EMPLOYER OF RECORD IN PORTUGAL
Employ in Portugal
Pebl’s Employer of Record (EOR) solution simplifies the process for companies to hire a distributed team in Portugal. Our Global Work Platform™ and team of experts fulfill all compliance and business requirements so you can dynamically expand your business and your team in Portugal.
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Portugal at a glance
EUR
Currency, Euro
10.24M
Population
331.64B
GDP
39th
Ranked Ease of Doing Business
Portuguese
Language
Bi-weekly
Payroll Cycle
Grow your team in Portugal
Benefits of hiring in Portugal
Portugal may be smaller in size compared to most European countries, but its economy is similar to other Western European countries as it is dominated by services. Portugal has a booming manufacturing industry, low labor costs, and a large English-speaking population, which are attractive features for businesses looking to expand internationally.
The Portuguese government is comparatively stable to others and helps businesses grow by simplifying bureaucracy and offering tax breaks.
Portugal is constantly finding new ways to attract highly skilled migrants and entrepreneurs. The country has transformed itself into one of the most attractive destinations for foreign workers and foreign direct investments in the world, according to Boston Consulting Group’s 2021 Decoding Global Talent report.
Portugal has achieved high shares of renewable energy, which covered 30% of energy demand in 2019. Portugal was among the first countries in the world to set 2050 carbon neutrality goals. The country aims to be climate-neutral by 2050 and cover 80% of its electricity consumption with renewables by 2030, allowing for immense growth in this sector.
Portugal was among the first countries in the world to set 2050 carbon neutrality goals.
Hiring in Portugal
When hiring employees in Portugal, the terms of employment are usually agreed to in writing. However, it is not legally required.
The following arrangements between employer and employee are legally required in a written agreement:
- The professional category into which an employee’s work falls
- The employee’s working hours
- The employee’s place of work
- Remuneration
An employment contract must be made in writing if it falls into any of the following categories of contract:
- Employment contract made with a non-EU citizen
- Fixed-term or part-time employment contract
- Temporary work contract or intermittent employment contract
- Teleworking employment contract
- Employment contracts with multiple employers
- Employment contract that contains non-competition clauses
Easily navigate payroll laws, contributions, and requirements in Portugal
August 31
Tax due date in Portugal The Portuguese tax year in the calendar year. The deadline for submitting income tax returns is August 31
BIWEEKLY
Payroll cycle in Portugal The payroll cycle in Portugal is biweekly by check, money order, or direct deposit.
40 HRS/WK
Average working hours in Portugal The normal working hours cannot exceed eight hours per day and 40 hours per week.
Hiring in Portugal
When hiring employees in Portugal, the terms of employment are usually agreed to in writing. However, it is not legally required.
In Portugal, all employees are entitled to a nationally applicable minimum salary, which is fixed annually by the law. For 2022, it is EUR705 per month for a full-time employee. In addition, employees are entitled to receive a holiday allowance and a Christmas allowance each year, which are each equal to one month’s salary.
In total, it is mandatory to pay each employee the equivalent of 14 months’ salary. These allowances bring the minimum monthly wage to EUR882.50. Collective bargaining agreements can set higher minimum wages in Portugal that apply to employees falling into specific professional categories.
Calculate payroll contributions in Portugal
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Taxes and social security in Portugal
Individuals are considered tax residents in Portugal if one of the following conditions are met:
- An individual remains in Portugal for 183 days or more in any 12-month period
- An individual has a household and habitual residency in Portugal
- An individual is a crew member of a ship or an aircraft owned by a Portuguese tax resident entity
Non-tax resident employees are liable to pay Portuguese personal income tax on their Portugal-sourced income. Portugal-sourced employment income obtained by non-tax resident employees is subject to a tax rate of 25%. This tax rate may be reduced or eliminated if a double tax treaty applies.
Non-tax residents working in Portugal who are residents in another European Union (EU) country can request a full or partial refund of the tax if their EU country’s tax rate is higher than Portugal’s tax rate.
Portuguese tax residents are liable to pay income tax on their worldwide income. Portugal grants a tax credit for foreign taxes paid on foreign-source income.
In Portugal, income is charged on a progressive tax rate scale that varies from 14.5% to 48%. The tax brackets are as follows:
- €0 – €7,112: 14.5%
- €7,113 – €10,732: 23%
- €10,733 – €20,322: 28.5%
- €20,323 – €25,075: 35%
- €25,076 – €36,967: 37%
- €36,968 – €80,882: 45%
- More than €80,882: 48%
On top of this, an additional solidarity tax is charged at a rate of:
- 2.5% for taxpayers with income exceeding EUR80,000 and up to EUR250,000
- 5% for taxpayers with income exceeding EUR250,000
The corporate income tax rate in Portugal is 21%.
Social security contributions are payable on employees’ gross annual earnings. The contributions are shared between the employer and the employee. The employer withholds the employees’ share from the gross salary, and the employer’s share comes on top of the gross salary. As of 2022, Portugal’s current social security rate charged on income for employees is 34.75% in total: 11% paid by the employee and 23.75% paid by the employer.
Leave entitlements in Portugal
The statutory number of annual paid leave is 22 working days, excluding public holidays. Employees are free to negotiate more paid leave per year. Collective labor agreements may specify additional leave provisions.
Employment benefits in Portugal
According to the Portuguese Government Public Service Portal, “Social Security is the system that ensures people’s basic rights and equal opportunities, through access to a set of benefits and support in terms of illness, parenthood, unemployment, disability, among others.” The system is valid both for Portuguese citizens and residents who make tax contributions in Portugal.
Termination and notice period in Portugal
Portuguese law only allows dismissals on the grounds of just cause, such as an employee’s gross misconduct and breach of the employment contract, or for objective reasons, such as unsuitability for the role. The unilateral termination of an employment contract by the employer is heavily regulated by Portuguese law, and it can only occur on those grounds. Employers can only dismiss employees without any justification during the probationary period and employees can also terminate the employment contract with no reason during the probationary period.
If an employer dismisses an employee for just cause, the following disciplinary procedure must be carried out:
- The procedure must be initiated within 60 days after the employer has become aware of the infraction
- The right to dismiss the employee expires one year after the infraction has been committed or within the time limits provided for by criminal law, if the infraction also constitutes a crime
- The procedure expires one year after it commenced if the employee has not been notified of any dismissal decision
- The employer must give notice to the employee of the decision within 30 days after the end of the evidence stage or after the opinion of the employee’s representative has been received
Employees can immediately terminate an employment contract with just cause where the employer acts in a way where it becomes impossible to continue the employment relationship, such as in cases of harassment. Where an employee terminates the employment contract, one of the following notice periods must be provided to the employer:
- For permanent employment contracts of up to two years: 30-day notice period
- For permanent employment contracts of more than two years: 60-day notice period
- For fixed-term or temporary employment contracts: 15-day notice period
Where the relevant notice period is not provided, the employee must compensate the employer with an amount equivalent to their base pay for the duration of the relevant notice period.
If an employee is lawfully dismissed with just cause, no severance payment is due. However, if a court rules that the dismissal of an employee was unlawful, the employee can choose between:
- Being reinstated with the employer
- Receiving a severance payment of between 15 and 45 days of base salary plus a length of service bonus
FAQ
An employer of record (EOR) in Portugal is a third-party organization that becomes the full legal employer of your in-country workforce. The EOR compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.
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