Portuguese labor law and employment contracts

It’s no wonder Portugal has become a magnet for internationals, with its year-round sunshine, friendly people, and affordable lifestyle. While some foreigners in Portugal continue working remotely for a company abroad, others are finding jobs or starting their own businesses locally. The low minimum wage may make it hard for some people to cope with the change, but rest assured that Portuguese jobs also include paid leave and health insurance.

Read on to discover everything you need to know about Portuguese labor laws, with sections covering the following:

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Portuguese labor laws

Portugal’s labor laws follow the EU workers rights, providing considerable protection for those living and working in the country. The Portuguese Constitution (Constituição da República Portuguesa) and Labor Code (Código do Trabalho) cover the fundamental rights of workers. They regulate wages, working hours, health and safety, vacation allowance, work-life balance, and access to equal opportunities.

According to the Organisation for Economic Co-operation and Development (OECD) Better Life Index, the annual household income after taxes in Portugal is around €25,584 – lower than the average of €31,357. Although 69% of the workforce has a paid job – compared to the OECD average of 66% – job insecurity remains an issue in the country. Workers face an expected 8.1% loss of earnings if they become unemployed – much higher than the OECD average of 5.1%.

Still, Portugal scores highly for work-life balance as only 6% of employees work very long hours in paid work.

Between 2019 and 2021, Portugal passed labor law reforms covering remote work, training, temporary contracts, and the right to refuse contact after working hours. As such, you should familiarise yourself with the business culture in Portugal.

Working

EU workers rights: the laws that protect European citizens

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Foreign workers – your right to work in Portugal

Portugal has around 10 million residents (in Portuguese). According to the Report for Immigration Borders and Asylum (Relatório de Imigração, Fronteiras e Asilo), there were 698,887 internationals (in Portuguese) living in Portugal in 2021. Of those, around 76.3% are part of the workforce. That’s higher than Australia (72.3%) and Canada (73.2%) but lower than Switzerland (77.1%) and Czechia (79.2%).

Foreign workers have the same rights and duties as Portuguese workers. If you’re a citizen of the European Union (EU), European Economic Area (EEA), or Switzerland, you’re allowed to live and work in Portugal without a visa or permit. Non-EU citizens, however, will need to apply for a work visa. 

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If you are a UK citizen and were already a legal resident of Portugal before 1 January 2021, you do not need a visa. UK nationals arriving in Portugal post-Brexit will need a work visa.

The Portuguese government has recently made changes to the Law on Foreign Nationals. Among the updates is a new job-seeking visa for anyone looking to enter Portugal to find a job. It’s valid for 120 days with the option to extend it to 180 days. There is also a temporary stay and residence visa for digital nomads who work remotely for clients outside of Portugal.

Employment contracts under Portuguese labor laws

Portuguese employment contracts can be in writing or verbal. That said, Portuguese labor laws require some contracts to be in writing, like contracts with foreign workers outside the EU, temporary contracts, remote working (teletrabalho), and part-time contracts.

The minimum age to work in Portugal is 16 years old. As a rule, minors can only apply for a job if they have completed compulsory education or are enrolled and attending secondary school. They also need to have adequate maturity (i.e., physical and psychological capabilities) for the job. If so, they can sign a contract with parental permission.

Trial periods (período experimental) can vary from 15 to 240 days, depending on the type of contract in place. While every contract is different, here is a sample contract for reference. Companies must inform their employees in writing of any changes to the employment contract.

In general, all contracts in Portugal should include the following:

• Identification of both the employer and the employee
• Place of work
• Daily and weekly schedule
• Date of the contract and start date
• Tasks for which the employee is responsible
• Base salary and other compensation
• Deadlines for canceling the contract

Temporary contracts and open-ended contracts

In general, employment contracts in Portugal are open-ended (contrato sem termo), or for an indefinite period. Temporary contracts are allowed only to cover a company’s needs for a specific project or to replace an absent employee. These can come in two formats:

• Fixed-term contract (contrato a termo certo): may not exceed two years, and can be renewed up to two times as needed
• Contract of unspecified duration (contrato a termo incerto): there is no end date

When the duration period of a temporary contract or the number of renewals is exceeded, an employee may receive an offer for an open-ended contract.

Very short contracts

Very short contracts (contrato de muito curta duração) can only be used in specific situations, like seasonal work. It does not require a written document, but the company must communicate the contract to social security. The duration cannot exceed 35 days per term or 70 working days in the same calendar year.

Part-time contracts

It’s also possible to arrange a part-time contract (contrato a tempo parcial). If a full-time worker does 40 hours per week, a part-time worker should have a lighter schedule. Whether this means a reduction of daily hours or the number of workdays per week, both parties must agree upon any arrangement in writing.

Freelancer contracts

Used by freelancers who provide services to different clients, the contract for service provision (contrato de prestação de serviços) ensures that the freelancer is paid for their work. In this case, self-employed workers are responsible for filing their taxes.

Wages and salary under Portuguese labor laws

The minimum salary for a full-time job in mainland Portugal in 2022 is €705 per month, based on 14 payments per year. There’s a separate minimum wage scales for the Azores and Madeira (in Portuguese). 

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Portugal’s minimum wage is updated annually, taking into account the cost of living, national productivity, and the government’s income policies.

Work hours under Portuguese labor laws

Full-time work (trabalho a tempo inteiro) in Portugal requires a maximum of 40 hours per week or eight hours daily. Once you’ve worked continuously for five hours, you can take a break. Usually, this ranges from one to two hours and is equivalent to a lunch break.

Employers should also give at least one day off per week. Workers have the right to rest for at least 11 hours straight between two working days.

Generally speaking, if your employer wants you to work more than eight hours a day, you must agree to the extra hours (horas extra or trabalho suplementar). However, these should not exceed 48 hours weekly. If you do extra hours, you must receive additional compensation and adequate rest time. 

Parents with children under 12 or caring for a disabled family member may request a flexible schedule (horário flexível). Additionally, workers may have reduced hours in pre-retirement or when the company is in a crisis.

Work hours for employees under the age of 18

Special rules apply to workers who are between the minimum employment age of 16 and 18 years old. These regulations include:

• Only allowed to work for seven hours a day
• Require a 1–2 hour break after four hours of continuous work
• Minimum two days of weekly rest time
• Cannot work at night or engage in unhealthy, dangerous, or distressing activities

Paid and unpaid leave in Portugal

Holiday pay

In Portugal, full-time workers are entitled to 22 working days of paid leave annually. You can take it all at once or divide it throughout the year. For shorter contracts, you get two days of paid leave for each full month of work. In terms of public holidays, there are 13 Portuguese national holidays, plus a few others specific to each region.

Sick pay

If you get ill or injured and need time off to recover, you can request sick leave (baixa médica). However, you can only do it if you’re incapable of working for more than three days – any less and you won’t receive compensation. Portuguese social security is responsible for providing sick pay subsidies (subsídio de doença) to help compensate for the loss of income while you’re temporarily off work. 

To receive sick pay, you must comply with the following requisites:

• Acquire a Certificado de incapacidade temporária (Certificate of temporary incapacity), that is a sick note from a doctor with the National Health Service (NHS, or Servico Nacional de Saude, SNS)
• Have contributed to social security or another illness subsidy system for at least six months
• Have worked at least 12 days in the first four months over the last six months (excluding freelancers)

The amount of sick pay is based on a percentage of the reference earnings, duration of the leave, and nature of the illness. According to social security, this can range from 55% to 75%. The maximum period of sick pay for general employees is 1095 days.

If you have had a work-related accident, you can receive 70% of the contribution base from day one. After 12 months, that value goes up to 75%. If it’s a permanent condition, you may get up to 80%.

Sick pay for self-employed workers

Self-employed workers (trabalhadores independentes) should follow the same steps as regular employees to acquire sick leave. However, unlike most employees, freelancers are only eligible for sick pay after 10 days. The only exception is in cases of hospitalization or tuberculosis when the subsidy comes in from the first day.

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Self-employed workers can only claim up to 365 days of time off, and the value can range from 55 to 70% of their income. Your sick note is sent directly from the healthcare provider to social security, so you don’t need to formally request the subsidy.

Other forms of paid leave

You need to notify your employer in advance if you wish to take leave. Workers may take time off for the following reasons:

Unpaid leave

Unpaid leave (licença sem retribuição or licença sem vencimento) is also possible and requires the approval of the employer. Reasons may include pursuing a university degree or family aid. 

According to Portuguese labor law, any employee may request unpaid leave for any reason. The employee should request this leave in writing at least 90 days before the start. However, this is flexible. For example, if it’s related to the death of a family member or serious personal issues. That said, the employer may refuse it for the following reasons:

• If, in the previous 24 months, the employee has already received professional training (if they are requesting leave for education purposes) or taken unpaid leave
• If the worker has been in the company for less than three years
• When the minimum notice period of 90 days was not met
• If it’s a small company that can’t easily replace the worker
• If the worker is in a directorial board role and their replacement may affect the company’s function

Parental rights under Portuguese labor laws

Your rights during pregnancy

Pregnant women have exclusive rights at work. To claim them, you have to inform your company that you’re pregnant. You should do this in writing and include a doctor’s note (atestado médico). Further, if you have a high-risk pregnancy (gravidez de risco), your note should mention this to receive other protections.

General rights cover the following:

• Appointments: all pregnant women are allowed to miss work for pre-natal appointments if they are not possible outside of working hours. Your employer may request proof of attendance.
• Extra hours: pregnant women have the right not to work extra hours
• Night shifts: dismissal from working between 20:00 and 07:00 for 112 days before and after the birth
• Protection against getting fired: a pregnant woman cannot be fired without a justified cause. The company must submit a process for review by the Commission for Equality In Labor And Employment (Comissão para a Igualdade no Trabalho e no Emprego – CITE), which can refuse it.

Maternity and paternity leave

In Portugal, the initial parental leave (licença parental inicial) can range between 120 and 150 days and can be taken by either partner or shared between them. If the parents do decide to share it, one can take 30 more days on top of the mandated six months.

Portugal also grants paid leave to adoptive parents (licença por adopção). Parents experiencing multiple births, hospitalization, or premature birth often receive additional time.

There are other types of leave in addition to initial parental leave:

• Mothers’ exclusive parental leave: The mother may request an exclusive leave for a maximum period of 72 days. Of those, 30 days should be spent before the birth and 42 days after the birth. If you decide to take a pre-birth leave, you should inform your employer as soon as possible and present a doctor’s note with the potential birth date.
• Fathers’ exclusive parental leave: The father is allowed 28 days off in the six weeks following the child’s birth. He can also take an extra seven days once the initial parental leave ends.
• Initial parental leave taken by one parent if the other is unable: One parent is allowed to take the remaining days of parental leave if the other can’t redeem it, either due to physical inability or death

Applying for parental allowance

To apply for parental allowance (subsídio parental, link in Portuguese), parents must submit the Modelo RP5049-DGSS (in Portuguese) to social security. You have six months after you stopped working to request it, based on the duration of the license and the contribution.

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Generally, parents will earn 100% of their contribution base. After 150 days, this can lower to 80%. It’s possible to extend the parental leave for up to three months with a licença parental complementar. However, in this situation, you will only be able to receive 25% of your contribution.

Unpaid parental leave

After using up their paternity leave, parents can request an unpaid leave known as licença para assistência a filho for up to two years. In the case of three or more children, this can go up to three years. If the worker does not indicate the duration of leave, it will be six months with the option of renewal. The worker is entitled to this license if their partner is working or can’t take care of the children. During this period, the employee is not allowed to do any kind of work.

To request unpaid parental leave, you must present a document in writing to your employer at least 30 days in advance. To compensate for the loss of income, you may be eligible to apply for a subsidy called subsídio para assistência a filho.

Parental leave for self-employed workers

Freelancers in Portugal and those running their own businesses also have the right to parental leave. In this case, the amount is calculated based on past contributions to social security. Ideally, about one year before you intend to get pregnant, you should top up your contributions to receive a larger subsidy.

Parental leave for unemployed parents

Unemployed parents are also entitled to paid maternity leave. However, unemployment benefits or other financial aid will be suspended on parental leave. You have five working days to inform the Employment Office (Centro de Emprego) of the beginning and end of the parental subsidy.

Returning to work after your parental leave

Portuguese labor laws include rights to help you balance your professional and family life. Parents returning to work may request reduced hours or a work-from-home arrangement as long as this is compatible with their work.

For the first 12 months after birth, mothers are entitled to two hours of breastfeeding time per day (dispensa para amamentação). In the case of multiples, you have 30 more minutes for each subsequent child. After 12 months, you need a doctor’s notice to justify breastfeeding time. When both parents are working, and the child cannot be breastfed, one or both parties have the right to request a breastfeeding waiver (dispensa de aleitação) until the baby is one year old.

Social security and tax in Portugal

Workers in Portugal must pay Portuguese taxes and register with social security. You pay contributions to access health insurance, coverage for illness, injuries, work-related accidents, unemployment, retirement, maternity, and paternal leave. 

Social security rates (in Portuguese) currently stand at:

• 11% – employees
• 21.4% – freelancers
• 23.7% – employers
• 25.2% – individual entrepreneurs

Part of the contribution payable by the employee comes out of their monthly salary. 

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On the other hand, self-employed workers (freelancers) must pay all of the social security contributions themselves. The amount is calculated and reaccessed every three months based on the income of the previous trimester. If you didn’t have any income during that period, the minimum contribution is €20. Meanwhile, personal income tax is calculated annually and varies according to your income, marital status, and size of household.

Protection from discrimination at work in Portugal

Like much of Europe, Portugal is working to further gender equality in the workplace. However, wage inequality is still prevalent. According to a Eurostat study, the salary gap between men and women in Portugal was 11.4% in 2020. 

Portuguese labor laws protect against discrimination based on sexual orientation, marital status, race/ethnicity, nationality, disability, religion, and age. Breaching this law constitutes a serious offense.

If you feel discriminated against at work, you should report this to your superior or file a complaint with the Autoridade para as Condições de Trabalho (Authority for Working Conditions – ACT). In severe situations, the case can end in court.

Joining a union in Portugal

Workers in Portugal have the right to join a trade union (sindicato). Essentially, there are two main trade union confederations, the Confederação Geral dos Trabalhadores Portugueses (General Confederation of Portuguese Workers – CGTP) and the União Geral de Trabalhadores (General Union of Workers – UGT).

Over the last decade, the number of union members has been declining. In 2021, only 15.3% of employees were part of a trade union.

Trade unions are also responsible for calling strikes. If the majority of workers in a company are not represented by a union, a strike can also be declared by a workers’ assembly. Unfortunately, strike-related absences are taken out of your salary.

Health and safety at work in Portugal

The ACT (in Portuguese) is also responsible for accessing workplace conditions, occupational health, and safety. Workers in Portugal have the right to a safe and healthy work environment. Employers must ensure that workers have adequate training related to the risks of their role. Companies in Portugal must also provide workplace accident insurance (seguro de acidentes de trabalho). A complete list of basic working conditions is available on the government website.

Training and development under Portuguese labor laws

Portuguese labor law requires that every company provide professional training to their employees. Each worker is entitled to at least 40 hours of training per year.

Additionally, both active workers and the unemployed have the right to apply for vocational courses to help elevate their skills. The cheque-formação is a government-funded training initiative for people registered at the Instituto do Emprego e Formação Profissiona (Institute for Employment – IEFP).

To claim it, companies or workers should apply through the IEFP online portal. Employees can claim 50 hours of training in two years, while the unemployed can claim up to 150 hours.

Terminating the employment relationship in Portugal

Dismissal

In Portugal, an employer can legally dismiss an employee for the following reasons:

• Dismissal attributable to the worker (Despedimento por facto imputável ao trabalhador): when a worker’s behavior has made it impossible to continue employment
• Dismissal for unsuitability (Despedimento por inadaptação): when a worker shows a lack of productivity or low quality of work and is no longer fit for the job
• Collective dismissal (Despedimento colectivo): simultaneous termination of several employment contracts in micro and small companies and one or several departments in medium and large companies

Companies must inform their employees of termination in writing. The required notice period varies by seniority:

As stated in Portuguese labor law, all workers are entitled to unclaimed holiday pay. You can use this simulator to calculate how much you can expect to receive.

Leaving a job voluntarily

Generally, workers have 30–60 days to present a resignation letter (carta de demissão) to their employer. However, it is possible to terminate a contract immediately if:

• The employer failed to pay salaries
• There was a lack of safe work conditions
• The employers or management were abusive

Redundancy

According to Portuguese labor law, a company may dismiss workers for redundancy due to the market situation or structural changes. To calculate redundancy pay (compensação em caso de cessação de contrato), the date the contract was signed must be considered.

Retirement

The current age of retirement in Portugal is 66 years and seven months. Unlike most European countries, Portugal is reducing its retirement age in 2023 to 66 years and four months due to the effects of the Covid-pandemic and a lower life expectancy. To qualify for the senior pension (pensão de velhice), you must have worked and made Portuguese social security contributions for at least 15 years. Pensions in Portugal are calculated based on your contributions and earnings.

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Early retirement (reforma antecipada or pré-reforma) is possible, but it can bring some penalties, such as a 0.5% cut for each month before the normal retirement age. You can retire at 60 if you meet certain conditions and have made at least 40 years of contributions.

If you decide to work beyond the age of retirement, your employer should reduce your contract to six months with the possibility of renewing.

Company mergers and insolvencies

If the company you work for changes ownership, your contract is automatically transferred to the new owners. Workers in this situation maintain their remuneration, seniority, professional category, functions, and social benefits. Following Portuguese labor laws, the employer must inform workers of the date of ownership transfer, as well as the reasons, consequences, and planned measures.

If your employer goes bankrupt or is declared insolvent, you are entitled to claim unpaid wages or seniority compensation. If this is not possible, workers can resort to the salary guarantee fund (fundo de garantia salarial). To redeem this fund, you must submit an application with social security.

Temporary, part-time, agency, and informal workers

Temporary contracts (contrato de trabalho temporário) are quite common in Portugal. In this type of contract, there is usually a go-between, like an agency. The agency is responsible for paying workers and dealing with social security matters. During the assignment, the agency employee receives the same rights and protections as any other worker under Portuguese labor laws.

Temporary employment or fixed-term contracts are only legal in very specific cases.

Making a complaint as a worker in Portugal

If a workplace problem cannot be solved directly with the employer or human resources department, you can file an official complaint. The ACT is responsible for dealing with workplace grievances. Workers should fill out a workplace inspection request form on the ACT website (in Portuguese), which allows them to remain anonymous. Make sure to take time to write your complaint since the system does not permit changes.

Useful resources

• Seguranca Social (Social Security) – declare your income and request parental leave and pensions
• IEFP – promotes the creation of job opportunities through the implementation of policies such as vocational training
• Diário da República Eletrónico (Electronic Journal of the Republic) – the Portuguese Labor Code as issued on the national legislation website
• Authority for Working Conditions, ACT (in Portuguese) – deals with safety requirements and discrimination complaints
• Commission for Equality In Labor And Employment, CITE (in Portuguese) – deals with gender inequality at work and parental rights issues
• European Commission – provides information on living and working conditions in Portugal and the rest of the EU