Employer of Record in Portugal

Your company can expand into Portugal without the necessity for entity creation with the support of Portugal EOR (Employer of Record) solutions. You can hasten the onboarding of your remote staff and efficiently handle their payroll, benefits, and other needs thanks to our centralised and automated global HR platform. With the knowledgeable support of our global network, we aid you in streamlining the process of global growth.

Portugal At A Glance

• Estimated Population: 10,304,434
• Currency: Euro (€)
• Capital: Lisbon
• Languages spoken: Portuguese and Mirandese and English
• GDP: 238.8 Billion USD (2019)

Employment Landscape In Portugal

Employers and enterprises in Portugal prefer to hire through referrals most of the time, and a lot depends on recommendations and connections made by people in the professional and personal spheres. It is a significant problem for international businesses and corporate organisations to hire the local labour in Portugal since trust and connections are prioritised. In Portugal, employment is based on a formal employment contract that must include all information on the new employee’s pay, benefits, compensation, additional compensation, and termination criteria.

Portugal’s tourist, hospitality, automotive, electronics, transportation, construction, footwear, and textile sectors are all booming. In June 2020, the unemployment rate was 5.6%, while the youth unemployment rate was 25.6%. The hiring of foreign workers has increased during the last few years.

Labour Laws in Portugal

Entitlements	Explanation
Labour Code	·        It is Portugal’s primary statute managing the labour market. The Labor Code has undergone several changes during the last 30 years.
Code of Contributory Regime	The law regulates the Social Security System.
Collective Bargaining Agreement (CBA)	a contract that governs unions and employer groups.

Terms of employment contracts in Portugal

The prohibition of discrimination based on factors such as gender, age, sex, marital status, family history and circumstances, religion, origin, genetic heritage, ideological opinions, economic condition, parenthood, trade union involvement, limited labour ability, and impairments is a significant part of Portuguese law.

Title	Explanation
Minimum working age	·        The minimum working age is 16, and people can start working under an employment contract at age 18 even if they haven’t finished high school.
Types of employment contracts	Fixed-term – this agreement has a set time frame, often six months. It might be less than this or as long as three years. Unspecified term contract: This employment agreement may last for as long as six years, but not longer. A contract with a very short length is one that lasts only 60 days. The contract is applicable to seasonal employment, such as the growing and tourism seasons. Part-time contract: Part-timers are only permitted to work up to 75% as many hours per week as full-timers. Intermittent contract – under this kind of employment arrangement, employees work on an as-needed basis. Employers must provide full-time contracts with a minimum term of six months and a minimum requirement of four consecutive months of work. Except for extremely brief-term contracts, employment agreements in Portugal must be in writing.
What details are included in the Employment Contract?	As per laws of Employment in Portugal, the employment contract should include: Employer’s identification Employee identification Job responsibilities and duties Payment terms The object of the contract Start date and last date of the contract. Duration of employment and justification for the same Day-to-day work timing Job location
Working hours	In Portugal, the standard workweek is 40 hours, or 8 hours each day. In Portugal, a normal workday lasts from 9:00 am to 1:00 pm and from 1:00 pm to 5:00 pm. Lunch is for two hours.
Overtime	In businesses with 50 or more employees, overtime is limited to 150 hours per year; in businesses with less than 50 employees, it is limited to 175 hours.

Leaves

Title	Explanation
Public holidays in Portugal	All employees in Portugal get a day off on public holidays. These are: New Year – January 1 Good Friday – March 30 Liberty Day – April 25 Labour Day – May 1 Corpus Christi – May 31 Portugal Day – June 10 Assumption of Mary – 15th Augusts Establishment of the Portuguese Republic – October 5 All Saints’ Day – November 1 Restoration of Independence – December 1 Immaculate Conception – December 8 Christmas – December 25
Annual Leave	Statutory paid yearly leave is twenty-two days long, and unused days accumulate. The employer is responsible for providing greater paid leave than is required by law.
Bereavement leave	Employees who have lost a family member are entitled to up to two days of paid bereavement leave in Portugal. The employee must provide these two documents: (a) a copy of the death certificate of the family member; and (b) a copy of the probative document that was sent to the employer by the authorities.
Sick Leave	While sick leave is available to employees, a minimum of four consecutive days of leave is required. Social Security covers paid sick time
Maternity Leave	Maternity leave is covered by Social Security, and it is available to new moms for 120 days.
Paternity Leave	The father is given a mandated 20-day leave. Five extra days are optional. The money for the leave is handled by Social Security.
Other types of leaves	Marriage Leave: Employees are eligible to take up to 15 consecutive days of leave when they get married. Study Leave: Workers may use this time off the day before and the day of the test. Family Care Leave – Employees are permitted to take up to 30 days off work to care for a family member who is under the age of 12. Employees may request up to 15 days of absence for elder care.

Contractors vs Full-time Employees

In accordance with the Portuguese Labor Code, an individual can be classified either as an employee or an independent contractor. An employee is engaged in providing intellectual or manual activities for an employer or organisation, while an independent contractor undertakes specific projects or provides certain types of work without being legally subordinate to the beneficiary.

For employees, the employer exercises legal subordination in various aspects as defined by employment contract law in Portugal, including:

• Setting working hours
• Defining job duties and descriptions
• Determining the work location
• Providing necessary tools and equipment
• Ensuring regular payment according to the employment contract
• Evaluating employee performance
• Integrating the employee into the work environment.

In the case of contractors, the beneficiary is responsible for making timely payments to the contractor and integrating them into the work environment.

There is also a distinction in the tax treatment between employees and contractors. For employees, social security contributions are shared between the employee (23.75%) and the employer (11%) as per the employment agreement in Portugal. On the other hand, contractors are solely responsible for their own social security contributions, which amount to 29.6%.

Additionally, independent contractors are generally subject to Value Added Tax (VAT) on their services, as most services provided by contractors fall under the VAT regulations. However, there are exemptions from VAT in certain cases for independent contractors.

To simplify the process of hiring a local workforce, managing onboarding, payroll, taxation, compliance, and legalities in Portugal, partnering with an Employer of Record (EOR) can be highly beneficial. Choosing a strategic EOR in Portugal can make your entry into the country smoother and more cost-effective, as they can handle various aspects of employment administration on your behalf.

By collaborating with an EOR, you can navigate the complexities of Portuguese labour regulations with confidence, ensuring compliance while focusing on your core business goals.

Hiring in Portugal

Once you have made the decision to enter the Portuguese market, the next crucial step is to swiftly build your team. However, this process can be challenging due to the complexities of employment laws, compliance requirements, and the overall hiring process. By outsourcing your HR functions to us, you can simplify and streamline the team-building process.

To hire employees in Portugal, you have a couple of options. Firstly, you can leverage your existing relationships and attend networking events to build your international team. Alternatively, you can utilise popular online platforms such as Indeed, Adecco, Net-Empregos, BonsEmpregos, Expressoemprego, Alertaemprego, and other reputable hiring companies in Portugal.

The hiring process in Portugal typically begins with preparing a written employment contract that encompasses all the necessary details, including compensation, employee benefits in Portugal, probationary periods, termination procedures, and everything specified in Euros, the local currency. It is also important to address any provisions outlined in the Collective Bargaining Agreement (CBA). While there is no explicit requirement for the onboarding process, it is customary to establish an employee code of conduct and provide training for new hires.

By utilising an Employer of Record (EOR) solution in Portugal, you can entrust the entire hiring and onboarding process to professionals who are well-versed in local labour laws, rules, and regulations. This ensures that your employment practices are fully compliant with the Portuguese Labour Code. To learn more about our services and how we can assist you, contact us today and discover the benefits of partnering with us for your expansion into Portugal.

Probation & Termination

In Portugal, employment may be terminated for a number of reasons, such as job inadequacy, position elimination, collective dismissals, or disciplinary reasons.

The employer must inform the employee in writing of the employee’s termination for disciplinary grounds and state the reasons for the termination. In these situations, a hearing should be held so that the employee has a chance to refute the allegations.

Any dismissals must be reported to the Ministry of Labor and the employees’ representative. This guarantees openness and adherence to labour laws.

The company is required to reimburse the employee for any accrued leaves and vacation days that were not used as part of the final settlement. This guarantees that the employee will get all benefits due to them upon termination.

To have a fair and legally compliant workplace in Portugal, it is essential to comprehend and follow these termination processes. To guarantee adequate adherence to the relevant laws and policies, it is advised to obtain professional guidance or counsel from legal authorities.

Standard probation period Portugal

Title

Explanation

Trial Period

The same has been described as follows: The trial period is 240 days in the case of top management and director-level posts.  The trial period is 90 days for standard employees and 180 days for those who hold senior positions that require technical expertise and are employed in the post of trust. The trial term for Fixed-Term workers is 15 days for contracts under six months and 30 days for those that are. During the trial period, either party may end the contract without giving the other any prior notice.

EOR Solution

The best method to get started when deciding to grow your company in Portugal is to collaborate with an elite EOR. With its flexible solution, you receive complete assistance in selecting and integrating the best personnel for company expansion. Every foreign country has its own set of difficult laws. You must make sure that no local legislation is disregarded or avoided while working with the workers, whether it be during hiring, processing payroll, or withholding taxes. An Employer of a Record provides an all-inclusive HR functional solution so you can concentrate on growing your business while they take care of the labour-related issues.

One of Portugal’s most qualified and prospective record-solutions employers is our business. It is a top-notch online platform with a clever and user-friendly layout and a wide range of features that may replace other platforms as your go-to choice for global expansion, not just into Portugal. You have access to low-cost, individualised solutions from us around-the-clock.

Types of Visas In Portugal

With a Portugal work visa, you can reside and function in a nation that values peace and stability in both the political and social spheres. Additionally, it refers to the freedom of movement inside the EU, the ability to bring family members to Portugal, and the ability to seek Portuguese residence after five years.

Types of work visas in Portugal	Explanation
D3 Visa	The visa category is intended for those with highly developed technical capabilities.
D2 Visa	It is a visa category for independent contractors or business owners.
Startup visa	This category of visas is also intended for international businesspeople.
D7 Visa	It is a form of resident visa for those who want to live and work in Portugal.
Tech Visa	It is a unique kind of visa intended for businesses with a permanent establishment or a head office in Portugal.
Golden Visa	The best approach to getting a residency permit in Portugal is to make capital investments, real estate purchases, or stock purchases in Portuguese businesses.

Work Permits

To apply for a work permit in Portugal, certain documents are necessary. These include a valid passport, proof of accommodation in Portugal, a valid Portuguese residence visa, two passport-size photos, tax documents for foreigners seeking a Portugal work permit, a police verification certificate for background checks, an employment contract, and social security registration documents. It’s important to note that obtaining a Portugal work permit requires a job offer, as the employer must apply for the work permit after extending the job offer to the applicant.

Payroll & Taxes in Portugal

Payroll in Portugal

Wages	Portugal’s minimum salary has been set at 635 euros per month with 14 payments, or 740.8 euros per month with 12 instalments. In Portugal, there is no set deadline for paying employees’ salary. The pay or compensation must, however, be paid once every month.
Overtime pay	The standard hourly wage plus 25% for the first hour and 37.5% for each additional hour of overtime labour is paid.

Portugal Payroll Taxes

Portugal payroll tax rates – Employer

Tax	Percentage
Social Security	23.75%
Labor Accident Insurance	1.75%
Wage Guarantee Refund (WGF)	1.00%
Total Employment Cost	26.50%

Portugal payroll tax rates – Employee

Title	Percentage
Social Security	11.00%
Total Employee Cost	11.00%

Income Tax slabs for Employees

Earnings (EU)	Tax %
0 – 7,112	14.5%
7,112 – 10,732	23.0%
10,732 – 20,322	28.5%
20,322 – 25,075	35.0%
25,075 – 36,967	37.0%
36,967 – 80,822	45.0%
80,822 and over	48.0%

It is crucial to comprehend the corporate culture while beginning a firm in Portugal. The following business kinds are described under the Portuguese Companies Code:

• A single-person-owned business can be classified into three categories: a sole proprietorship, an individual limited liability establishment, and a single-member limited company.
• companies with two or more owners: With a minimum investment of €5,000, a private limited company or Sociedade por Quotas can have two or more partners.
• Sociedade Anomina, a Public Limited Company, requires a minimum of five shareholders and a €50,000 investment.
• Two partners with personal obligations form a partnership or society by name collective.
• Two partners with unlimited responsibility and sleeping partners with limited liability make up a limited liability partnership, or Sociedade em Comandita.

Portugal offers a sufficient number of business options. The establishment of a holding company in Portugal has several advantages. The dividend income can be tax-free with a 10% stake, while the company’s capital gains are subject to a low tax rate. It is best to consult an expert on this subject before travelling to Portugal.