Portugal HR Information

Updated on: 2025/03/11 04:48 (UTC)

Overview

Labor and employment law in Portugal is governed by the Portuguese Constitution, Labor Code, and Labor Procedural Code. Collective bargaining agreements cannot provide more favorable conditions than those prescribed by the law during their first two years of operation.

Hiring

Employment Contracts

Employment contracts that are fixed-term, of unspecified duration, intermittent, teleworking and part-time must be in writing. A written contract must include the following information:

• name of employer;
• name of employee;
• type of employment and responsibilities;
• starting date and end date, if known; and
• location of job and work hours.

Generally, employers may put their employees on probation for 90 days. The probationary period may extend to 180 days for those who hold positions of trust, technical complexity or a high level of responsibility or positions requiring special qualifications and to 240 days for directors and higher management.

Fixed-term contracts can be used only for satisfying temporary company needs and are subject to strict duty and time guidelines. Any breach of these requirements will transform contractual to permanent employment and entitle the worker to all of the protections afforded employees in Portugal.

Remote work: Employers may enact remote work but must have a written policy in place. The written agreement must include: work to be done, pay, the place where the employee will work, normal working hours, and the frequency and method for face-to-face contacts, among other conditions.

Employees may refuse to work remotely and do not need to give reasons for the refusal. Any such refusal cannot be deemed to be proper grounds for dismissal or any other sanction.

Employers must refrain from contacting employees during their rest period, except in case of force majeure.

Employers may refuse an employees’ request to work remotely but such refusal must be justified.

Employers are obliged to provide the employee with equipment

Restrictions on Hiring

The minimum working age is 16 years, although youths under 16 can work in a family business or, if they’ve completed compulsory education, do light work that won’t harm their health or further education. If they haven’t completed compulsory education, youths under 16 can still be employed if the business provides education or professional training.

Before employing a youth, a company must get a health certification that he or she is able to perform the duties of the job and must provide annual follow-up health checkups.

Youths cannot work more than eight hours a day or 40 hours a week, and those under 16 performing light duties cannot work more than seven hours a day and 35 hours a week. Minors cannot work overtime unless unforeseen and exceptional circumstances make it necessary and no adult workers are available. Minors are generally not allowed to work at night.

Recordkeeping

Employers must keep for five years a record of working time for each employee.

Background Checks

The employer cannot require job applicants or employees to provide information on their private lives, particularly their health or whether they are pregnant, nor can an employer require job applicants or employees to take medical tests for mental or physical conditions unless the employer can justify such tests based on the nature of the job or they are mandated by occupational safety and health laws. In the case of information regarding health or pregnancy, employees may only be required to provide the information to a doctor, who can inform the employer only whether the person is able to perform the job.

Under Portuguese law, job applicants and employees have the right to control personal information, to be able to see personal information files and to correct mistakes and make updates.

Noncompetition Agreements

Under the Labor Code, employees have a duty to remain loyal to their employers; not to engage in competition with them, whether on their own behalf or on behalf of another; and not to divulge any information about an employer’s organization, production or business methods. Breach of this duty is grounds for discipline or termination. Businesses are responsible for including clauses in their employment contracts concerning the disclosure of information after the employment relationship has ended.

A noncompetition agreement may not exceed two years, three years in cases in which the worker was in a highly trusted position or had access to highly sensitive information. The agreement must be in writing, must only limit activities that could harm the employer and must include compensation for the employee.

Reference Citations

Employment Contracts: Labor Code, 2009 (as amended) arts. 5, 111-112

Restrictions on Hiring: Labor Code, 2009 (as amended) arts. 68-72

Recordkeeping: Labor Code, 2009 (as amended) art. 202

Background Checks: Labor Code, 2009 (as amended) art. 16

Noncompetition Agreements: Labor Code, 2009 (as amended) arts. 128, 136

Immigration and Work Permits

In General

A residency permit is required for anyone who intends to work in Portugal, and most non-EU nationals will need a work permit.

Visas and Work Permits

Under Portuguese law, foreign nationals or stateless persons authorized to work on Portuguese soil are entitled to the same rights as Portuguese citizens, including equal treatment and employee rights. Citizens from EU/EEA/Switzerland do not require a work visa to live or work in Portugal. However, those who plan to work in the country for longer than six months must obtain a residence permit.

In 2017, Portugal began implementing the EU’s intracompany transfer (ICT) directive. Under the directive, ICT residence permits can be obtained by non-EU national managers, specialists, and trainees who have been employed by an employer outside Portugal for at least three months.

Otherwise, most non-EU nationals will need a work permit before they can work in Portugal. The Short-Term visa is for temporary contracts lasting less than six months. It can be extended up to one year if the employee is engaged in scientific research, academic teaching, or highly qualified professional activities. The Long-Term work visa is for contracts lasting six months or more. U.S. citizens may apply for this visa from within Portugal, within 90 days of arrival.

Once employees have obtained their work visa, they can then begin the process of obtaining a residence permit. The standard residence permit for most employees working in Portugal is valid for two years and may be renewed for successive three-year periods. After five years of temporary residence, the holder may request a permanent residence permit.

Requirements for obtaining a residence permit differ depending on whether the individual seeks to work for an employer, is a self-employed service provider, or seeks to engage in scientific research or an activity that requires high-level technical knowledge. If the person seeks to work for an employer, getting a residence permit depends on the availability of jobs, and hiring preferences are given to Portuguese nationals and workers from other European nations.

Jobseeker Visa. Effective Aug. 26, 2022, foreign workers can apply for a temporary visa that allows them to gain entry into Portugal for 120 days to try to obtain work in the country. The visa is renewable for a further 60 days.

Digital Nomad Visa. Effective Oct. 30, 2022, foreigners can apply for a residence permit to work remotely in Portugal for a company that does not have a presence in the country. The visa is valid for one year.

Penalties

Foreign nationals are subject to removal from Portugal if:

• they illegally enter or stay in Portuguese territory,
• they act against Portuguese national security or public policy,
• their presence in the country is a threat to the interests of Portugal or its nationals,
• they interfere abusively in the exercise of rights to political participation that are reserved for citizens,
• they have performed acts that should have prevented entry into the country,
• there is strong reason to believe that they have committed serious offenses or intend to commit such actions specifically in EU territory or
• they hold a valid residency permit for another EU state but have failed to comply with its requirements.

Reference Citations

Visas and Work Permits: Labor Code, 2009 (as amended), arts. 4-8; Law No. 102/2017, § 124(b) (Portuguese)

Nondiscrimination

In General

The constitution states that all citizens are equal before the law, and the Labor Code prohibits discrimination against any employee or job applicant on the basis of ancestry, age, gender, sexual orientation, marital status, family circumstances, economic status, education, genetic status, reduced work capacity, disability, chronic illness, nationality, country of origin, language, race, ethnic origin, union membership, or religious, political, or ideological beliefs.

Disability Discrimination

The law sets out the general principle that employers must provide work for employees with reduced working capacity, adapting working conditions, position and pay as necessary and providing or helping to provide appropriate vocational training courses. Persons with disabilities are entitled to the same rights and are subject to the same responsibilities as other employees with respect to access to employment, vocational training, promotion and working conditions.

An amendment to the labor code establishes hiring targets for persons with disabilities, who are defined as individuals “with a degree of disability equal to or greater than [sixty percent].” Employers with 250 or more workers must establish a hiring benchmark of two percent for persons with disabilities in their workforce. For employers with 75 or 249 workers, the benchmark goal is one percent.

Gender Discrimination

The Portuguese Labor Code outlaws sex discrimination. Job advertisements and other types of advertising linked to recruitment may not contain any direct or indirect restriction, specification or preference based on sex. The Labor Code also requires equal working conditions, particularly regarding pay.

Pay Transparency Policy: Effective Aug. 21, 2021, employers with 50 or more workers must implement a transparent pay policy that objectively evaluates all jobs and accounts for pay differences among male and female workers related to productivity, merit, attendance, or seniority.

Any pay differences still in place one year after rollout of the action plan and which have not been justified by the employer will be deemed to be discriminatory.

EU Pay Transparency Directive: As a member state of the European Union, Portugal has until June 2026 to transpose the minimum requirements of the EU Pay Transparency Directive into its national law or amend any current pay equity laws to conform with the directive, which aims to promote pay equity between men and women. The directive introduces requirements on gender pay gap reporting, salary history bans during the hiring process, and wage disclosure in job vacancy listings. The national law may go beyond the minimum requirements of the directive, but the law may not directly conflict with the directive requirements.

Harassment

The Labor Code defines harassment as unwelcome behavior that has a discriminatory effect on employment and that embarrasses or affects the dignity of the target or creates an intimidating, hostile, degrading, humiliating or offensive environment.

Harassment is grounds for dismissal and criminal prosecution leading to imprisonment. Employers with seven or more employees must implement a code of conduct that aims to prevent workplace harassment.

Reference Citations

Nondiscrimination: Labor Code, 2009 (as amended), arts. 23-24

Disability Discrimination: Labor Code, 2009 (as amended), art. 85

Gender Discrimination & Harassment: Labor Code, 2009 (as amended), arts. 29, 270; Law Approving Measures to Promote Equal Pay for Women and Men for Equal Work, Number 60 of 2018 (Portuguese)

Employee Privacy

Employee Data

On May 25, 2018, the General Data Protection Regulation (GDPR) superseded the Data Protection Directive as the primary law governing data privacy in the EU. The GDPR establishes minimum requirements for the processing of employee data and allows EU member nations to introduce more restrictive local legislation. Stricter requirements can also be established in collective bargaining agreements or work contracts. For more information, see the In Focus: International Privacy Laws.

Employee Monitoring and Surveillance

Email and other messages. Employees have the right to confidentiality of personal communications, although employers have the right to establish rules for the use of various forms of workplace communication, including email.

Employer surveillance. Employers can use technological means of surveillance only to protect their workers or facilities or if such surveillance is required by the special nature of the business as authorized by the National Commission for Data Protection. If the surveillance is proper, employees must be informed about its existence and purpose, and signs must be posted stating that a particular site is under surveillance.

Under the GDPR, employers can monitor employees only if there is a lawful basis for doing so. Lawful bases can include preventing employee misconduct, deterring crime, and ensuring compliance with health and safety procedures. Employees must be given prior notice, and any data that is collected must be used and kept only to fulfill its original purpose.

Reference Citations

Employee Data: General Data Protection Regulation, 2016

Employee Monitoring and Surveillance: Labor Code, 2009 (as amended), arts. 17- 22 ; General Data Protection Regulation, 2016

Compensation

Hours of Work

A standard workweek in Portugal is 40 hours, usually consisting of five eight-hour workdays, although the Labor Code emphasizes that employers have some flexibility in extending or reducing the workday under certain circumstances.

Employees may not work more than five hours without a rest break, which must be a minimum of one hour and a maximum of two hours. Workdays must be separated by a rest period of at least 11 hours

Employees are entitled to at least one rest day per week. Sunday is the default day, but another can be substituted when business circumstances require.

Minimum Wage

Effective Jan. 1, 2025, the monthly minimum wage is 870 euros, up from 820 euros.

Overtime

Generally, employers must pay overtime for any hours worked in excess of eight in a day or 40 in a week. Overtime pay must include a premium of 25 percent for the first hour and 37.5 percent for subsequent hours. Overtime pay for work performed on a worker’s weekly day of rest must include a premium of 50 percent.

Overtime is limited to 175 hours per year for employees of small companies and 150 hours per year for larger companies. Overtime performed by part-time workers is limited to 80 hours per year, although it may increase to 130 hours per year with an individual written agreement and 200 hours per year with a collective agreement.

Employers must report the amount of overtime performed by employees to the Ministry of Strategy and Planning.

Employers may only require employees to work overtime:

• in order to cope with temporary increases in workload that do not justify hiring additional employees,
• in cases of force majeure or
• to prevent or address serious risk or damage to the enterprise or to ensure its viability.

Wage Payment

Employees must be paid by check, money order or direct deposit in biweekly or shorter intervals. The employee must receive a pay stub documenting the payment and any deductions.

Mandatory Bonuses

Employers must pay employees a Christmas bonus usually equal to one month of wages, which must be paid by Dec. 15. Workers hired partway through the year get a bonus proportional to their time of service.

Employers also must pay to each employee a vacation subsidy, also known as a vacation allowance, holiday bonus, or holiday allowance, which must be paid before the employee takes vacation leave. Despite sometimes being referred to as a holiday bonus or holiday allowance, this subsidy is not equivalent to the Christmas bonus and instead is designed to provide employees with additional funds to spend during their vacation, as an addition to the paid leave they receive. The amount of this subsidy generally is equal to one month of wages.

Reference Citations

Hours of Work: Labor Code, 2009 (as amended), arts. 203, 210, 213

Minimum Wage: Labor Code, 2009 (as amended), art. 275

Overtime: Labor Code, 2009 (as amended), arts. 203, 211, 227-228, 268

Wage Payment: Labor Code, 2009 (as amended), art. 276

Mandatory Bonuses: Labor Code, 2009 (as amended), art. 263

Benefits

Vacation

Employees are guaranteed a minimum 22 days of paid leave each calendar year. New employees with six months’ service are entitled to two working days’ vacation for each month worked in the year of hire up to a maximum 20 days.

Unused vacation may be carried over to April 30 of the following year, although no more than 30 vacation days may be taken in the same year. Any annual leave entitlement in excess of 20 days may be exchanged for cash.

Scheduling of annual leave is decided through agreement between employer and employee. The leave can be broken into periods of no less than 10 days.

Holidays

Employees are entitled to the following nine public holidays with pay:

• Jan. 1: New Year’s Day
• Good Friday
• Easter Sunday
• April 25: Liberation Day
• May 1: Labor Day
• June 10: Portugal Day
• Aug. 15: Assumption Day
• Dec. 8: Immaculate Conception Day
• Dec. 25: Christmas

Municipalities may designate other holiday observances.

Holidays are always observed on the day they fall.

Employees who work on public holidays are entitled to a 50 percent increase in the corresponding remuneration or a day of rest in lieu.

Maternity Leave

Maternity, paternity, and other parental leave are all covered under articles 13, 41-48 of the Portuguese Labor Code. Employees who have been employed and made contributions to the social security system for at least six months are entitled to between 120 and 180 days of paid maternity leave. From May 2023, In the case of hospital admission of the child during the period after birth, the parental leave will not begin to run until the mother and baby are discharged.

This change is pursuant to Decree-Law no. 53/2023 which expands parental leave entitlements and the right to request telework arrangements for parents of young or disabled children under Portugal’s labor law. This law entered to force on July 6, 2023 and takes effect retroactively beginning May 1, 2023. This law transposes EU directives 2019/1158 (work/life balance) and 2019/1152 (transparent and predictable working conditions) into national law.

From May 2023, mothers can exclusively opt to take up to 30 days before birth and must take 42 consecutive days following birth, both are part of the initial parental leave benefit.

Mothers who breastfeed have the right to work leave for this purpose, during the duration of breastfeeding. Daily leave for breastfeeding is taken in two distinct periods, with a maximum duration of one hour each, unless otherwise agreed with the employer, with exceptions for parents who work part-time or in the event of multiple births.

If not shared, leave can be taken for 120 or 150 days; if shared, it can be increased to as much as 180 days. For leave to be considered “shared,” the parent taking the lesser amount must take at least 30 consecutive days or two periods of 15 consecutive days.

Parents who take 120 days of leave are entitled to compensation at 100 percent of their normal salary, whether the leave is shared or not. Parents who take 150 days of leave are entitled to 100 percent of compensation if the leave is shared, 80 percent if it is not.

For multiple childbirths (twins, triplets, etc.), parents can take an extra 30 days of paid leave for each additional child. During a pregnancy, if it is determined there is a risk to the health of the mother or of the fetus if the mother continues to work, the mother can take as much leave as necessary prior to birth.

From May 2023, Portugal’s labor law expanded parental leave entitlements and the right to request telework arrangements for parents of young or disabled children pursuant to Decree-Law no. 53/2023 which entered into force on July 6, 2023 and takes effect retroactively beginning May 1, 2023. This law transposes EU directives 2019/1158 (work/life balance) and 2019/1152 (transparent and predictable working conditions) into national law.

Effective 1 May 2023, once the initial and extended leaves are used, each parent will be eligible for an additional 90 days of paid parental leave if this leave is combined with part-time work at 20% of their salary, paid through Social Security, in addition to their part-time salary.

If a parent taking leave becomes physically or mentally incapacitated, the other parent can take the leave that the incapacitated parent was entitled to. If the mother becomes physically or mentally incapacitated or dies, the father is entitled to at least 30 days of leave.

A working grandparent is entitled to 30 days of paid leave upon the birth of a grandchild if the parent of the grandchild is under the age of 16 and resides in the grandparent’s home.

Employers must allow parents of children under the age of 3 to telework if such work is compatible with the employee’s duties.

Maternity leave is borne by social security.

Paternity Leave

Fathers are allowed to share maternity leave with mothers. See Maternity Leave for additional provisions.

From May 2023, the father’s exclusive initial parental leave benefit is increased from 14 days to 28 days. The first seven days must immediately following birth, and the remaining 21 days must be used within 42 days of the end of the initial seven day period. This change is pursuant to Decree-Law no. 53/2023 which entered into force on July 6, 2023 and takes effect retroactively beginning May 1, 2023.

Sick Leave

Employees who have worked and made contributions to the social security system for at least six months and worked at least 12 days in the four months before the illness, are entitled to sick leave at partial pay.

Under the national health care system, employees are also entitled to medical benefits, subject to some cost sharing, that include general and specialist care, maternity care, hospitalization, surgery and listed medicines.

For the first 90 days of sick leave, the social security system pays employees 65 percent of their average earnings. For the 91st to the 365th day of sick leave, the rate increases to 70 percent, and thereafter the rate is 75 percent. The rate is higher for employees who are diagnosed with tuberculosis. In cases of TB, employees who have up to two dependent family members receive 80 percent of average pay; those who have three or more dependent family members get full pay. The sick leave benefit in most cases starts after a three-day waiting period. The waiting period is waived in cases of hospitalization, tuberculosis or childbirth. The maximum duration of sick leave is 1,095 days (three years). There is no time limit with respect to benefits for cases of tuberculosis.

Other Leave

Adoption leave. Employees who adopt a child are entitled to the same benefits as birth parents. From May 1, 2023, all adoption leave benefits also apply to new foster parents.

Personal leave. Employees are also entitled to the following types of personal leave:

• Death of a family member: Effective Jan. 4, 2022, employees are entitled to up to 20 days of paid leave following the death of a family member.
• Family care: Employees are entitled to 30 days of paid leave per year to provide urgent and essential care for a family member younger than 12, 15 days to provide assistance to an older family member.
• Marriage: Employees are entitled to 15 consecutive days of paid leave after they get married.
• Child care: Parents who have been employed and made contributions to the social security system for at least six months and want to stay home to care for a child younger than 7 years old have the following child care options:

three months of paid parental leave,

a half-time work schedule for 12 months, or

a combination of leave and reduced schedule that results in a total period of three months of leave.

Remote Work. From May 2023, employees living with a disabled child or a child under three years of age are entitled to request a reasonable telework arrangement, dependent on their type of work and their employer’s ability to accommodate the request.  This change is pursuant to Decree-Law no. 53/2023 which entered into force on July 6, 2023 and takes effect retroactively beginning May 1, 2023. This law transposes EU directives 2019/1158 (work/life balance) and 2019/1152 (transparent and predictable working conditions) into national law.

Pensions and Social Security

Old-age pension benefits can be collected at age 66 years and five months for most workers with a minimum of 15 years of contributions. Some workers—such as miners, longshoremen, fishermen, air traffic controllers and dancers—are entitled to old-age benefits at a younger age, but these special systems are being gradually unified with the general system. Early pensions at a reduced rate are available at age 63 with a minimum of 40 years of contributions. As of October 1, 2019, early retirement is available for beneficiaries who are at least 60 years old and with 40 or more years of contributions to social security.

Disability pension benefits are available to employees with a total permanent disability who have at least three years of contributions to the social security system and to workers with partial disability—those who have lost at least two-thirds of their earning capacity—who have at least five years of contributions.

The social pension is available to retirees age 65 and older who are not entitled to old-age pension benefits and to people with disabilities age 18 and older who are not entitled to benefits under any other contributory program. Entitlement to a social pension also requires that monthly family income be below a specified amount.

Workers’ Compensation

A compensable injury is defined by Portuguese law as any bodily injury, functional disorder or disease caused by work activity that directly or indirectly results in a reduction in work or earning capacity or in the death of the employee. The employer is responsible for both medical and treatment payments, as well as monetary compensation for disability, death or pain and suffering and is required to carry insurance to cover such expenses.

Employees who suffer from a work-related temporary total disability are entitled to 70 percent of their average daily earnings for the first 12 months of disability and 75 percent thereafter until either full recovery or certification of permanent total disability. Those who suffer from a temporary partial disability get a daily allowance of 70 percent of their lost earning capacity.

Benefits for employees whose work-related disability permanently prevents them from engaging in their usual profession range from 50 percent to 70 percent of their average daily earnings, depending on their residual earning capacity. Employees whose disability permanently prevents them from performing any work are entitled to 80 percent of their average daily earnings plus an additional 10 percent for each dependent up to a total of 100 percent. In the case of a death, the survivor receives a lump sum payment equal to 12 times the social benefit index.

During the rehabilitation period, the employer must adjust the employee’s duties and/or work station to accommodate the disability and provide vocational training. If an employee is permanently disabled, the employer must provide part-time work, time off for training or a new job.

Reference Citations

Vacation: Labor Code, 2009 (as amended), art. 238

Holidays: Labor Code, 2009 (as amended), arts. 234, 268

Maternity Leave: Labor Code, 2009 (as amended), arts. 40-47

Paternity Leave: Labor Code, 2009 (as amended), arts. 40-43

Sick Leave: Sickness Allowance

Other Leave: Labor Code, 2009 (as amended), arts. 49, 51, 131, 249 (Portuguese)

Workers’ Compensation: Workers’ Compensation Law, 2009, No. 98

Labor Relations

In General

The Portuguese Constitution expressly guarantees workers the right to form and join unions, and discrimination against employees because of union membership is expressly barred.

Right to Organize

Trade unions are independent organizations responsible for defending and fostering the rights and interests of the employees they represent by participating in the development of labor legislation, negotiating collective bargaining agreements, lobbying for changes in working conditions, providing services to their members and performing similar duties. Unions must be independent of any sponsorship or interference by the state, religious institutions, political parties or other associations. Officers must be elected by secret ballot in accordance with the bylaws of each trade union and are entitled to normal union protections as well as protection from interference with the performance of their duties. Trade unions are seen as much more antagonistic than workers committees and works councils and are specifically given the ability to call strikes to achieve their goals.

Workers committees have many of the same objectives as trade unions. They range in size from two to 11 members, depending on the size of the company, and members are elected by direct and secret ballot. If the company has workplaces that are geographically dispersed, workers can form subcommittees of between one and five members at the various locations. The committees’ duties include overseeing collective bargaining agreements and budget plans and monitoring management. Management is required to provide committees with information such as the business’s general plans, budget, financial situation and methods of financing and must consult with the committees on such things as changes in criteria for job classifications and promotions, restructuring plans and plans to close the company. Workers committees are essentially part of the company and act much like an association of shareholders, keeping watch over the company’s labor relations.

Works Councils

European works councils are groups sanctioned by the European Union to ensure member states are protecting worker rights as outlined in EU legislation. Employees in companies that have at least 1,000 workers within the EU member states and at least 150 workers in each of two member states are entitled to set up a works council. Councils have the right to be informed and consulted on major changes in the business, such as the introduction of new working methods and production processes, mergers, layoffs and closings, as well as on the financial condition of the company, and must be provided an annual report that provides details on these and other topics.

Dispute Resolution

When one party presents a written proposal for a new collective agreement or the alteration of an existing agreement, the other must respond within 30 days to accept the proposal, reject it or offer a counterproposal.

Conciliation: If an agreement cannot be reached between unions and employers, whether about collective bargaining or other workplace disputes, the parties can engage in a conciliation process. Both parties can agree to conciliation or one of the parties can request it if the other has failed to respond to a collective agreement proposal.

The parties can ask the Ministry of Labor and Social Solidarity to conduct the conciliation or they can employ an outside body. If an outside entity is used, the Ministry of Labor must be informed about the process at the beginning and the end. If an agreement still cannot be reached, both parties can request mediation or one of the parties can request it within one month of the commencement of conciliation by written notice to the other party.

Mediation: A dispute that is not settled through the conciliation process moves on to mediation. Like conciliation, mediation can be conducted by the Ministry of Labor and Social Solidarity or by other parties. If the request is made to the Ministry of Labor, it will appoint a mediator, who has 30 days to submit a proposal to both parties. If both parties do not agree to the mediator’s proposal within 10 days, the mediation will be deemed rejected.

The parties can also ask the minister responsible for their industry sector to conduct the mediation. In this case, the Ministry of Labor still must be informed about the process at the beginning and the end.

Voluntary arbitration: At any point in a labor dispute, the parties can agree to go into voluntary arbitration. If they cannot agree on how the arbitration is to be conducted, the law requires that three arbitrators be appointed, one by each of the parties and a third by these two. The parties must inform the Ministry of Labor about the proceedings at the beginning and the end. If an agreement is still not reached, compulsory arbitration is the last step.

Compulsory arbitration: Compulsory arbitration takes place upon order of the Ministry of Labor and Social Solidarity after hearing from the parties and regulatory and supervisory bodies for the parties’ industry sector. In deciding whether to require arbitration, the ministry will take into consideration the number of workers and employers involved, the relevance of providing social protection for the workers involved, the social and economic effects of the dispute and the positions of the parties. Employees or employers can activate compulsory arbitration if no new collective agreement is reached within 12 months after the previous agreement has expired. The arbitrators are appointed in the same way as voluntary arbitration. A decision issued in a compulsory arbitration proceeding has the same effect as a collective bargaining agreement.

An expired collective bargaining agreement remains in effect while the parties go through the conciliation, mediation and/or voluntary arbitration process. If after 18 months no agreement is reached, the collective agreement will continue in effect 60 more days, and the dispute must be reported to the Ministry of Labor and Social Solidarity, which may require compulsory arbitration or allow the agreement to expire. The Labor Code places a 6 ¹ / ₂ year time limit on successive renewals that occur upon expiration.

Strikes and Lockouts

Employees have the right to take industrial action in the form of strikes. During strikes, employers are prohibited from employing replacement workers or from contracting work out to other firms except to provide essential public services—such as mail, medical, water and electricity and firefighting—or to ensure the continued safety and maintenance of equipment and facilities. Employee representatives are obligated to work with the employer to provide enough workers to maintain essential public services. The government may end strikes that involve essential public services, but rarely has done so.

Lockouts are prohibited by the Portuguese Constitution.

Successorship Clauses

In cases where a business is sold or transferred, the successor employer becomes responsible for its predecessor’s rights and duties towards the employees under the collective agreement for at least one year.

Reference Citations

Right to Organize: Labor Code, 2009 (as amended), arts. 404, 417, 433

Works Councils: Labor Code, 2009 (as amended), art. 404

Dispute Resolution: Labor Code, 2009 (as amended), arts. 492, 507-508, 526-528

Strikes and Lockouts: Labor Code, 2009 (as amended), arts. 530-537

Successorship Clauses: Labor Code, 2009 (as amended), art. 498

Safety, Health and Security

In General

Employees are entitled to carry out their work in conditions that are safe, hygienic, and healthy. Workers have the right to remove themselves from situations that endanger health or safety without jeopardy to their employment.

Workplace Safety and Health

Employers are obligated to organize occupational safety, hygiene and health activities aimed at preventing occupational risk and safeguarding the health of their employees. They are to do this by:

• planning and organizing the prevention of occupational risks;
• eliminating accident and risk factors;
• assessing and controlling occupational risks;
• informing, training, consulting and involving employees and their representatives and
• promoting and monitoring employees’ health.

In the Labor Code, there is an extensive list of employer obligations that must be met to guarantee that employees’ working conditions are safe, hygienic and healthy, including taking steps to provide a more ergonomic workplace, organizing work in such a way as to eliminate the adverse effects of monotonous and repetitive activity on employees’ health and giving collective protection measures priority over individual protection measures. The law provides employers with a large degree of discretion when applying the various safety standards to the workplace.

Workers’ representatives oversee the implementation and regulation of health, safety and hygienic standards in the workplace and are responsible for reporting infractions to the appropriate authorities. Employers must keep records of existing protections in the workplace, which are subject to review at any time.

Drug and Alcohol Use

Smoking is banned in the workplace.

Reference Citations

Workplace Safety and Health: Labor Code, 2009 (as amended), arts. 127, 281

Drug and Alcohol Use: Law on Tobacco Products, 2007, No. 37, art. 4 (Portuguese)

Termination

Termination by Employer

The concept of “at-will” employment does not exist under Portuguese labor law, and the constitution bars dismissals without just cause or for political or ideological reasons.

The Labor Code defines “just cause” for dismissal as wrongful conduct by the employee serious enough that it makes the continuation of the employment relationship impossible. The burden of proof lies with the employer, which must prove that the worker meets one or more of the following criteria for dismissal:

• insubordination;
• violation of the rights of other employees;
• repeated provocation of conflict with other employees;
• repeated disregard for the obligations inherent in the employee’s work or position;
• serious damage to the financial interests of the employer;
• false justification of absences or excessive unjustified absences;
• willful disregard for health and safety rules;
• physical or verbal abuse or other offenses punishable by law with regard to other company employees, officers or directors or the individual employer, its agents or representatives;
• noncompliance with or opposition to legal or administrative decisions or
• abnormal decreases in productivity.

The Labor Code lays out various other lawful reasons for ending an employment relationship—such as the expiration of an employment contract, termination of a contract by agreement between employer and employee, layoffs, dismissal when a worker is found to be unsuitable for a job—each having its own requirements and procedures.

In order to dismiss an employee for cause, the employer must provide the individual with a statement of intention to dismiss and with evidence of misconduct. The employee has 10 days to respond. The employer then holds probative proceedings, upon completion of which it submits the case to the works council (if there is one) and the trade union (if the employee is represented by a union), which have 10 days to respond. The employer then has 30 days to decide whether to retain or terminate employment. Within five days of termination, an employee can ask the Labor Court for an injunction to temporarily suspend the dismissal and has two months following receipt of the notice of dismissal or the date of termination, whichever is later, to challenge the termination in court.

The court will rule a dismissal of any kind unlawful if it is determined that the employer did not follow proper protocol for dismissal or provided insufficient evidence to warrant termination.

If a court determines that the dismissal was unlawful, the employer must compensate the employee for pecuniary and nonpecuniary damages, reinstate the employee to his or her previous position and pay the employee’s full salary from the time of the dismissal to the date of the Labor Court’s final decision.

If the court determines that the employer had substantive grounds for terminating the employee but failed to follow proper procedures, the employee is not entitled to reinstatement but is entitled to half the compensation he or she would have received if termination were found to be unjustified and the employee had requested compensation in lieu of reinstatement.

If an employee asks for compensation instead of reinstatement, the court may decide to award an amount between 15 and 45 days of pay and service bonuses for each year of the employee’s service to the company.

The employer can also request that it be allowed to pay the unlawfully dismissed worker compensation in lieu of reinstatement, but only if the person was in administration or management and the company can show that his or her return would seriously harm the operation of the business. If the court grants the request, it will award the employee an amount between 30 and 60 days of pay and service bonuses for each year of service to the company.

Employers seeking to terminate the indefinite contract of an individual employee for economic reasons must provide the employee between 15-75 days of notice prior to the termination depending on the employee’s length of service. Employers must provide employees on fixed contracts 30 days of notice if the employees’ contract term is at least six months and 15 days if the employees’ contract term is less than six months.

Whistleblowing. Employers in Portugal with 50 workers or more must install and operate a whistleblowing program for employees to report work-related and business infractions. Under the law, effective June 18. 2022, the definition of a whistleblower extends to service providers, contractors, subcontractors, suppliers, shareholders, volunteers, and interns. The law transposes the EU Directive on Whistleblowing into national law.

Termination by Employee

An employee is required to give 30 days’ notice of termination of a contract if he or she has up to two years of service, 60 days with more than two years of service. An employee can immediately terminate a contract if there is just cause due to the following types of conduct by the employer:

• failure to pay wages in a timely fashion,
• violation of a worker’s legal rights,
• application of abusive penalties,
• poor workplace safety and health conditions,
• serious harm to the worker’s financial interests,
• physical harm to the employee or
• criminal harm to the morality, freedom, honor or dignity of the worker.

An employee can also terminate an employment contract for cause if he or she has a legal obligation that conflicts with the continuation of the contract or if the employer makes substantial changes to working conditions.

The employee must inform the employer of the termination of the employment contract and the reasons for it within 30 days of learning of the situation that justified the termination. In cases in which the termination is caused by an employer’s wrongful conduct, the employee is entitled to compensation of between 15 and 45 days of pay and service bonuses for each year of service.

The employer can challenge the termination of the contract in court during the 12 months following the termination. If the employer wins the case, the employee must compensate the employer in an amount at least equal to his or her base pay and service bonuses for the proper amount of notice the employee would have been required to give.

Plant Closings and Mass Layoffs

Under the Labor Code, a collective dismissal occurs when the employer terminates, either simultaneously or within a period of three months, the contracts of employment of:

• at least two workers if the employer has less than 50 workers or
• at least five workers if the employer has at least 50 workers.

Employers intending to carry out a mass layoff must follow specific procedures, beginning with informing and consulting with either the employees’ representatives or the employees themselves about the potential job cuts. The labor authority also must be notified.

This period is followed by a negotiation stage during which a representative of the Ministry of Employment must be present. Within 15 days after the initial communication with employees, the employer must notify each employee, in writing, of its final dismissal decision, indicating the reasons for the dismissal and the date of termination.

Payment on Termination

In the case of terminations for just cause, for labor contracts signed after Nov. 1, 2011 and for all work performed after Oct. 31, 2012, employers must provide employees with undefined contracts with the equivalent of 18 days of pay for every year of service for the first three years and 12 days of pay for each year of service after the first three years. For defined contracts, employers are required to pay employees 18 days of pay for each year of service. Employers must provide employees with one month of pay for every year of service up to Oct. 31, 2012, for labor contracts signed before Nov. 1, 2011.

Employers that terminate employment contracts without just cause must compensate employees with the equivalent of 15 to 45 days of pay for each year of service, depending on the degree of the infringement. Additionally, when there is a court order for reinstatement due to unlawful dismissal, employees may request between 15 to 45 days of pay in lieu of reinstatement.

Unemployment Insurance

There are two types of benefits, the regular unemployment benefit and the unemployment social benefit. The social benefit is available to those who do not qualify for or have exhausted the regular benefit.

To qualify for unemployment benefits, a worker must have been laid off or fired, must be registered with an employment office and must still be capable of and available for work. To get the regular unemployment benefit, the worker must have made contributions to the social security system based on at least 360 days of employment during the 24 months prior to unemployment. To get the social benefit, the worker must have made contributions based on at least 180 days of employment during the 12 months prior to unemployment.

Reference Citations

Termination by Employer: Labor Code, 2009 (as amended), arts. 114, 363, 371-385

Termination by Employee: Labor Code, 2009 (as amended), arts. 400-401

Plant Closings and Mass Layoffs: Labor Code, 2009 (as amended), arts. 359-363

Payment on Termination: Labor Code, 2009 (as amended), arts. 344, 391

Personal Taxes

Residency Requirements

Anyone who lives in Portugal for 183 days or more in a year is considered a tax resident.

Taxable Income

Residents are liable for taxes on worldwide income, nonresidents only on income earned in Portugal.

Tax Rates

Foreign workers generally are subject to a flat tax of 25 percent for employment income, business income and professional income.

Resident employees are taxed on a progressive scale ranging from 14.5 percent to 48 percent depending on their annual income.

In addition, a solidarity tax is charged at the following rates:

• 2.5 percent on income above 80,000 euros but not exceeding 250,000 euros and
• 5 percent on income above 250,000 euros.

Social security contributions vary widely, depending on the type of employer and employee. For general workers at for-profit organizations, the employers must make social security contributions of 23.75 percent of employee salary, and employees must make social security contributions of 11 percent.

Reference Citations

Residency Requirements: Income Tax Code, 1988, No. 442-A, art. 16 (Portuguese)

Web References

In Portuguese unless otherwise noted.

Law and Regulation

Constitution of Portugal (English)

Labor Code

Workers’ Compensation Law