugal.  

The Labor Code covers key areas of employment such as minimum wage, leave entitlements, working hours, termination procedures, and more. Both employers and employees must know the labor laws in Portugal for compliance. 

As a European Union (EU) member, Portugal’s employment legislation is shaped further by EU directives. This ensures alignment with broader European standards for workplace equality and worker protection. 

As an employer, you need to develop a fair understanding of the employment laws in the country to build a long-term, compliant relationship with your employees. 

In this guide, we will look at employment laws in Portugal, including employment contracts, and benefits like working hours, leave entitlements, minimum wage, termination, and more.  

Key employment laws in Portugal

Here are some of the most prominent employment and labor laws in Portugal, covering important elements. 

Labor Code (Código do Trabalho) – Law No 7/2009

• The Labor Code of Portugal, Law No 7/2009, covers working hours, employment contracts, safety, equality, and termination. 

Social security framework law (Lei de Bases da Segurança Social – Law No. 4/2007)

• The law defines the structure, general principles, and operation of the social security system in the country. It aims to protect citizens in cases of disability, old age, illness, unemployment, and other situations. 

Legal framework for health and safety at work – Law No. 102/2009 

• Law No 102/2009, which has been later amended to Law No 3/2014, is the central Portuguese legal framework for occupational safety and health. 
• The law enforces employer responsibility for hazard assessment, risk prevention, and health surveillance. 

Prohibition of discrimination in employment – Law No. 93/2017

• The law bans direct and indirect discrimination in recruitment, employment, and working conditions, based on nationality, race, color, or origin. 

Strengthening harassment prevention mechanisms – Law No. 73/2017

• It mandates that employers with more than a threshold number of employees adopt codes of good conduct. 

Contract employment laws in Portugal

According to the local regulations of the Portuguese government, employment contracts in Portugal are governed by the Labor Code (Law No 7/2009). 

The employment contract, written and bilingual, in Portuguese and English, establishes the relationship between the employer and the employee. 

Types of contract

Some of the most common contract types in Portugal include:

• Fixed-term contract 
  • This is a temporary contract with a fixed duration. 
  • The duration and termination of the contract are mutually agreed upon by the employer and the employee according to a time period or an event. 
  • Usually, these contracts do not exceed two years and may be renewed. 

• Unfixed-term contract 
  • This is also a temporary contract. However, the termination depends on the event, the date of which is unknown or uncertain. 
  • This contract has a maximum duration of 4 years.

• Permanent contract 
  • Contrary to fixed-term contracts, these contracts do not have a stipulated end. 
  • Once the duration of the unfixed-term contract is over, it automatically converts to a permanent contract.

Essential contract terms

In the employment contracts in Portugal, you must provide the following information to the employee. 

• Identification of the employee and the employer, along with the location and address
• The category of the employee
• Brief description of the employee’s duties and responsibilities
• Start and end date of the employment contract
• Leave and holiday entitlement
• Notice period
• Probation period
• Salary of the employee
• Benefits and bonuses
• Termination

Minimum wage in Portugal

As per the labor law, the current minimum wage in Portugal is €920 per month. Regardless of the sectors, all employees are entitled to this level of remuneration.

Working hours in Portugal

• A typical work week in Portugal is from Monday to Friday. 
• The total working hours in the country are 40 hours per week, which makes it 8 hours per day. 

As per overtime laws in Portugal, there is a provision of paid overtime in the country as well. 

• The first hour of overtime in a day is increased by 25%.
• The second hour of overtime on the same day is increased by 37.5%. 
• If the overtime is on a weekly, complementary, or compulsory rest day, 50% of each hour or fraction thereof.
• If overtime is on a public holiday, 50% for each hour or fraction thereof. 

Probation period

The probation period in Portugal depends on the kind of employment contract. 

• For permanent contracts
  • General employment – 90 days
  • Roles involving confidential duties or special skills, technical complexity jobs, and long-term unemployed or first-time job seekers – 180 days
  • Management or directorate roles – 240 days

• For fixed-term contracts
  • Contracts over six months – 30 days
  • Contracts of less than six months – 15 days

Mandatory benefits

Employers have to provide certain mandatory benefits to employees in Portugal. Some of them are as follows:

• Public health insurance – Public health insurance is mandatory for all employees in Portugal. Healthcare in the public system is provided by the Serviço Nacional de Saúde (SNS). 
• Sick leave – Employees in Portugal are entitled to sick leave. The pay for sick leave varies according to the number of days of leave. The maximum period for which an employee can receive sickness allowance is 3 years.
• Social security contributions – Both employers and employees must contribute to the state social security system. While employers have to pay 23.75% of the gross salary of the employee, employees have to pay 11% of their salaries. These contributions cover pension, family, and unemployment benefits. 

• Maternity leave – Maternity leave in Portugal can last between 120 and 150 consecutive days. If the leave is shared with the father or if twins are born, the leave can also be increased by 30 days. 
• Paternity leave – Minimum paternity leave in Portugal is 28 days. However, there are provisions for increasing this leave in the country. 
• Annual bonus – 13th and 14th-month pay is mandatory in Portugal. Employees receive the payment on a monthly basis as part of their salary. 
• Annual leave and public holidays – Employees in Portugal are entitled to an annual leave of 22 working days per year, in general. However, in the first year of employment, the employee has a maximum of 20 holiday days. Sometimes, the number of days of leave is calculated in proportion to the months worked. 

There are 13 public holidays in Portugal. They are as follows:

• New Year’s Day
• Good Friday
• Easter Sunday
• Freedom Day
• Labor Day
• Corpus Christi
• Portugal Day
• Assumption of Mary 
• Republic Day
• All Saint’s Day
• Independence Restoration Day
• Immaculate Conception
• Christmas Day

Termination

Termination laws in Portugal are regulated by the Labor Code. The official Portuguese Authority for Working Conditions (ACT — Autoridade para as Condições do Trabalho) oversees the entire termination procedure. All dismissals must have a valid,  subjective, legal, or objective cause. 

Types of termination scenarios

• Termination by mutual agreement between the employee and the employer
• Dismissal for disciplinary cause, usually based on employee misconduct
• Dismissal for the elimination of the position due to unsuitability or structural reasons
• Collective dismissal, leading to the termination of multiple employees

Notice period in Portugal

The notice period in Portugal varies depending on whether the employee is in a probation period. After the probation period, the notice period depends on the length of service. 

• Notice period during probation

• Notice period after probation

Severance payable 

• The severance pay in Portugal (compensação por despedimento/ caducidade) is mandatory for redundancy or objective dismissal. 
• The pay is calculated based on the length of service and the employee’s salary. 
• The employee is entitled to severance pay, along with tenure-based increments, for each year of service.

Navigate employment laws in Portugal with trusted support

Labor laws in Portugal are complicated and detailed. Not adhering to the regulations and laws can lead to penalties and legal complications. 

Workforce management platforms like Payoneer Workforce Management offer guidance with labor law compliance in Portugal, along with offering support in onboarding, payroll management, employment contracts, localized benefits, and more. 

Book a demo right now!

FAQs

1. What are the different types of employment contracts in Portugal?

The common types of employment contracts in Portugal include fixed-term contracts, unfixed-term contracts, and permanent contracts. 

2. Is the annual bonus payable in Portugal?

Yes, employees in Portugal are entitled to mandatory 13th and 14th-month pay in the country. They receive the payment on a monthly basis as part of their salary. 

3. Are employees in Portugal entitled to wedding leave?

Yes, employees in Portugal are entitled to 15 days of paid wedding leave in the country. 

4. Is it mandatory to provide a written employment contract in Portugal?

Fixed-term contracts in Portugal must be in written format and typically bilingual. Open-ended contracts may be verbal. However, employers have to legally provide written information on key terms, such as working hours, pay, and role, within a few days of hiring. 

5. What is the minimum wage in Portugal?

The current minimum wage in Portugal is €920 per month.