HR Solutions & Employee Relations in Portugal with IRIS
IRIS HR consulting has experience in helping businesses expand into Portugal. Without expert guidance, it can otherwise be risky to leave local laws and legislation open to interpretation. For a scalable, compliant operation, IRIS can manage your HR in Portugal to help your business hire, recruit, and pay staff overseas. As a popular destination for businesses, IRIS can navigate local barriers – from culture to compliance – to arrive at a rewarding opportunity for your business to thrive in this exciting marketplace.
Take your business to Portugal with IRIS HR Consultancy.
Global expansion in Portugal
With many investment opportunities, favourable tax structures and English widely spoken, Portugal is an attractive destination for businesses looking to expand globally. Located in close proximity to some of the most important markets within the EU, there are also great trading relationships with countries outside of Europe, including America and countries in Africa.
Establishing your business in Portugal
Embarking on a global expansion is more often a strategic move to extract value from foreign markets. But the international stage isn’t always easy to navigate.
A Guide to Employing Staff in Portugal
Everything you need to know about the employment laws and compliance requirements in this country
Employment laws in Portugal
When first expanding your business into Portugal, navigating employment laws and remaining compliant is never easy. These laws are not always universal. Rather, employment is protected in local policies and this is constantly shifting.
Did you know?
With a prime location on the Iberian Peninsula, Portugal is a thriving hub for tourism.
In Portugal, employment contracts can be verbal or written, however in certain situations a written contract is required. These situations include fixed-term employment contracts, part-time employment or hiring foreign workers.
Captured within this key documentation, employers should notify:
- the identity of both parties;
- the place of work;
- the professional category or a brief description of its functions;
- the start date of the contract;
- the duration of the contract in case of a fixed term contract;
- vacations entitlement;
- termination notice;
- the remuneration and pay frequency;
- daily and weekly working hours;
- the labour accidents insurance policy and the insurance company;
- the applicable collective agreements;
- the applicable labour compensation fund.
Work visas in Portugal
If your business is considering expansion into Portugal, it’s likely that many of your employees will require work visas and permits before commencing a new role in this exciting market.
As Portugal is a member state in the EU, citizens will be able to work in this country without a permit or visas but may be required to obtain a residence card (typically within 6 months of moving).
Non-EU citizens, however, will need to obtain the correct visa type, or one of the following:
- Type 1: permanent residency visa
- Type 2: resettlement visa (for relatives of Portuguese citizens)
- Type 3: resettlement visa (for relatives of non-citizens)
Hiring & recruitment in Portugal
When getting your first hire in Portugal, you will need expert guidance in ensuring compliance with local labor laws.
What are the working hours?
Standard working hours in Portugal are a maximum of 8 hours per day and 40 hours a week. Within the employment law, employees are entitled to a least one hour’s uninterrupted break and not work for more than 5 consecutive hours. If an employee’s working period exceeds 10 hours, they should not work for more than 6 consecutive hours.
Working hours, beyond the standard hours in Portugal, are classified as overtime and attracts additional pay to compensate employees for using their rest period. Typically, overtime is limited to 2 hours per normal working day.
Certain employees are exempt from the working time rules such as those working unmeasured time or those working in industries that operate continuously over 24-hour periods.
In addition to vacation time, public holidays in Portugal are celebrated as days off for employees. In total, there are 13 national public holidays, including:
- New Year’s Day – 1 January
- Good Friday
- Easter Sunday
- Liberation Day – 25 April
- Labour Day – 1 May
- Corpus Christi
- National Day – 10 June
- Assumption Day – 15 August
- Republic Day – 5 October
- All Saints’ Day – 1 November
- Independence Day – 1 December
- Immaculate Conception Day – 8 December
- Christmas Day – 25 December
In Portugal employees are entitled to a minimum of 22 days paid leave per annum. In the first year of employment, paid vacation is earned a rate of 2 days per each month of employment for the first 6 months up to a maximum of 20 working days. Employees under a fixed-term contract of 6 months or less are entitled to 2 days paid leave per month of service. Vacation days in certain circumstances can be carried forward until 30th April of the following year.
Vacation bonuses are entirely discretionary, although they remain commonplace within the private sector. The bonus equates to one months’ salary, which is then split and paid at 50% for Christmas and the remaining 50% spread across the monthly pay periods.
Sick Leave in Portugal
Upon meeting the eligibility criteria, an employee can receive sickness benefit of 55% of the average daily wage for a maximum duration of 30 days; this benefit decreases incrementally by set percentages, up to a maximum of 1,095 days. It is common for the employer to supplement this provision to 100% of salary for a specified period.
Maternity Leave in Portugal
An eligible pregnant employee is entitled to paid maternity leave, of up to 150 calendar days; this can increase to 180 calendar days in the event of multiple births.
Maternity Pay can be granted at 100% of salary for 120 days, or 80% of salary for 150 days.
The mother must take 42 days’ of maternity leave, and may share the remaining days as ‘Parental Leave’, should she choose.
An eligible employee is entitled to take 20 calendar days of paid leave, at 100% of regular salary, with a further optional 5 days. Five of these days must be taken compulsorily, immediately following the baby’s birth; the remaining 15 days must be taken within 6 weeks of the baby’s birth.
Both parents have the right to shared parental leave of 4 or 5 months, with 100% of salary, only if that leave is shared. This timeframe may increase to 6 months, where the salary payment will then be at 83% and not 100%. A further 3 month extension is allowable, whereby salary payment will decrease further to 25%.
We’ve Got You Covered
Deliver your business to new, exciting markets with confidence and compliance.
End of Service
HR in Portugal means being compliant not only during an employee’s service, but also at the end of it. End of service might include severance, termination, redundancy, and leaving packages. Or, for globally mobile companies with international teams, this could be repatriation services for those returning from an assignment overseas.
For these more complicated matters, you will need expert HR guidance in order to navigate Portugal’s employment laws and remain compliant.
For termination to commence on an active contract, an employer must provide a minimum notice period reflective of their length of service with the company.
The statutory minimum notice period will depend on the length of employment:
- Less than one year service: 15 days notice.
- Between one year and five years’ service: 30 days notice
- Between five and ten years’ service: 60 days notice
- After ten years’ service: 75 days notice
Payment in lieu or garden leave is not allowed in Portugal, instead employees are required to work their notice.
Portuguese social security benefits are funded by contributions from both employee and employer. The benefits provided under the umbrella of Social Security Taxes (SST) are as follows:
- old age
- occupational diseases
- survivor’s benefit
There has been a noticeable shift in trends surrounding Pillars 2 and 3 of the pension structure, as concern grows in relation to social security old age pension provisions, particularly for higher earners / top executives. Consequently, it has become popular to secure occupational pension plans to employees, at all levels within the organisation. Whilst there is continues to be a mix of both Defined Benefit (DB) and Defined Contribution (DC) schemes in the market, the latter are more prevalent.
Life and Disability benefit, are both commonplace provisions as a supplemental benefit, most typically incorporated into a pension scheme. The premiums are usually fully-funded by the employer, with a benefit equating to 1 times’ salary, or for executive-level employees, 2 times’ annual salary.
Private Medical Insurance (PHI)
Provision of access to private medical insurance is commonplace across the board, to the extent that many employees would expect this to be provided as part of an employment package. Most employers secure schemes that enable dependant registrations, which is a highly attractive proposition. Although some schemes can be basic, the market shows the trend for provision of comprehensive schemes, to include supplemental coverage such as dental and vision care.
There are financial incentives available for employers recruiting, particularly those currently unemployed. The availability of grants for employment can make it attractive for global expansions.
Why Partner With IRIS?
When entering new, exciting countries in foreign markets, like Portugal, you will need an employment specialist to navigate Portuguese employment laws. Delivering a compliant solution, IRIS can help your business arrive into new marketplaces whilst protecting your workforce – our partners can discover power and protection through us.
Overseas expansions can seem risky to those who dare it alone. Understanding the complexity of a fully compliant solution, IRIS can help businesses establish a foreign branch in Portugal without the hassle.
Our cost-effective, knowledgeable approach to HR in Portugal makes us an ideal partner to commence your overseas plans.