Portuguese employment law

Portugal’s employment legal system is governed by a combination of labor laws and EU directives. The Portuguese Labor Code is the principal piece of legislation that regulates employment relationships, setting out the rights and obligations of both employers and employees. It covers all aspects of employment, including contracts, wages, working hours, dismissals, and employee rights. In addition, collective bargaining agreements (CBAs) may apply to specific sectors or industries.

Key Points:

Employment Contracts: The general rule as regards the hiring of employees in Portugal is that employment contracts must be made for an indefinite period. The possibility of hiring employees under term employment contracts is, in principle, limited to situations of a temporary need of the employer and duration is limited to that of the need in question (with a maximum of 2 years for fixed term contracts and 4 years for contracts of unspecified duration).
Termination: Employment in Portugal is not strictly at-will. Termination of employment contracts are limited to certain causes expressly set out in Portuguese legislation (such as collective dismissal procedures, termination of a job position, or dismissal with just cause following a disciplinary procedure) and compensation for termination (when due) must follow specific rules
Minimum Wage / Payments: There is a national minimum wage – currently (2024) in the amount of €820. Employees are entitled to 14 monthly payments per year, including holiday remuneration, holiday bonus and Christmas bonus. Collective Bargaining Agreements may however foresee higher minimum salaries.
Social Security: Contributions to social security are mandatory in Portugal and are shared between employers and employees (as a rule 23.75% and 11%, respectively). The system provides coverage for various benefits, including retirement pensions, unemployment insurance, sickness benefits, and family allowances.
Workman Compensation Insurance: employers must take up workman compensation insurance (seguro de acidentes de trabalho) in relation to their employees, in order to cover damages that arise from work accidents or occupational diseases
Working Hours: The maximum legal working hours are 8 hours per day and 40 hours per week. However, flexible work arrangements, including exemption from working hours, teleworking and part-time work may be agreed upon by the parties.
Holidays / Paid Leave: Generally, employees are entitled to a minimum 22 working days of holiday per calendar year. Special rules apply in certain situations, such as: (i) during the first year of employment, (ii) if the contract is suspended, (iii) for contracts with a duration of less than six months, (iv) for contracts lasting under 12 months or terminating in the year following the employee’s admission and (v) upon termination of employment.
EU Directives: As a member of the European Union, Portugal must comply with EU directives concerning employment rights, such as anti-discrimination policies, working time regulations, and health and safety standards.