Employer of Record in Portugal

An Employer of Record (EOR) in Portugal is a company that legally hires employees on your behalf. This means the EOR handles all the legal and HR responsibilities of employment, like payroll, taxes, benefits, and contracts, while you manage your team's day-to-day work. Using an EOR service, like Rivermate, lets you hire talent in Portugal without the need to set up a local legal entity.

How an Employer of Record (EOR) Works in Portugal

Using an EOR to hire in Portugal is a straightforward process. You find the talent, and the EOR takes care of the local employment logistics.

Here is how it generally works:

1. You Find Your Candidate: You are responsible for sourcing and recruiting the person you want to hire in Portugal.
2. The EOR Hires Them: The EOR becomes the legal employer and provides your new team member with a locally compliant employment contract.
3. Onboarding: The EOR manages the onboarding process, ensuring all paperwork and registrations with Portuguese authorities, like Social Security, are completed correctly.
4. HR and Payroll Management: The EOR handles all administrative tasks. This includes processing monthly payroll, managing taxes, and ensuring all statutory benefits are provided according to Portuguese law. In Portugal, this also includes managing the mandatory 13th and 14th-month salary payments.
5. You Manage Your Employee: You maintain the direct working relationship with your employee, assigning tasks and managing their performance, while the EOR handles the employment compliance.

Why use an Employer of Record in Portugal

Using an EOR in Portugal simplifies your expansion into the country. It allows you to access local talent quickly and efficiently without getting delayed by complex legal and administrative hurdles. You can focus on your business goals while the EOR ensures your employment practices are fully compliant with Portuguese labor laws.

Here are some key benefits:

• Avoid Setting Up a Local Entity: You can hire employees in Portugal without the time and expense of establishing a legal entity in the country.
• Ensure Compliance: EORs are experts in Portuguese labor law. They manage all aspects of employment compliance, from contracts to benefits, reducing your risk.
• Simplify HR and Payroll: The EOR handles all payroll processing, tax withholdings, and benefits administration, saving you from managing these complex tasks.
• Faster Market Entry: It provides a much faster way to build a team in Portugal compared to setting up a subsidiary. You can hire and onboard talent in a fraction of the time.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Portugal includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Portugal.

Hiring in Portugal means tapping into a skilled and adaptable workforce. The country has a strong service sector and is a hub for technology and remote work. To hire compliantly, you need to understand Portugal's labor laws, which favor employees. This guide breaks down the key areas you need to know.

Employment contracts & must-have clauses

While you can have a verbal agreement for a permanent role, it’s best practice to have a written contract. For some contract types, like fixed-term or part-time, a written agreement is required by law. If you don’t have a written contract for these, the law will consider the employee to be permanent and full-time.

Your employment contracts in Portugal should be in Portuguese and include the following:

• Identification: Full names and addresses of both you and the employee.
• Workplace: The location where the employee will work.
• Job Details: The employee's title, role, and responsibilities.
• Start Date: When the employment begins.
• Contract Term: If it's a fixed-term contract, the end date must be stated.
• Probation Period: The length of the trial period.
• Compensation: The base salary and any additional pay or benefits.
• Working Hours: The daily and weekly work schedule.
• Annual Leave: The number of paid vacation days.
• Termination: The notice periods for ending the contract.
• Collective Agreements: Mention any applicable collective bargaining agreements.

Probation periods

Probation periods in Portugal give you and your new hire time to see if it's a good fit. During this time, either of you can end the contract without cause. The length of the probation period depends on the type of contract and the role.

Working hours & overtime

The standard workweek in Portugal is 40 hours, typically spread over five 8-hour days. Anything beyond these hours is overtime.

Here’s how overtime pay works:

• First hour of overtime: 25% premium on the regular hourly rate.
• Additional overtime hours: 37.5% premium on the regular hourly rate.
• Overtime on a rest day or public holiday: 50% premium on the regular hourly rate.

There are limits to how much overtime an employee can work. Generally, it's a maximum of 2 hours per day and 150-175 hours per year, depending on your company's size.

Public & regional holidays

Portugal has 13 national public holidays. Employees get a paid day off for these. If they have to work, they are entitled to double pay.

National Public Holidays in 2025:

• January 1: New Year's Day
• April 18: Good Friday
• April 20: Easter Sunday
• April 25: Freedom Day
• May 1: Labour Day
• June 10: Portugal Day
• June 19: Corpus Christi
• August 15: Assumption Day
• October 5: Republic Day
• November 1: All Saints' Day
• December 1: Restoration of Independence
• December 8: Immaculate Conception
• December 25: Christmas Day

On top of these, there are also regional and municipal holidays. For example, Lisbon celebrates St. Anthony's Day on June 13th, and Porto celebrates St. John's Day on June 24th.

Hiring contractors in Portugal

Hiring independent contractors in Portugal can be a flexible way to get specialized skills for specific projects. Contractors manage their own work, use their own tools, and are responsible for their own taxes and social security. This can seem like a simpler way to build a team without the long-term commitments of employment.

However, there's a real risk of misclassifying an employee as a contractor. Portuguese law looks at the reality of the working relationship, not just the contract. If you treat a contractor like an employee by controlling their work hours, providing their equipment, and integrating them into your company structure, the government can reclassify them as an employee.

Misclassification can lead to serious consequences, including:

• Back payment of social security contributions and taxes.
• Fines and penalties.
• Having to provide all the benefits and protections of a full-time employee, like paid leave and severance.

An Employer of Record (EOR) helps you avoid these risks. An EOR legally employs workers on your behalf, ensuring full compliance with Portuguese labor laws. This means you can hire the talent you need without the risk of misclassification. The EOR handles all the administrative tasks, from contracts and payroll to taxes and benefits, so you can focus on growing your business.

In Portugal, paying your team involves more than just currency conversions. You need to understand the local approach to compensation, social security, and holiday pay to stay compliant. The system has specific requirements, from mandatory bonuses to official documentation in Portuguese. This guide breaks down what you need to know about payroll in Portugal.

Payroll cycles & wage structure

In Portugal, you process payroll monthly, and employees receive their pay by the end of the month. You must provide a payslip with each payment, detailing all earnings and deductions.

A unique feature of Portuguese payroll is the 14-month salary structure. Employees receive their regular 12 monthly payments, plus two additional payments:

• Holiday bonus: Paid in June
• Christmas bonus: Paid in December

These extra payments are mandatory and essentially part of the annual salary. Meal allowances are also a common part of compensation packages and offer tax advantages.

Overtime & minimums

The standard workweek in Portugal is 40 hours, with an 8-hour day. Anything beyond this is overtime.

• First hour of overtime: 125% of the normal rate.
• Subsequent hours: 137.5% of the normal rate.
• Work on rest days or holidays: 150% of the normal rate.

As of January 2025, the national minimum wage is €870 per month.

Employer taxes and contributions

As an employer in Portugal, you are responsible for making social security contributions on behalf of your employees. You must withhold the employee's portion from their salary and remit both your and their contributions.

Employee taxes and deductions

Employees also contribute to social security. These contributions are deducted directly from their gross monthly salary.

In Portugal, employee benefits and leave are generous, reflecting a culture that values work-life balance. The system is a mix of government-mandated social security benefits and additional perks employers offer to attract top talent. All employees with a formal employment contract, including full-time, part-time, and fixed-term workers, are entitled to statutory benefits.

Statutory leave

• Annual Leave You get a minimum of 22 paid working days off each year. In your first year, you earn two days of leave for each month you work, and you can start taking it after six months. You can't be paid extra for unused vacation days.

• Sick Leave If you're sick, you can get paid sick leave for up to 1,095 days. The benefit starts on the fourth day of your illness and is paid by Social Security, not your employer. The amount you receive ranges from 55% to 75% of your regular earnings, depending on how long you are out. You will need a doctor's note to qualify.

• Parental Leave New parents are entitled to 120 or 150 consecutive days of leave, which they can share. Mothers must take at least six weeks of leave immediately after birth. Fathers get 15 working days of paternity leave to be taken within the first month after the baby's birth.

• Family Care Leave You can take time off to care for sick family members. This includes up to 30 days a year for a child under 12 and up to 15 days for a child over 12 or another family member.

Public holidays & regional holidays

Portugal has 13 national public holidays. Some municipalities also have their own local holidays.

Typical supplemental benefits

To stay competitive, many companies offer benefits beyond the legal requirements.

How an EOR can help with setting up benefits

Setting up a competitive and compliant benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR can:

• Ensure your benefits package complies with all Portuguese labor laws.
• Manage the administration of both mandatory and supplemental benefits.
• Offer insights into what benefits are most attractive to local talent.
• Handle the complexities of social security registration and contributions.

By partnering with an EOR, you can save time and resources, allowing you to focus on your core business goals while ensuring your employees are well taken care of.

Letting an employee go in Portugal requires a structured process. You must follow specific legal procedures to ensure a compliant and fair exit. This involves providing written notice, respecting notice periods, and in many cases, paying severance. The process is designed to protect both you and your employee, ensuring that terminations are handled professionally and legally.

Notice periods

When you terminate an employment contract, you need to give the employee advance notice. The length of this notice period depends on how long the employee has worked for your company.

These are the minimum periods required by law. You can agree to longer notice periods in the employment contract. If you don't provide the required notice, you must pay the employee their salary for the notice period.

Employees who decide to resign also need to provide notice. Typically, this is 30 days for those with up to two years of service and 60 days for those with more than two years.

Severance pay

When you terminate an employee's contract for reasons such as redundancy or collective dismissal, you are required to pay severance. You do not owe severance if the termination is for "just cause," such as serious misconduct by the employee.

The standard severance payment is calculated as 12 days of base salary for each year of service. This calculation is based on the employee's base salary and any seniority allowances.

There are some key things to keep in mind:

• Calculation Basis: The pay used for the calculation cannot be more than 20 times the national minimum wage.
• Overall Cap: The total severance amount cannot exceed 12 times the employee's monthly salary.
• Partial Years: For any fraction of a year worked, the severance is calculated proportionally.

If a court finds a dismissal to be unfair, the compensation can be higher, ranging from 15 to 45 days of base salary for each year of service.

How Rivermate handles compliant exits

Navigating termination and offboarding in a different country can be complex. We handle the entire process for you, ensuring everything is done by the book.

Here’s how we make it simple:

• Compliance check: We make sure every termination follows Portuguese labor laws, from valid reasons to correct procedures.
• Notice periods: We calculate and manage the correct notice periods for each employee based on their service length.
• Severance calculation: We accurately calculate all required severance payments, so you don't have to worry about complex rules.
• Documentation: We prepare all the necessary termination paperwork to ensure a smooth and official exit.
• Final payroll: We handle the final payment to the employee, including any outstanding salary, unused vacation days, and severance.

We manage the details so you can focus on your business.

Navigating visas and work permits in Portugal can seem complex, but it's straightforward with the right information. If you are not a citizen of a European Union (EU) or European Economic Area (EFTA) country, you will need a visa to work in Portugal. The process typically involves securing a job offer first, as your employer plays a key role in the application. Portugal offers several visa options depending on the nature of your work, from long-term employment to temporary projects.

Employment visas & sponsorship realities

An Employer of Record (EOR) can be your legal employer in Portugal, handling payroll, taxes, and HR. This is a practical route if your company doesn’t have a legal entity in the country.

What an EOR can sponsor:

• Standard Work Visa (D1 Visa): This is the most common path for non-EU citizens who have a job offer from a Portuguese company. An EOR can act as your official employer and sponsor this visa.
• EU Blue Card: This option is for highly skilled professionals with a university degree and a qualifying salary offer. It offers greater flexibility for mobility within the EU.
• Tech Visa: Some EORs are certified to fast-track visas for tech professionals hired by qualifying Portuguese companies.

What an EOR typically can't sponsor:

• Digital Nomad Visa: This visa is for individuals working for companies outside of Portugal. Since an EOR employs you locally, this visa type is not a suitable route.
• Visas for independent contractors: An EOR employs individuals on a payroll. If you are a freelancer, you will need to apply for a visa that supports self-employment.

The visa process through an EOR can take a few months, so it is important to start early. Your EOR partner will guide you through the paperwork and requirements.

Business travel compliance

For short-term business trips, the rules are simpler. As a non-EU citizen, you can typically visit Portugal and the Schengen Area for up to 90 days in any 180-day period without a visa.

This visa-free travel allows for certain business activities:

• Attending meetings and conferences
• Visiting business partners
• Participating in training

You cannot work on a short-term visit. If your trip involves any form of local employment, you will need a proper work visa. Always check the specific entry requirements for your nationality before you travel.