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Labour law in Portugal

In comparison to many other foreign nations, Portuguese Labour law principles usually provide employees with more social-, income-, and labour protection, putting the employer at greater financial and operational risk than may be common in the client’s own country.

Are you considering expanding your business to Portugal and want to learn more about Portuguese labour law? We give you a summary of the most important legislation and regulations impacting working conditions and social security.

Do you want to learn more about labour law in Portugal? We compiled all of the information about labour conditions, social security, contracts, probation/notice periods, and terminations into a single file for your convenience. Request it through the button below and we’ll send you the document immediately.

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Portugal

Labour Conditions

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Minimum wage & extra payments

The minimum wage in Portugal is 760 EUR per month.

Historically, salary in Portugal is paid in 14 instalments – 12 monthly wages plus two additional payments taking place in June and December. However, this may differ
among companies and Collective Agreements. Salary can also be paid in 12 monthly payments, so the annual salary will be divided in 12 instalments and the employee will receive the same salary each month.

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Telework allowance

Employers must reimburse all expenses incurred by employees due to working from home. Employees must provide proof of the increase of their expenses by comparing
the invoice of each month since working from home verses the invoice from the same month of the last year prior to working from home. Considering this cumbersome
process, it is common to provide the employee with a monthly telework allowance.

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Paid annual leave

The statutory minimum of paid holidays is 22 days, in addition to public holidays. During the first year of employment, employees are entitled to 20 days. Holidays should be taken within the calendar year in which it becomes due. If needed, they can be carried over and taken until April 30 of the following calendar year.

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Sick leave

Sick pay is paid by the employer for the first three days at a rate of 89% of the usual salary rate. Employees must provide a medical certificate within 48 hours of the first day of sickness. After the fourth day of illness, benefits are covered by the social security contributions for up to 1095 days. The amount of sickness benefits depends on the length and nature of the illness. Pay is generally 55% to 75% of the employee’s salary.

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Working hours

The work day is 8 hours per day for a 40 hour work week. Anything beyond 40 hours is considered overtime. Typical work days start at 9 am, break at 1 pm for two hours, resume at 3 pm, and end at 7 pm.

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Medical examination

Employees are entitled to an initial medical examination. The employer bears the medical examination costs and, if possible, should schedule it during work hours. The medical check must be conducted within 15 days after the starting date of the employee.

Social Security

Employees are entitled to social security coverage in Portugal. Contributions are made by both employer and employee and cover sickness, occupational diseases, maternity, paternity, adoption, unemployment, disability, pension and death. Employees pay 11% of their salary and their employer matches it with approximately 23.75%.

Public Health Insurance

The public health insurance is provided through the national system – Direção-Geral da Saúde (DGS) and works by Serviço Nacional de Saúde (SNS). All the foreign people that have a fixed address in Portugal can use the SNS. There is the possibility for employees to additionally opt for private health insurance at their own expense.

Accident Insurance

The Labor Accident Insurance is paid by the employer and covers all accident-related injury claims for employers.

Wage guarantee fund

Employers are obliged to contribute monthly 1% of an employee’s gross income to the Working Compensation Fund and the Working Compensation Warranty Fund. This protects employees from the risk of not receiving their salary in case of bankruptcy of the company. The obligation to pay contributions to the Working Compensation Fund will be suspended for the duration of the medium-term agreement for the improvement of income, wages and competitiveness. It will be suspended until the changes to the legal framework of the Labor Compensation Fund come into effect.

Pension

The Portuguese pension system consists of a state pension scheme that’s provided by the government. Employee and employer contribute towards the state pension through the social security contributions. This includes survivor and disability pension as well.

Maternity leave

Female employees are eligible for 30 days of maternity leave at full pay by Social Security before a child’s birth (optional), and 42 days following the birth (mandatory). If the employee has twins, she’s entitled to an additional 30 days.

Paternity leave

Partners are eligible to 28 consecutive or interspersed days, of at least 7 days, in the 42 days following the birth of the child (simultaneously with the mother’s initial leave), 7 of which must be taken consecutively immediately afterwards.

Initial parental leave

The initial parental allowance is granted to the partner or mother for between 120 and 150 consecutive days, equally extended to both. The period can be taken simultaneously by both. In the case of a lifeless birth, only the 120 days are allowed. In some cases the period may be increased by 30 days. Request our overview to read more about the conditions.

Your guide

Our team

Reach out to our experts in Portugal, who are always happy to answer your questions about the Portuguese labour principles.

HR-consultants Portugal

Labour law and regulations in portugal: minimum wage | parakar
Belen Werd
HR Operations
Labour law and regulations in portugal: minimum wage | parakar
Veerle Holterhues
HR Operations
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