Hire in Portugal

Probation periods for permanent employees typically span 90 days, with exceptions for roles of high complexity, trust, or responsibility, which extend to 180 days, and management positions, which may last 240 days. On average, probation lasts 90 days.

For temporary contracts, probation periods are shorter:

• – 15 days for contracts lasting less than six months
• – 30 days for contracts lasting six months or longer

During the probation period, termination by either party does not require justification or entail compensation. Employers need not give notice within the first 60 days; thereafter, a notice of seven or 15 days is required, depending on the duration of the probation. Longer probation periods are not permitted, but parties may mutually agree to waive or shorten the probation period.

The standard maximum daily and weekly working hours are set at eight hours per day and 40 hours per week. However, exemptions can be arranged for employees in managerial roles, positions of trust, or those regularly working off-site. In such instances, the standard limits do not apply. Employees covered by the exemption regime usually receive an additional bonus as compensation.

Overtime is allowed for dealing with an extraordinary increase in workload, to prevent serious damage or if due to force majeure. Such overtime is subject to maximum limits: 

• Two hours when performed on a normal working day
• When overtime is performed on a rest day or on a public holiday, the maximum allowed is equivalent to the daily normal working period 
• The total allowed hours is 150 (medium-sized and large-sized companies) or 175 (small-sized companies) per year

Overtime must be compensated with additional payment, with an increase of hourly rates:

• Overtime work on normal working days earns a 25% increase for the first hour and then a 37.5% increase for additional hours
• Overtime on a rest day or a holiday is compensated at the normal hourly rate plus 50%
• Overtime on a normal rest day (typically, Sunday) also entitles the employee to additional time off that is equivalent to one day of work

Overtime work exceeding 100 yearly hours must be compensated as follows (increase of hourly rates):

• Work on normal working days: 50% increase for the first hour and 75% for additional hours
• Work on rest days or holidays: 100% increase for each hour

CBAs may require more beneficial treatment for employees in regards to overtime.

Employers bear a continuous responsibility to maintain workplace health and safety standards. This entails adhering to specific guidelines designed to prevent work-related accidents and illnesses, including:

Implementing technical measures to prevent accidents.
Providing employees with training, information, and opportunities for consultation regarding workplace safety.
Establishing internal or external health and safety services.
Additionally, employees are required to undergo health examinations before starting work and at regular intervals thereafter.

Mandatory: Portuguese employees receive a holiday bonus, often referred to as the 13th month pay, encompassing their basic salary and additional payments related to job performance. This bonus, equivalent to one month’s salary, is typically disbursed before the holiday season, commonly in June. Furthermore, employees are entitled to a Christmas bonus, equivalent to one month’s salary, which must be paid by December 15 annually, often known as the 14th month bonus.

Contractual/Discretionary: Employers in Portugal frequently offer additional bonuses beyond the statutory ones, determined by contractual agreements or at the employer’s discretion. The employer has the liberty to establish the terms and conditions of these bonus schemes without specific regulatory constraints, ensuring they remain nondiscriminatory.

Employers in Portugal have the authority to terminate contracts under specific circumstances deemed as ‘just cause.’ This concept encompasses disciplinary dismissals and other justified terminations as outlined by law.

The Portuguese Labor Code recognizes various forms of dismissal, including:

1. Dismissal based on unlawful conduct by the employee.
2. Redundancy-related terminations resulting from job elimination.
3. Dismissal due to failure to adapt to work requirements, wherein the employee is incapable of adjusting to the job demands, making it untenable to sustain the employment relationship.

Collective dismissal regulations are triggered when at least two employees (in companies with up to 49 employees) or five employees (in companies with 50 or more employees) are dismissed within a three-month period.

Upon termination of an employment agreement, the employer must furnish the employee with a certificate of employment, delineating the commencement and termination dates and the held position(s). Additional official documents, including those for Social Security purposes, are also requisite.

If the notice period is not observed, compensation in lieu of notice must be provided. Garden leave arrangements are permissible when mutually agreed upon.

In cases of unfair dismissal, regardless of the cause, the employee reserves the right to challenge the legality of their termination before the labor courts. Upon a ruling of unfair dismissal, the employee is entitled to:

• – Payment of back wages from the dismissal until the date of the court decision.
• – The option of either reinstatement or receipt of severance compensation, the latter ranging from 15 to 45 days of base salary per year of service.

Employees designated as representatives or those who are pregnant or nursing benefit from special protection rights concerning termination of their employment.

The employee retains the freedom to resign, with notice periods stipulated as follows:

For permanent employees:

• – 30 days for contracts in force up to two years.
• – 60 days for contracts in force beyond two years.
• For fixed-term (temporary) employment agreements:
• – 15 days for contracts with an agreed (or expected) duration of less than six months.
• – 30 days for contracts with an agreed (or expected) duration equal to (or longer than) six months.

• Fair dismissal based on objective grounds (such as redundancy) or dismissal due to the employee’s unsuitability for the job entitles the employee to receive severance pay equivalent to 14 days’ salary per year of service, capped at 12 months’ base salary. Half of this severance is covered by a fund (FCT) managed by Social Security, to which the employer must contribute.
• In cases of fair disciplinary dismissal, no severance pay is mandated.

Employers may choose to offer higher severance payments voluntarily as a means to mitigate the risk of legal disputes.

Post-termination restraints designed to safeguard the employer’s legitimate business interests are enforceable if the restricted activity poses a potential risk to the employer. These obligations can be outlined in the initial employment agreement:

Agreement on non-compete and/or non-solicitation by the employee
Specification of the scope of the obligation (activity and geographic area)
Duration of the restriction (legally limited to two years, or three years for positions of trust or those with access to highly sensitive information)
Compensation to be provided to the employee during the restricted period, typically ranging between 50% and 80% of the last monthly remuneration
Failure to meet these legal criteria renders the restraint invalid and unenforceable.

Non-compete agreements: Permissible within the aforementioned regulations.

Customer non-solicitation clauses: Permissible within the aforementioned regulations.

Employee non-solicitation clauses: Permissible within the aforementioned regulations.

In 2019, the European Court of Justice ruled that companies must institute a system to accurately record the working hours of their employees. Consequently, employers are mandated to establish an objective, dependable, and easily accessible system that allows for the logging of the daily work hours completed by each employee.

Employee representative bodies are allowed but not obligatory in Portugal. Employees within a company have the option to establish the following representative bodies:

1. Works council: Members are chosen by the employees and serve to advocate for the interests of the company’s workforce. Works councils are more common in larger companies.
2. Union delegates: Elected representatives of employees affiliated with a particular union. Multiple unions may have representatives in a single company.
3. Health and safety representatives: These representatives oversee workplace safety and health matters, though they are not widely established in Portugal.
4. European Works Council (EWC)
Trade unions play a significant role in certain sectors, with industry-wide collective bargaining agreements being standard practice across various industrial sectors such as automotive, chemicals, transportation, pharmaceuticals, construction, and metallurgy.

Employee representatives are entitled to paid time off to fulfill their responsibilities, subject to certain time limits. They may also convene general employee meetings either during or outside of working hours, with a maximum duration of 15 hours per year if held during working hours.

Fixed-term contracts are permitted only when essential, serving temporary staffing requirements or specific employment strategies, such as facilitating the employment of particular groups like first-time job seekers or the long-term unemployed, as well as fostering the establishment of new businesses or ventures.

Part-time fixed-term contracts can be renewed up to four times within a four-year period. Upon reaching the four-year threshold, the employer is obligated to offer permanent employment to the worker.

Standard fixed-term contracts are subject to a maximum of two renewals, with the total duration not exceeding two years.

Upon the expiration of a fixed-term contract, the employee is entitled to compensation equivalent to 24 days of basic salary and seniority benefits for each full year of service.

Regardless of the payment method, employees are entitled to receive a payslip detailing their remuneration (including gross pay, lunch allowance, etc.) and deductions (such as personal income tax, social security contributions, and authorized withholdings like union dues).

Employers provide employees with a statement in January of the following year, reflecting the earnings from the previous year. This statement is essential for employees when filing their annual tax returns with the tax authorities.

Under Portuguese law, employees generally have the right to a minimum of 22 working days of holiday per calendar year, which becomes effective on January 1 and pertains to work performed in the preceding year. Collective bargaining agreements (CBAs) may extend this holiday entitlement, often to 25 days.

In the year of employment commencement, employees are entitled to two working days of holiday for each month of the contract’s duration, capped at 20 working days. These days can be taken after six full months of employment or earlier if agreed upon by both employer and employee.

In the subsequent year, employees are entitled to two working days of holiday for each month of the contract’s duration, up to 22 working days. During the first two years of employment, the holiday entitlement aligns with the working time of each calendar year rather than the previous year.

Special regulations apply to employees working under fixed-term contracts:

Employees with tenure between six months and one year are entitled to accrue two working days of leave per month, up to a maximum of 20 days.

If the tenure ends before six months have passed in the calendar year, the accrued leave can be utilized before June 30 of the following year, with a cap of 30 working days per year. For contracts lasting less than six months, employees are entitled to two days of paid leave for each full month stipulated in the contract. The scheduling of annual leave is subject to mutual agreement between the employer and the employee, typically taken as a continuous block but can also be divided into periods of no less than 10 days.

Employees are entitled to paid time off due to illness or injury, covered by the state social security protection scheme, provided they meet the eligibility criteria. Certain collective bargaining agreements (CBAs) may outline additional rules regarding sick leave.

Under the social security protection scheme, employees receive sick pay for a maximum of 1,095 days, calculated based on their remuneration reference for social security purposes, ranging from 55% to 75% depending on the duration of illness.

Employees are required to notify their absence due to sickness promptly, and the employer may request medical documentation within 15 days of notification. During the first three days of absence, the employer continues to pay the salary, after which the sickness allowance is provided by Social Security.

For short-term sick leave, up to three working days, employees can self-report their absence through the National Health Services website or app, twice a year.

Education Leave: Upon request, the employer has the option to provide an unpaid leave period to an employee for them to enroll in a training program offered by an educational or vocational training institution.

Maternity Leave:

Employees who have contributed to the social security system for at least six months are eligible for 120 to 180 days of paid maternity leave. A maximum of 30 days of this leave can be utilized before childbirth. The parental leave can be divided between the mother and father, provided that:

• The mother takes a minimum of six weeks of leave after childbirth.
• The father takes five days of leave immediately following the birth and an additional 10 days within the following 30 days.

Paternity Leave:

Fathers can also claim an additional 10 days of paternity leave, which can be taken during the mother’s maternity leave period.

If both parents do not share the leave, it can last for either 120 or 150 days; if shared, it can extend up to 180 days. For the leave to be “shared,” the parent taking the shorter period must take at least 30 consecutive days or two 15-day periods.

For 120-day leave, parents receive full compensation regardless of whether it’s shared. For 150-day leave, they receive full compensation if shared, and 80% if not.

In cases of multiple births (twins, triplets, etc.), parents can take an extra 30 days of paid leave per additional child.

Maternity leave is covered by social security.

Employers must permit parents of children under three to telecommute if it aligns with their job duties.

Paternity Leave:

Fathers of newborns can take up to 28 working days of paternal leave. At least 5 consecutive days must be taken within 42 days of the child’s birth. After the initial 28 days, fathers are entitled to an extra 7 days, some of which must be used during the mother’s maternity leave.

The pay for paternity leave is provided by Portuguese Social Security.

Adoption Leave:

Adopting a child under 15 grants the prospective adopter exclusive paternal leave of 28 days. For multiple adoptions, the leave increases by 2 days per adoption after the first.

Childcare Leave:

After parental leave, parents can take child assistance leave, consecutive or intermittent, for up to two years. For families with three or more children, the allowance extends to three years.

• Death of Spouse, Child, or Stepchild: 20 consecutive days of leave are granted.
• Death of Parents: 5 consecutive days of leave are allowed.
• Death of a Newborn or Unborn Child: 3 consecutive days of leave are permitted.

In Portugal, there are 13 public holidays in a calendar year. These public holidays are separate from statutory holiday entitlement.