Bordered by Spain and the Atlantic Ocean, Portugal is quickly becoming one of Europe’s most important hubs for startups and tech. With an economy that keeps growing, Portugal is a popular destination for digital nomads and workers at major tech companies, including Microsoft, Amazon, and Google.
Portugal has some of the leading and most comprehensive compensation and benefits packages for employees in the European Union.
When hiring Portuguese employees or workers based in Portugal, it is important to have strong written contracts that are agreed upon between employee and employer. Contracts must also be compliant with all local and federal labor laws. Contracts ensure that no confusion arises between either party about the specific benefits to which employees are entitled. Employers can also offer supplementary benefits to stay competitive and hire the best international talent.
This article gives information for employers about the mandatory benefits Portuguese employers need to provide, as well as supplemental benefits that employees should look for when searching for jobs in Lisbon, Porto, and other cities.
Per the Social Security Institute in Portugal, employees can receive a number of mandatory benefits through their social security. Employees pay 11% into their social security, while employers pay 23.75%.
Portugal has a progressive tax system system, so you may have to pay more or less in taxes depending on the income bracket of the employee.
Social security covers a wide range of mandatory benefits, including:
Maternity, paternity and adoption
There are 3 levels of health benefits in the country. There is publicly funded healthcare that is paid directly by social security, specialized healthcare for specific industries, and private healthcare. Private healthcare is an added benefit that some employers may want to consider offering in order to stay competitive against other companies.
There are mandatory 13th- and 14th-month salary payments–once in June for the summer holidays, and another in December for Christmas.
Employees must receive 22 days of paid vacation time each year, as well as paid time off for federal holidays.
For employees, all requests for paid leave must be submitted well in advance and approved by the employer. Further, leave can be carried over to the next year if unused but must be completed by the 30th of April.
During the 1st year of employment, new employees are compensated with 20 days of leave. Most importantly, if employment starts in the 1st half of the year, the employee starts out with 8 days of vacation after completing 60 days of work. However, if the calendar year ends before the employee serves 6 months, the remaining days are extended until the 30th of June of the following year.
In addition to employees' mandatory paid leave, there are also 13 paid public holidays in Portugal.
New Year’s Day
All Saints Day
Restoration of Independence
Immaculate Conception Day
Employees with at least 6 months of service to a company receive up to 365 days of paid sick leave per year. Within the first 48 hours of sickness, a medical certificate is required to receive compensation for sick days.
For the first 3 days of illness, the employer pays directly to the employee, 89% of their usual salary.
After the first 3 days, social security pays the remaining days of sickness. The percentage of the employees salary paid by social security are as follows:
55% of average salary rate for 30 days
60% of average salary rate between 31-90 days
70% of average salary rate between 91-365 days
If an employee is injured on the job in Portugal, employers are required to take out a private insurance policy to cover the work injury.
Portugal has a strong parental leave system that allows both the mother and father to agree to take time off in the case of birth or adoption of a child.
You are entitled to 100% of your salary paid by social security for up to 120 days. To be eligible for this leave, you must have been employed for at least 80 days during the 12 months prior to the due date.
Parental leave is granted for both parents and can be shared. If you need more than 120 days of leave, you can take an additional 60 days, at 83% of your usual salary rate.
Mothers receive 30 days of parental leave and a mandatory 6 weeks of leave following birth.
Fathers can take at least 5 days of parental leave following birth. A mandatory 20 days of leave must be taken within 6 months of birth. This time off can be taken in a single period or throughout a series of random days. This is paid at 100% of the employee’s average salary in the last 6 months.
After the required 6 months of maternity leave and 30 days of paternity leave, the couple can decide who takes the remaining 78 or 108 days.
Both employer and employees pay into the pension fund through their social security taxes. The pension fund is a public safety net set up by the Portuguese government.
In case of the death of a family member, employees are permitted to take 5 consecutive days of paid time off.
When an employee is married, they receive 15 days of consecutive time off with pay to attend their wedding and honeymoon
In Portugal, employees are entitled to 30 days of paid leave per year to provide care for a family member under the age of 12. The number is bumped up to 45 days of paid time off for older family members.
Employers must provide employees with 1 meal allowance per working day.Each meal is tax free, up to 7.65 EUA.
As public health insurance is mandatory for everyone in Portugal and paid through their social security, employers should strongly consider offering private healthcare coverage as a perk.
Many employers opt to give their employees productivity bonuses to encourage success. If an employee feels like their work is being valued and rewarded, they are much more likely to exceed expectations. You could also offer flexible working hours as a productivity bonus for top performers. Easier working conditions can help to retain top talent.
While not necessary in all industries, company cars can be a great incentive in certain industries where employees may have to drive far or need a car for their day-to-day business.
Housing in Portugal can be expensive, especially in Porto and Lisbon. Giving your employees housing allowances can help to offset rising rent prices.
Another great way to encourage both public transportation and reward employees who live in rural areas is to give them stipends for their commute. Employees will feel like their time making it to work is being rewarded.
While offering remote work may not be accessible in all industries, giving your employees the option to work from home if possible is another benefit that is highly valued. Offering remote work gives employees the ability to choose their working hours and enjoy their working conditions.
Most benefits are mandated by laws passed by the Portuguese government, so knowing what supplementary benefits to offer potential employees is a must. This is where using a global EOR service like Via is a strategic move. As your employer-of-record in Portugal, we have valuable knowledge about what benefit packages will attract potential employees and allow employers to stay competitive while still adhering to Portuguese laws.
Companies of all sizes want to hire employees in Portugal, but don’t know how to navigate the country’s complex social security and benefit system. Via makes hiring Portuguese talent and building your global team seamless. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad as we know exactly what to include in Portuguese employment contracts. As your employer-or-record/entity in Portugal, Via assumes responsibility for all legal compliance, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in Brazil with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
There are many benefits of working in Portugal as a foreigner. The country strongly protects employees and ensures that social security takes care of you. You will have paid time off, maternity and paternity leave, sick leave, healthcare, and a pension fund.
Salaries are paid in Portugal bi-weekly through either a check, money order, or direct deposit. Employers must pay you on a working day and provide you with a paystub.
In Portugal, you can have up to 365 days of sick days with proper documentation and medical recommendation.
There are many things that make it worth it to work in Portugal. Many companies have begun to expand their companies into the country. Further, there is a boom in tech and IT. You will also receive a number of mandatory benefits like health insurance and paid time off that you may not get in other countries.