General Overview

Portugal, located on the Iberian Peninsula, boasts a diversified economy focused on services, tourism, and industry. With its vibrant culture, stable business environment, and commitment to EU policies, Portugal offers appealing opportunities for businesses and professionals alike.

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Employment Contracts

Employment contracts in Portugal must be in writing and can include fixed-term, indefinite, part-time, intermittent, and teleworking agreements. The type of contract depends on the nature of employment and its duration.

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Probation Period

Indefinite Contracts:

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• 90 days for most roles.
• 180 days for technically complex or high-responsibility positions, first-time job seekers, or long-term unemployed.
• 240 days for management and senior roles.

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Fixed-Term Contracts:

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• 30 days if the contract lasts 6 months or more.
• 15 days for contracts shorter than 6 months.

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Working Hours

The standard workweek is 40 hours, with a daily cap of 8 hours. Overtime compensation is as follows:

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• 25% extra for the first hour, 37.5% for subsequent hours (on regular days).
• 50% for the first hour on rest days, public holidays, or weekends.

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Vacation Days

Employees are entitled to 22 working days of annual leave, which must generally be used within the calendar year or by April 30 of the following year. During the first year of employment, workers accrue 2 vacation days per month, up to a maximum of 20 days after six months.

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Sick Leave

Sick leave benefits begin on the fourth day of absence and are paid by Social Security:

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• 55% of wages for the first 30 days.
• 60% for days 31–90.
• 70% for days 91–365.
• 75% for periods beyond 365 days.

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Wages and Salary Payment

The national minimum wage for 2024 is updated to €900 per month (based on recent estimates), with 14 annual payments (12 monthly salaries plus Christmas and vacation bonuses). Salaries must be paid no later than the 7th of each month.

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Public Holidays

Portugal observes 13 mandatory public holidays, including:

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• New Year's Day (January 1)
• Easter Sunday (movable)
• Labor Day (May 1)
• Christmas Day (December 25)

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Additional holidays, such as Carnival Tuesday and local municipal holidays, may apply through collective agreements.

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Employer Taxes

Employers contribute 23.75% to social security. Additionally, they must provide insurance for occupational accidents, with premiums varying by risk classification.

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Employee Taxes

Employees contribute 11% to social security. Income tax rates for residents range from 14.5% to 48%, depending on income levels. Non-habitual residents may qualify for a special tax regime with reduced rates.

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Notice Period

Fixed-Term Contracts:

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• 15 days for contracts shorter than 6 months.
• 30 days for contracts longer than 6 months.

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Permanent Contracts:

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• 30 days for employment of up to 2 years.
• 60 days for employment exceeding 2 years.

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Termination and Severance Pay

For fixed-term contracts: 18 days' salary per full year of service. Compensation is capped at 12 months' salary or 240 times the minimum monthly salary.