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Public Holidays Calendar
|Tuesday||Nov-1||All Saints Day|
|Thursday||Dec-1||Restoration of Independence|
Last updated: Mar 14, 2022
Payroll and Benefits Guide
Papaya Offers Complete Payroll, PEO and Contractor Management Services For Portugal
Due to COVID-19, Portugal has made several changes in the labor code to accommodate the current situation:
- Telework- Telework in Portugal is usually something that is agreed on by both employee and employer. Due to COVID-19, telework is now mandatory when:
- An employee is certified as a person who is immunocompromised
- Disabled and is considered at least 60% incapacitated
- Children under 12 years of age who have experienced disruptions with school closures. One parent is able to request telework.
- When an employee is able to conduct their work outside of their workplace
- Collective bargaining agreements may set daily or weekly telework rotations, work schedules, and even schedule lunch breaks.
Employer Payroll Contributions
Labor Accident Insurance
WGF (wage guarantee fund)
Employee Payroll Contributions
Employee Income Tax
up to 7,116.00 EUR
7,116.01 EUR to 10,736.00 EUR
10,736.01 EUR to 15,216.00 EUR
15,216.01 EUR to 19,696.00 EUR
19,696.01 EUR to 25,076.00 EUR
25,076.01 EUR to 36,757.00 EUR
36,757.01 EUR to 48,033.00 EUR
48,033.01 EUR to 75,009.00 EUR
75,009.01 EUR and above
The payroll cycle in Portugal is generally a monthly cycle, with wages paid before the last day of each month.
There are mandatory 13th and 14th salary payments in Portugal, which are paid out in June, for Holidays, and December, for Christmas.
The standard working hours in Portugal are 40 hours per week, 8 hours per day.
The maximum weekly and daily working hours can differ as stipulated in employment contract /collective bargaining agreements.
In 2022 significant changes in the remote working regime have been implemented, the most significant being that employers must have a written agreement in place if they want to enact remote work, and if there are 10 or more employees, the employees with children up to 8 years old are entitled to work under a remote work regime, (job and employer permitting)
In addition, there is a new rule on contact outside of working hours whereby employers must refrain from contacting employees during their rest period, except in the case of force majeure.
All work more than the standard 40 hours a week is to be paid as overtime and is regulated by the employment contract/collective agreements. In general, overtime maximum limits are set weekly as 2 hours per day up to a maximum of 48 hours per week, and annually, as 150 hours per year for employees of a company with more than fifty employees, and 175 hours per year for companies with less than fifty employees. As stipulated in employment contract/collective bargaining agreements, the maximum daily, weekly, and annual overtime hours can differ.
Overtime payments are calculated as 125.00% of the usual salary rate for the first hour of overtime, increasing to 137.50% per hour for subsequent hours worked. Overtime worked on rest days/holidays is paid at 150.00% of the usual salary rate.
Paid Time Off
Paid leave in Portugal is set in the employment contract as a minimum of 22 days paid holiday a year, following completion of 1-year service, in addition to public holidays.
All paid time off requests must be applied for before the start of the leave and approved by the employer. The leave can be carried forward into the next year but must be used by 30th April.
During the first year of employment, an employee is entitled to 20 days of leave, accumulated as two days per month. If the employment starts in the first half of the year, the employee is entitled to eight days of vacation after completing 60 days of work, and if the calendar year ends before six months has been completed, the days are extended until 30th June the following year.
Portugal has 13 mandatory public holidays.
All employees with at least six months’ service are entitled to 370 days of paid sick leave per year and must provide a medical certificate within 48 hours of the first day of sickness.
The sick pay is paid by the employer for the first three days at a rate of 89.00% of the usual salary rate, then by the Social Security as follows:
- 55.00% of the average salary rate of pay for the next 30 days
- 60.00% of the average salary rate of pay between 31 and 90 days
- 70.00% of the average salary rate of pay between 91 and 365 days
- 75.00% of the average salary rate of pay between up to 366 days
Eligible expectant mothers are entitled to 100.00% of their usual salary rate, paid for by Social Security for 120 days. For an employee to be eligible, they must have been employed for at least 80 days of the preceding 12 months before the expected due date.
Parental leave is granted for the birth of a child under Portuguese law, which may be shared between both parents (in which case the total parental leave period may be 180 days and paid at 83.00% of the usual salary rate of pay. The mother is entitled to 30 days of parental leave before delivery and a minimum of six weeks following the birth.
Compulsory leave for fathers has increased from 15 days to 20 days, and optional paternity leave has decreased from 20 days to five days. Fathers must take paternity leave within six weeks of the child’s birth and use at least five days’ leave immediately after the birth. The leave can be taken as a single period or in a series of days.
This leave is paid by social security at 100.00% of the employees’ average salary in the last six months.
After the required six weeks of maternity leave and 20 days of paternity leave, the couple can decide who takes the next 78 or 108 days. If the couple takes a total of 150 days, the leave is 80.00% paid, and if they choose 120 days, they will receive 100.00%.
In Portugal, employees are entitled to up to 5 consecutive days of paid leave in the case of a family bereavement.
Employees are also entitled to 30 days of paid leave per year to provide urgent and essential care for a family member younger than 12 and 15 days for an older family member.
In the case of an employee getting married, the employees are entitled to 15 consecutive days of paid leave.
The termination process is standard in Portugal, with notice periods required unless an employer can provide sufficient cause for dismissal without notice, usually due to misconduct or disobedience. The lack of notice of termination must be in writing and sent to the relevant service under the Ministry of Labour, except in discipline dismissal.
In general, notice periods in Portugal are stipulated within the employment contract/collective agreement and are linked to the employee’s length of service, as below:
- Seven days’ notice if employed less than six months service
- One month notice if employed between 6 months & 48 months
- Two months’ notice if employed for more than two years
Severance pay in Portugal depends on several factors, including the terms of the employment contract, the position/role of the employee, and the reason for termination.
The minimum amount of severance pay due (if applicable) is 18 days of the usual salary rate for the first three years of service and 12 days’ salary for each subsequent year of service.
Portugal’s probation period for permanent employees is 90 days, 180 days for high technical/complexity roles, and 240 days for management, directorate, and equivalent responsibility roles. Fixed and unfixed term temporary contracts are subject to shorter probation periods.
Any foreigners coming to work in Portugal for longer than six months need a Residence Certificate (Certificado de Registo). Most non-EU nationals will also need a Portuguese work permit before they can undertake employment in Portugal. In most cases, a Portuguese work permit is only granted when a job offer is confirmed, and once approved, they can continue the process of obtaining a Portuguese work visa or residence permit. After five years of residence in Portugal, you can claim Portuguese permanent residence, and after six years, Portuguese citizenship.
Portugal has quotas to limit the number of jobs that go to third-country nationals to improve employment opportunities for EU nationals. Most jobs need to be advertised to Portuguese and EU/EFTA citizens for 30 days before the Institute for Employment and Vocational Training in Portugal (IEFP) will classify them as jobs that non-EU employees can freely fill.
The standard rates of VAT in Portugal are 23.00% in Continental Portugal, in Azores, it is 18.00% and in Madeira, it is 22.00%