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Hiring practices in Portugal
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Portugal

Hiring practices in Portugal

Requirement for Foreign Employees to Work

In Portugal, foreign employees authorized to work in the country have the same rights and obligations as Portuguese citizens.

Notwithstanding, non-EU/EEA nationals or those from countries without reciprocal agreements must comply with specific and additional requirements.

Employment contracts for these employees must follow specific formalities, such as the inclusion of a copy of their residence visa or work permit details and information regarding beneficiaries in case of death deriving from a work-related accident.

Hiring foreign workers without valid permits can lead to fines of up to €10,000, bans on certain business activities, and the need to repay public benefits (if any). Employers can also face criminal charges for facilitating illegal immigration or employment.

 

Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?

It is not mandatory to establish a local entity in Portugal to hire employees.

However, employing individuals based in Portugal will lead to specific obligations, including compliance with social security contributions and employee income tax requirements.

These obligations vary based on the particular circumstances of each case, and a detailed assessment should be conducted to address the specific legal, tax, and social security implications regarding not only the employee but also the Employer

Additionally, it is important to assess whether the hiring of employees could result in the creation of a permanent establishment (“estabelecimento estável”) for tax purposes, which could impose further corporate tax liabilities.

Limitations on Background Checks

In Portugal, employers are generally not allowed to request personal information about employees or job applicants, unless it is strictly necessary for assessing their suitability for the job and this necessity is clearly explained in writing. This principle is tied to privacy, equality and non-discrimination rights.

Background checks are commonly used in certain sectors like finance, healthcare, and government, where assessing integrity and qualifications is critical. However, background checks must comply with privacy regulations, particularly the GDPR, and some types of checks are only legally permitted under very specific conditions.

Usually, background checks are carried during the recruitment process, in order to gather more information about candidates and potential employees. However, it is also possible to run background checks during the effective labour relationship.

In Portugal, while various types of background checks are commonly listed, many are only legally permissible under specific conditions. Some of the most common background check elements are the following:

  • Academic Qualifications: Employers can verify education, but only request relevant qualifications related to the job.
  • Employment History and Reference Checks: Requires the candidate’s explicit consent and should not violate privacy or include discriminatory questions.
  • Criminal Record Check: Allowed only for roles where it is legally required, such as jobs involving children or financial positions, written justifications shall be provided to the employee.
  • Social Media Searches: Allowed, but only from public profiles and the collection of such information must considering the specific job position requirements.
  • Credit History Check: Typically used in finance roles but requires the candidate’s explicit written consent.
  • Medical Exams: Allowed if necessary for job safety or specific job requirements, but only with proper justification and adherence to data protection laws.

Drug and Alcohol Tests: Allowed when job safety and security of the employee or third parties is at stake.

Restrictions on Application/Interview Questions

There are clear limits regarding the type and range of questions an employer can ask a candidate during the recruitment process, namely, employers are prohibited from requesting information regarding a candidate’s private life (e.g. sexual orientation, gender identity, political beliefs, trade union membership) or health status, including pregnancy, unless exceptional circumstances apply.

Personal information can only be requested if it is objectively and reasonably necessary for the specific job role, and the employer must provide a written explanation to justify such inquiries. Candidates and employees retain full control over their personal data, with the right to know how it is used, access its content, and request corrections. Moreover, candidates have the right to withhold or provide inaccurate information if unlawfully asked inappropriate or discriminatory questions.

Any questions

Ask our member firm SRS Legal in Portugal