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Employment contracts in Portugal
Employment Law Overview Portugal
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Employment contracts in Portugal

Minimum requirements

As a general rule, an employment contract is not subject to written form, although it is best practice to do so, not only for clarity and certainty regarding each party’s obligations, but also for compliance with information duties of the Employer.

 

There are exceptions to the general rule, and certain types of employment contracts have mandatorily to assume written form, such as:

  • Remote work employment contracts
  • Promissory employment contracts
  • Part-time employment contracts
  • Term employment contracts
  • Employment contracts entered into with foreign (i.e. non-EU Member State) employees – and prior work authorization in Portuguese territory must be requested
  • Employment contracts under a commission of service regime
  • Contracts for the temporary assignment of employees

The employer is obliged to observe a duty of information in relation to, amongst others, the following terms and conditions of employment:

  • Employer’s identity
  • Place of work
  • Employee’s job category
  • Date of execution of the contract and date on which it enters into force
  • Duration of the contract (if a term contract)
  • Remuneration amount, time and form of payment and a detailed description of its elements
  • Daily and weekly working time
  • Rules applicable to overtime work and shift organization
  • Applicable Collective Regulation Instruments (“CBA”), if any
  • Workman compensation insurance policy number and insurance provider
  • Deadlines and formal requirements for each contract termination forms or the criteria to determine them
  • Duration and conditions of the probationary period
  • Continuous professional training entitlement
  • Social protection regime
  • The parameters, criteria, rules and instructions on which algorithms or other artificial intelligence systems are based that affect decision-making on access to and retention in employment, as well as working conditions, including profiling and monitoring of professional activity.

 

In some circumstances, information can be replaced by a reference to the applicable legal provision or collective bargaining agreement.

 

The information must be given in writing and signed by the employer. The duty of information is considered fulfilled when it is, for instance, included in a written employment contract.

Fixed-term/Open-ended Contracts

The standard legal form of hire is the permanent employment contract.

 

Under a permanent employment contract, it is during the probationary period (only) that the employer enjoys maximum flexibility to evaluate whether the employment relationship should be maintained or terminated unilaterally without having to justify the decision and without having to pay the employee any compensation.

 

Term contracts are qualified as exceptional by law: and they can assume one of the following types:

  • fixed term employment contracts; or
  • unspecified duration term employment contracts.

 

As a general rule, the possibility to hire employees under term employment contracts is confined to situations resulting from a temporary need of the employer and the duration of the contract is limited to that of the need in question.

 

The Labour Code lists the situations which are considered temporary needs for term employment purposes.

 

In addition to temporary needs, term employment contracts may also be executed in case of:

 

  • launching of a new business activity or the incorporation or commencement of operation of a company or undertaking with less than 250 employees, over a period of two years following the launching of a new business activity, incorporation or commencement of operation
  • hire of very long-term unemployed workers (as defined by law).

 

The validity of a term employment contract also depends on its execution in writing, with express reference to the terms and conditions mentioned in the Labour Code, namely its duration, grounds and connection between the duration and the indicated grounds.

 

A fixed term employment contract’s duration is subject to three simultaneous limitations:

  • it cannot exceed two years (including renewals), depending on the circumstances that justify the contract’s temporary nature
  • it cannot be renewed more than three times; and
  • the total duration of the renewals cannot exceed the initial period of duration of the contract

Unspecified duration term employment contracts are used when there is a temporary need to hire but it is not possible to foresee the length of the period during which it will endure, therefore the durations and termination date of this type of contract is not precisely determined in the contract. However, the total duration of this specific type of contract cannot exceed four years.

Trial Period

There are strict regulations governing probationary periods in Portugal, with specific maximum durations depending on the employee’s role.

 

For open ended employment contracts:

  • 90 days: standard probation period applicable to most employees
  • 180 days: applies to employees in roles requiring technical complexity, high responsibility, special qualifications, or those in positions of trust, as well as first-time job seekers or long-term unemployed individuals
  • 240 days: reserved for employees in senior management or directorial positions

 

For term employment contracts:

  • 30 days if the contract’s duration is equal to or exceeds 6 months
  • 15 days: if the contract’s duration does not reach 6 months (or, in case of term contracts for an unspecified period and the foreseeable duration of the contract does not exceed 6 months)

 

If the employer fails to inform the employee about the probationary period’s duration and conditions, it is assumed that the probationary period has been waived.

 

Once the probationary period ends, the employer can only terminate employment in accordance with legal requirements, adhering to the principle that prohibits termination without just cause.

 

For probationary periods exceeding 60 days, the employer must provide a minimum of 7 days’ notice for termination. If the probationary period extends beyond 120 days, a 30-day notice period is required for lawful termination by the employer.

Notice Period

Termination of employment in Portugal is governed by the constitutional principle that prohibits employers from unilaterally terminating employment without just cause. Termination is permitted only under the following conditions:

 

  • Objective Just Cause: Based on market, technological, or structural reasons impacting the company’s operations
  • Subjective Just Cause: Based on an employee’s breach of legal or contractual duties

 

In all cases, termination must comply with the material and procedural requirements set out in the Portuguese Labour Code and these rules are mandatory.

 

Notice Periods for Objective (Economic based) Terminations

 

For terminations based on objective (economic) grounds, employers must observe the following minimum notice periods (after the implementation of the correspondent legal proceeding and when the final decision is issued and handed to the employee), which vary based on the employee’s length of service:

 

  • 15 days: For employees with less than one year of service
  • 30 days: For employees with one to five years of service
  • 60 days: For employees with five to ten years of service
  • 75 days: For employees with more than ten years of service

 

Dismissals for Disciplinary Reasons

 

No notice period is required for dismissals due to disciplinary causes. The dismissal takes effect immediately once the employee is formally notified, following the completion of the mandatory disciplinary procedure.

 

Fixed-Term Employment Contracts

 

For fixed-term contracts, if no renewal is agreed upon and no notice is given by either party, the contract will automatically renew for an equal period. Termination of such contracts requires written notice:

 

  • Employer: Must provide at least 15 days’ notice
  • Employee: Must provide at least 8 days’ notice

 

Term Employment Contracts of Unspecified Duration

 

For contracts with an unspecified term, termination is permissible once the end date can be determined, with the following notice period:

 

  • 7 days: For contracts lasting less than six months
  • 30 days: For contracts lasting between six months and two years

60 days: For contracts exceeding two years

Any questions

Ask our member firm SRS Legal in Portugal