Portugal

Overview

Portugal, a key nation of the Iberian Peninsula, has a GDP of $204.56 billion (2016), the 45th largest GDP in the world. The nation’s economy went through a lean patch between 2005 and 2013, which made the country’s GDP dip to be one of the lowest among other European nations. However, beginning from 2013, Portugal has bounced back steadily and secured 38th position in 2015-16 The Global Competitiveness Index report. The country predominantly has a service-based economy, which mainly revolves around exporting clothing, footwear, chemicals, machinery, and paper products. In 2016, Portugal ranked 24th according to the World Bank’s Ease of Doing Business Report.

Currency: Euro (€)

Principal language: Portuguese

Government: Representative Democracy

Capital City: Lisbon

Major Cities: Alentejo, Algarve, Beira, Douro Litoral, Estremadura, Minho, Ribatejo, Trás-os-Montes

Employment Contracts

Employment contracts must be in writing, be it for a fixed-term, an unspecified duration, intermittent, teleworking or part-time. A written contract needs to include the following information:

  • Name of the employer
  • Name of the employee
  • Type of employment and responsibilities
  • Employment commencement and end date, if known, and
  • Job location and work hours

Employers generally put their employees on a probation of 90 days. The probationary period may extend up to 180 days for professionals holding positions of trust, technical complexity or a responsible position at the senior management level, requiring special qualifications. For directors and higher management employees, the probationary period may go up to 240 days.

Fixed-term contracts can satisfy only temporary business requirements and are subject to stringent regulations and time guidelines.

Work/Time Regulations

A standard workweek in Portugal is typically 40 hours in 5 workdays with 8 hours a day. Although the 2009 Labor Code emphasizes that employers have some flexibility in extending or reducing the workday under certain circumstances.

Employees are entitled to a minimum 1 rest day per week. Sunday is the default rest day, but another can be substituted when business circumstances arise. Employees’ work hours must not be more than 5 hours without a rest break. The rest break must be a minimum of 1 hour and a maximum of 2 hours. Employees must have at least 11 consecutive hours between 2 consecutive daily working periods.

Leave

Employees get at least 22 days of guaranteed paid leave in a calendar year. New employees with a service of 6 months get 2 working days’ leave for each month of work during their year of hire. In addition to their usual pay for the period of vacation, employees get an equal amount as a vacation allowance. Employers must provide new hires with 2 days of paid leave for every month worked for the initial year of their contract. Employees may take this leave after 6 months’ of work.

Unused vacation may be carried forward to April 30 of the subsequent year. Any annual leave that more than 20 days may be exchanged for cash. Determination of annual leave schedule is through an agreement between employer and employee. The leaves can be broken down into periods of no less than 10 days.

Holidays
Employees get the following 9 paid public holidays:

  • Jan. 1: New Year's Day
  • Good Friday
  • Easter Sunday
  • April 25: Liberation Day
  • May 1: Labor Day
  • June 10: Portugal Day
  • Aug. 15: Assumption Day
  • Dec. 8: Immaculate Conception Day
  • Dec. 25: Christmas

These are 9 mandatory holidays, but the autonomous regions may have to add to this list. Municipalities in the country may designate other holidays. Observance of holidays is always on the day they fall. Law entitles employees who work on public holidays to a 50% higher remuneration.

Benefits

Mandatory social security contributions are equal to 34.25% of an employee's gross income, out of which the employer contributes 23.25% and the balance 11% by the employee. From the total social security fund, 20.21% goes towards providing old-age benefits, 4.29% is allocated as disability benefits, whereas survivor benefits account for 2.44%. The remainder of social security contribution funds sick leave, maternity/paternity leave, unemployment and family benefits, and workers' compensation.

Statutory Benefits

  • Maternity Leave
  • Paternity Leave
  • Surrogacy Leave
  • Adoption Leave
  • Caregiver’s leave
  • Health Insurance
  • Unemployment Benefits
  • Pension Benefits

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Portugal and hire their employees without having to establish a branch office or subsidiary in Portugal.

  • Your candidate is hired via our Portugal PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Portugal laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.