Looking for an employer of record in Portugal? Here’s what you need to know

Hiring and managing employees in Portugal can be complicated for foreign businesses like U.S.-based companies, as one needs to comply with local labor laws covered by the Código do Trabalho.

Usually, rather than training your HR staff on Portugal-specific regulations and setting up a local entity, companies prefer to work with an Employer of Record (EOR). However, the EOR model may not be permitted or recognized in Portugal, so you may use a workforce management platform.

Find out more about how Payoneer Workforce Management works, or keep reading to learn about Portugal’s labor laws and other hiring obligations.

How to hire employees in Portugal

There are three main options for foreign companies, U.S.-based or otherwise, to hire employees in Portugal. 

1. Hire employees by setting up a local entity
2. Hiring independent contractors
3. Hiring workers via a workforce management platform in Portugal

Here’s how they compare:

Method	Ease of doing business	Compliance
Local entity	Time-consuming and potentially expensive to set up.	You are directly responsible for managing compliance for local employees.
Independent contractors	Simpler to hire and pay workers when compared to setting up an entity.	The workers you hire will not be employees. Treating them like employees counts as misclassification and can result in non-compliance. It’s also harder to attract talent, as they won’t receive employee benefits.
Workforce management platform	Very simple to hire, onboard, pay, and manage workers.	The workforce management platform helps streamline payroll, onboarding, and HR responsibilities as per the local laws.

Partnering with a workforce management platform in Portugal

Typically, an EOR is a company that’s legally registered in the target country and acts as the direct employer. However, the EOR model may not be permitted or recognized in Portugal, so you may use a workforce management platform.

A workforce management platform assists with handling taxes, payroll, benefits, and social security contributions. It also manages all HR responsibilities in line with Portugal’s labor laws.

Payoneer Workforce Management’s services are available in 160+ countries, including Portugal, making international expansion accessible for companies of all sizes.

How to onboard employees in Portugal

An effective onboarding process not only provides new employees with the resources they need to succeed but also makes them feel a part of the company. 

Before an employee in Portugal starts work, make sure to complete the following onboarding tasks:

• Enroll your employee in benefits and payroll
• Enroll your employee for social security
• Configure work devices and set up work accounts
• Schedule an orientation call
• Schedule an introductory call with the employee’s new team

Importantly, you need to register the employee with the tax authorities and ensure you have all the correct information to pay their salary.

Pay employees in Portugal

Here are the basic facts you need to know about paying employees in Portugal:

• The fiscal year runs from January 1st to December 31st.
• The payroll cycle is usually monthly, and payments are made on the last day of the month.
• The minimum wage in 2025 is EUR 870 per month.
• Employees in Portugal receive bonuses in the form of 13th- and 14th-month salary payments in summer and winter, respectively.
• Employers must withhold income tax from the employee’s salary and send it directly to the Portuguese tax authorities, according to the current tax rates.
• Both the employee and the employer must pay social security contributions for family, pension, and unemployment benefits. The employer pays 23.75% of the employee’s gross income, and the employee pays 11%.

Employment laws in Portugal

Portuguese labor laws are covered in the Código do Trabalho. Here are some of the main points:

Law	Description
Maximum work hours	Normal working hours equate to 40 hours per week and 8 hours per day.
Rest during the working day	Employees must get a break after 5 continuous hours of work.
Rest between shifts	There must be 11 hours of rest between shifts.
Weekly rest	Employees must have at least 1 day off per week. Usually Saturday or Sunday.
Overtime	There should be no more than 8 hours of overtime per week (or a total of 48 working hours per week).
Payment frequency	Employees should be paid every month on the last day of the month.

Minimum wage in Portugal

Portugal has a minimum wage of  EUR 870 per month.

Minimum wages may be reviewed and adjusted periodically to account for inflation and the cost of living, so it’s important to stay up-to-date. 

Employment contracts in Portugal

In Portugal, employment contracts can be written or verbal, but as an international employer, it’s highly recommended to have a written contract in place. This helps define both the employee’s and the employer’s rights and obligations.

According to the Portuguese government portal, every contract should include the following:

• Company identification and information
• Location where the work will take place
• Job description
• The contract start date
• Duration of the contract (if fixed-term)
• Holiday policies
• Criteria and notice periods for termination
• Salary information and payment schedule
• Normal daily and weekly working times
• Occupational accident insurance information

Leave policy in Portugal

As in many countries, employers must offer a minimum amount of leave to their Portuguese employees.

Public holidays

Portugal has 13 public holidays, which, if they fall on a workday, must be paid days off. 

Holiday	Date
New Year’s Day	January 1st
Good Friday	Date varies (usually March or April)
Easter Sunday	Date varies (usually March or April)
Liberty Day	April 25th
Labor Day	May 1st
Corpus Christi	Date varies (usually May or June)
Portugal Day	June 10th
Assumption of Mary	August 15th
Republic Day	October 5th
All Saints’ Day	November 1st
Restoration of Independence	December 1st
Feast of the Immaculate Conception	December 8th
Christmas Day	December 25th

Portugal has 308 municipalities, some of which also have their own local holidays. Make sure to check if any of these apply to your staff.

Vacation leave

In an employee’s 1st year of employment, they are entitled to 2 working days’ vacation per month (up to 20 days). They can take this leave after working for 6 full months.

After the 1st year, employees are entitled to a minimum of 22 days of paid vacation per year.

Sick leave

The first 3 days of sick leave in Portugal are unpaid, and a medical certificate is not required.

From the 4th day, an employee can receive sick pay from the social security system, as long as they have contributed to the system for at least 6 months and obtain a medical certificate from a licensed healthcare professional. 

Parental leave

Maternity leave in Portugal is usually 120-150 days, which is mandatory and taken immediately after childbirth. 

Paternity leave consists of 28 mandatory days and 7 optional days. Of the mandatory days, 7 must be taken consecutively and directly following the birth. The rest must be taken within the first 6 weeks.

It’s important to be aware of these policies as you must provide employees with the leave they are legally entitled to. 

Background check in Portugal

Background checks may not be mandatory in Portugal, but you may wish to carry them out to ensure a candidate is the right fit for the role and for your business. 

These are usually performed after making an offer of employment but before the new hire starts work.

All checks should be run following Portuguese laws and legislation, as well as the European General Data Protection Regulation (GDPR). This means you need to get the applicant’s written consent and clearly state what information you need and why.

Here are the most common background checks in Portugal:

• Criminal background check
• Work authorization check
• Education history check
• Employment history check
• Reference check

Some checks, like medical record screening and driving record checks, can be carried out if they’re relevant to the role. However, it is illegal to perform any checks related to the applicant’s personal life or protected characteristics, like their race, religion, or sexuality. 

Employment termination in Portugal

In Portugal, a contract can be legally terminated in the following situations:

• Contract expiration
• Dismissal for just cause
• Collective dismissal
• Dismissal for redundancy
• Dismissal for unsuitability
• Termination by the worker

The required notice period and severance pay vary depending on the reason for termination and the employee’s seniority. Notice periods range from no notice during short probation periods to up to 75 days for employees with more than 10 years of service.

Company registration in Portugal

Registering a company in Portugal involves the following steps:

• Applying for a tax number (NIF)
• Choosing a business structure and name
• Opening a bank account
• Drafting the Articles of Association
• Acquiring the Commercial Registration
• Registering for social security
• Registering with the tax authorities

The process can be done online or in person and costs around EUR 360.

PEO in Portugal

If you register your company in Portugal, you can work with a Professional Employer Organization (PEO). A PEO helps you with administrative duties relating to HR, but you remain the direct employer and responsible party.

For companies building an international workforce, working with a workforce management partner is more suitable since it offers to streamline the process without the need to establish a local entity.

Try Payoneer Workforce Management

Payoneer Workforce Management can help you engage with local talent with support to handle the HR responsibilities, like:

• Onboarding
• Employment contracts
• Employment benefits
• Leave policy (sick pay, vacation, etc.)
• Payroll
• Tax obligations

Payoneer Workforce Management offers services in over 160 countries, so you can engage global talent without setting up a local entity. 

Book a demo today to learn more.

FAQs 

1) What is an employer of record in Portugal?

Typically, an EOR is a third-party company that legally hires employees on your behalf. However, the EOR model may not be permitted or recognized in Portugal, so you may use a workforce management platform to streamline onboarding, payroll, taxes, benefits, and compliance.

2) Are there PEOs in Portugal?

Professional Employer Organizations also exist in Portugal, and they can help legally registered companies with administrative tasks.