Global PEO Services (GPS) helps companies hire employees in Portugal without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Portugal, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Portugal labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Portugal. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Portugal - Country Overview
Portugal, a key nation of the Iberian Peninsula, 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 with stable growth rates achieved during the last 5 years, the GDP is expected to touch $225 billion by 2020. The country has a predominantly service-based economy, which mainly revolves around exporting clothing, footwear, chemicals, machinery, and paper products.
Alentejo, Algarve, Beira, Douro Litoral, Estremadura, Minho, Ribatejo, Trás-os-Montes
Employment Contracts in Portugal
Employment contracts must be in writing, be it for a fixed-term, unspecified duration, intermittent, teleworking or part-time work. 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.
Working Hours in Portugal
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 get a resting period of at least 11 consecutive hours between two consecutive daily working periods.
Employee Leave in Portugal
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 of 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.
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.
Employee Benefits in Portugal
Mandatory social security contributions are equal to 34.25% of an employee’s gross income, out of which the 23.75% contributed by the employer 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.
- Maternity Leave
- Paternity Leave
- Surrogacy Leave
- Adoption Leave
- Caregiver’s Leave
- Health Insurance
- Unemployment Benefits
- Pension Benefits