Employment Laws in Portugal

Portuguese Employment Laws

Portugal’s employment laws have evolved to provide a comprehensive framework that balances employer and employee rights. Governed by the Labour Code (Código do Trabalho), these laws cover a wide range of aspects, from working hours to vacation days, thus ensuring a safe and healthy work environment for all, inclusive of those with a disability or chronic illness.

Key provisions under the Labour Code include:

• A maximum normal working period is typically 40 hours per week.
• A minimum rest period of 11 consecutive hours in every 24 hours, popularly called the rest period.
• A minimum of 22 vacation days each year, part of the employee benefits.
• Additional compensation for overtime work.

Understanding these rules is crucial for any company looking to expand its operations or hire new tech talent in Portugal. The employer must respect these rules to avoid any legal repercussions, such as severance payments or fines from social security institutions.

Employment Contracts in Portugal

The employment and labor laws in Portugal make no provisions for the terms upon which employment contracts have to be drafted or for information that must be contained in the document. As a result, an employer must establish an employment relationship by agreeing terms of the employment either in written form or verbally, with the employee's consent. However, some contract types exist that require certain clauses and terms to be documented in writing, such as fixed-term employment contracts. Such terms include determining the type of work relationship to be established. The following are the different types of employment contracts that exist in Portugal

Fixed-term contracts

Any employment in which the contract terms are meant to be for a stipulated duration, or maximum duration, has to be clearly written. Fixed-term contracts in which the employer and employee agree to the termination agreement of the employment at a set date have to have in writing, else the employment terms will be deemed to be an open-ended contract whose employment has no expiration date.

Open-ended employment contracts

Most employment types in Portugal are open-ended. This means that the employment relationship between the employer and the employee is for an indefinite period, unlike fixed-term contracts. With this type of employment contract, the employee is entitled to certain employee benefits the employment ends when there is a breach of contract terms, mutual agreement between both parties or sickness and death.

Trial Period

Also referred to as the probation period, is an initial period during the employment when permanent employees are observed to determine the efficiency or effectiveness in handling the employment requirements. In Portugal, the probationary period is typically 90 days or the first three months of employment. In rare cases, the probation period can be 180 days or 240 for managerial positions.

There is no legal requirement for the employment contract to be drafted in any particular language. In fact, as long as both parties can interpret the finite details of the contract, it is acceptable.

The sample letter of agreement between employer and employee provided by Skuad can serve as a starting point for drafting a comprehensive employment contract in Portugal.

Minimum Employment Terms and Conditions

The collective agreements labor regulations set the employment minimum terms in Portugal. However, the contract agreed upon by both parties - the employer and employee can override the collective bargaining agreements only if the new terms agreed upon have better offerings than the one proposed by the collective bargaining agreement.

Wages and Compensation

In Portugal, the minimum wage is periodically reviewed and adjusted by the government. As of 2024, the monthly minimum wage stands at €859.22. It is crucial to note that this is a base figure, and compensation can vary depending on the industry, job role, and the individual's level of experience. Any failure to comply with this minimum standard can have severe implications, potentially leading to penalties for misclassification of independent contractors.

Overtime and Additional Work

The Portuguese Labour Code also includes provisions for overtime work. Employees are entitled to additional pay for any hours worked beyond the standard 40-hour workweek. This ensures that the extra effort and working hours spent by the employee are adequately rewarded. The employer must ensure that the minimum duration of rest between shifts is respected, requiring the employee's consent for any changes.

Safe and Healthy Workplace

Employers in Portugal are obliged to provide a safe and healthy work environment for their employees. According to labor regulations, employers follow stipulated guiding principles that ensure the work environment is safe and complies with high health and safety standards. Also, it is mandatory to provide structures such as easy access to first aid and prevents work accidents. This even includes measures to protect against sexual harassment and discrimination based on sexual orientation. While these practices do not apply to remote organizations in Portugal, employers are also required to provide safe working conditions for their employees.

Social Protection

In addition to wages and working conditions, Portugal's employment laws include provisions for social protection, which cover aspects such as sickness, maternity, paternity, unemployment, and retirement. Notably, Portugal is among the countries offering a robust healthcare system, which aligns well with these social protection schemes. The social security contributions by employers and employees support this system. This includes self-employed workers, who also have certain social security obligations. For more details, consider reading about countries that offer free healthcare.

Leave Policies

Leave policies form a crucial part of Portuguese employment law, providing employees with ample opportunities for rest, recovery, and personal pursuits. By ensuring appropriate leave policies are in place, businesses can foster better employee representation, increase productivity, and avoid common legal troubles for global businesses.

Annual/Holiday Leave

Full-time employees in Portugal are entitled to 22 days of paid annual leave. For employees with temporary contracts whose service duration is more than six months, they are entitled to two days of paid leave for every month that they have worked in a calendar year. The annual leave can be taken once or split throughout the year. Additionally, on public holidays, the employer is entitled to rest without any reduction in wages.

Sickness Leave

Employees are entitled to paid sick leave or sickness compensation from the Social Security System when they fall sick and are unavailable to work during their normal working period. The payment for sick leave is dependent on the duration of absence, the nature of illness and the percentage of the reference payments. This sick pay ranges from 55 to 75%. However, the employer must pay the employee's salary for the first three days of absence due to illness.

Parental Leave

Recent fathers and mothers are granted initial parental leave before and after the birth of their child according to Portuguese employment law. However, pregnant mothers are entitled to at least 30 days of this parental leave before the birth of their child. The parental leave can be up to a total of 180 days shared between the parents.

Maternity leave: Pregnant mothers are entitled to a minimum paid leave of at least six weeks following childbirth.

Paternity leave: Fathers are entitled to 15 days of leave. However, this leave must be utilized during the 30 days after the birth of the child.

An employer must also make necessary social security contributions for their employees. This contributes towards the social security benefits that the employees are entitled to.

Termination of Employment and Severance

Before termination can be initiated in Portugal, the notice period must be given, and the cause must be subject to strict rules that establish that there have been breaches made regarding the employment contract. Independent contractors may have different rules regarding the notice period. The following are grounds for termination in Portugal

• Expiration of the employment contract
• Termination as a result of mutual agreement
• termination due to the employee showing incompetence in the given job role, which may be more common in the case of independent contractors.
• Collective dismissal, that is, termination due to reasons such as finance, economics or structure and has nothing to do with the employee's actions.
• Termination due to illegal offenses such as theft.

During the notice period, the employee is entitled to continued remuneration and benefits.

Severance Pay

Employees whose contract was terminated due to reasons such as collective dismissal or failure to meet the terms of the employment activities are entitled to severance pay or compensation packages. However, this compensation varies depending on the duration of employment and when terms of the employment contracts including when the employment was initiated. For senior citizens retiring, their severance pay is calculated according to the number of years works and an agreed fraction of their base salary.

Anti-discrimination Laws

The Labor Code makes provisions against discriminatory practices and unfairness in terms of equality in the work environment. Employees in Portugal cannot be discriminated against on grounds such as race, gender, sexual orientation, nationality or disability.

Since the last quarter of 2017, there have been reinforced legal measures against workplace harassment. The new legal measures provide new responsibilities for employers to ensure that harassment does not become common practice while working.

Data Privacy

In terms of data privacy, Portugal, as a member of the European Union, adheres to the General Data Protection Regulation (GDPR). Companies must take necessary steps to protect personal data, respect individuals' privacy rights, and avoid potential legal and tax risks of remote employees working from abroad.

Proper data handling practices can prevent breaches and other global HR compliance mistakes.

Ensure Compliance in Portugal with Skuad

Staying above compliance with Portugal's employment laws helps your organization avoid costly and unnecessary fines and penalties and cultivates a conducive work environment.

Skuad, an Employer of Record solution, enables organizations to hire contractors and employees across over 160 countries, compliantly, Portugal included. Legal liabilities and fines are no longer a concern with Skuad, as the platform guarantees your organization's full compliance with each country's respective laws and norms.

Schedule a demo with Skuad to learn more.

FAQs

What are Portugal's working hours?

Portugal has a standard working hours of 40 hours per week. Typically, this means eight hours daily in a five-day work schedule.

Can Americans live and work in Portugal?

Yes, Americans can live and work in Portugal, provided they have a residence permit and a job in Portugal.