Hire employees in Portugal

Quick answers

The questions leadership teams ask first, answered directly. Detail follows further down the page.

Hiring routes compared

Foreign companies have to weigh speed, capital commitment, ongoing compliance and misclassification exposure. Here is how the three routes stack up.

What an employee costs in Portugal

Portugal funds social security through a single unified contribution, the TSU, split 23.75% employer and 11% employee, applied to the whole of gross pay with no cap. Workplace accidents are not covered by the state: Law 98/2009 requires private insurance covering 100% of annual remuneration. The 14-month structure is the other cost driver, and it is statutory, not a bonus.

For an employee on €3,500 a month (€49,000 across 14 payments), budget roughly €63,000 to €66,000 all-in. Ask us for a cost model at the salary you have in mind.

Payroll and tax

Portuguese payroll runs monthly, with net salary paid by SEPA transfer at month end. Salary is split across 14 payments: 12 monthly base salaries, a holiday subsidy (subsídio de férias) of one month's pay before the main vacation, usually June or July, and a Christmas subsidy (subsídio de Natal) due by 15 December. By written agreement, half or all of the subsidies can be spread across the year in twelfths (duodécimos). The monthly remuneration declaration (DRI) goes to Social Security by the 10th of the following month, and TSU and withheld IRS are both paid by the 20th. Payslips must itemise base pay, subsidies, meal allowance, the 11% TSU deduction and IRS withholding.

Income tax withholding

The employer withholds IRS monthly using tables published by the Ministry of Finance. The brackets are steep and progressive: roughly 13% up to €7,703, rising through 16.5%, 22%, 25%, 32%, 35.5%, 43.5% and 45% to 48% above €81,199, plus a solidarity surcharge of 2.5% between €80,000 and €250,000 and 5% above that. The old non-habitual resident regime is closed to new applicants. Its successor, IFICI, offers a flat 20% IRS rate for 10 years to qualifying R&D, research and certified startup roles.

Statutory minimum wage

The guaranteed minimum monthly remuneration (Retribuição Mínima Mensal Garantida, RMMG) is set each year by government decree after tripartite negotiation and is paid 14 times a year. Sector CCT wage scales override it for classified job tiers, and it anchors the severance cap.

Leave and mandatory benefits

• Paid vacation. 22 working days a year, vesting in full on 1 January. In the first year of employment the entitlement is 2 days per month worked, up to 20, usable after 6 months. Vacation cannot be waived or paid out in cash during employment.
• Public holidays. 13 mandatory national holidays, one optional (Carnival) and one municipal holiday.
• Subsidies. The holiday and Christmas subsidies are each a full month's base salary and are legally required.
• Sick pay. The first 3 days are unpaid unless the CCT or your policy says otherwise. From day 4 Social Security pays a benefit scaling from 55% to 75% of pay.
• Parental leave. Initial parental leave of 120 or 150 consecutive days paid at 100% by Social Security, or 180 days at 83% if shared. Fathers must take 28 working days: 7 immediately after birth and 21 within six weeks. Parents of children up to 8 have a statutory right to telework where the role allows.
• Other leave. 15 days for marriage, paid by the employer. Bereavement of 20 days for a child, 5 for a spouse or parent.
• Training. At least 40 hours of certified professional training per employee per year (Article 131 CT).
• Occupational health. A pre-placement medical before the start date or within 15 days, annual exams thereafter, and an internal or external safety service. From 7 employees you need a written anti-harassment code of conduct.
• Working time. 8 hours a day and 40 a week, 11 hours of daily rest and one full weekly rest day. Overtime pays +25% for the first hour, +37.5% after that and +50% on rest days and holidays, capped at 150 hours a year (175 in small firms). Senior staff can sign an exemption from working hours (IHT) for an allowance of typically 20% to 25% of base pay. Contacting employees outside working hours is a fineable offence.

Termination and notice periods

The permanent contract (sem termo) is the default. Fixed-term contracts must state a specific objective justification under Article 140 CT or they convert to permanent; since Law 13/2023 they are limited to 4 renewals and 2 years (4 years for uncertain-term project contracts). Probation is 90 days for standard roles, 180 for highly technical or trust roles and first-time job seekers, 240 for senior executives, and 15 or 30 days on fixed-term contracts. Either side can end probation without severance, with 7 days' notice once probation passes 60 days and 15 days after 120.

• Severance for redundancy. 14 days of base salary and seniority allowances per year of service for post-reform contracts, prorated for partial years. The monthly base used is capped at 20 times the minimum wage and the total at 240 times it.
• Disciplinary procedure is strict. Written charges, 10 business days for the employee to respond and call witnesses, and a reasoned decision within 30 days. Skip a step and the dismissal is void.
• No outsourcing after redundancy. You cannot subcontract or outsource a role for 12 months after eliminating it through objective or collective dismissal.
• Collective dismissal. Two or more employees in firms under 50 staff, or five or more from 50, within 3 months triggers formal negotiation with representatives and DGERT.
• Mutual termination. A written agreement (revogação por acordo) settles all claims, but the employee can revoke within 7 days unless signatures were authenticated before a notary or labour court.

Can I use independent contractors?

Only for genuinely independent suppliers. Portuguese law looks at the facts, not the contract label (primazia da realidade). Article 12 of the Labour Code presumes an employment contract exists when at least two indicators are present: the work is done at your premises or a place you designate, you supply the equipment or software, you set or control the hours, the worker is paid a fixed periodic amount, or they hold a leadership role in your structure. Even a lawful contractor costs more once dependent: at 50% to 80% of their income from you, you owe a 7% Social Security levy, rising to 10% above 80%. If the Authority for Working Conditions (ACT) or Social Security reclassifies a false recibo verde, the relationship becomes a permanent contract from day one, you pay all unpaid employer TSU at 23.75% with interest and very serious administrative fines, and you owe retroactive holiday and Christmas subsidies and untaken vacation. An EOR is the compliant alternative for anyone who works like an employee.

The legal framework in brief

Portuguese employment law is a codified civil law system built on constitutional guarantees, the Labour Code and sector collective agreements extended across whole industries by ministerial order. The statutes you will hear most:

• Constitution, Article 53. Security of employment; no dismissal without just cause.
• Labour Code (Código do Trabalho, Law 7/2009). Contract types, probation (Art. 112), working time (Arts. 197 to 236), the 14-month structure (Arts. 263 and 264), telework (Arts. 165 to 171) and termination.
• Agenda do Trabalho Digno (Law 13/2023). Limits on fixed-term contracts, the outsourcing ban after redundancy, 14-day severance, platform worker presumption and longer parental leave.
• Collective agreements (CCTs). Published in the Boletim do Trabalho e Emprego and often extended sector-wide by portaria.
• Workplace Accident Law (Law 98/2009). Compulsory private insurance for accidents at work and on the commute.
• Occupational Safety and Health Law (Law 102/2009). Medical exams, risk assessment and safety services.
• Authority for Working Conditions (ACT). The labour inspectorate that audits time records, telework agreements, insurance and contractor legitimacy.
• GDPR and Data Protection Law (Law 58/2019). Cameras, screen monitoring and keystroke logging to assess performance are prohibited (Arts. 20 and 21 CT); the CNPD supervises.
• Whistleblowing Law (Law 93/2021). Confidential internal reporting channels from 50 employees.
• Immigration Law (Law 23/2007) and AIMA. D3 highly qualified visas, the Tech Visa, the D8 digital nomad visa and job seeker visas.

Where the talent is

Portugal has become one of Europe's leading technology, shared services and remote work destinations. English proficiency is among the highest in continental Europe, the engineering universities are strong, and the workforce is fluent across English, French, Spanish and German. The country runs on Western European Time, aligned with the UK and Ireland. Contracts are drafted in Portuguese, with bilingual execution standard.

This guide is general information, not legal, tax or immigration advice. Portuguese employment, social security and tax rules change regularly through annual decree, collective agreement extensions and court interpretation. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.