Requirement for Foreign Employees to Work

A general principle foresees that expatriates working on work permit are granted equal rights and obligations as national employees. Written form is required for employment contracts with expatriates working on work permit (non-EU). The employer’s contract copy must have a copy of documents attesting compliance with legal obligations on the entry and residence of the foreign employee in Portugal duly attached to it. Moreover, the contract must include information on the employee’s residence visa or work permit required to carrying out a professional activity as employee in Portugal. The employee must also attach to the contract the identification and address of the legal beneficiary(ies) in the event of death resulting from work accident or occupational disease. In addition, the employer must communicate to the Portuguese labour authorities, through electronic form:

• the execution of the employment contract prior to the beginning of its entry into force;
• the contract’s termination, within 15 days upon termination.

In accordance with the law, companies must assure the candidate holds a residence visa or permit specifically granted for carrying out a professional activity as employee in Portugal. In cases where the employer has the intention to employ a foreign citizen (non-EU) currently living abroad, a statement confirming that the employment offer is included in the legal defined quota or that no quota has been set and that no preferential candidate (Portuguese, EU citizen) was found to perform the job shall be issued by the Portuguese Institute of Employment and vocational training and delivered to the candidate for submission together with the visa request. For the same purpose, the employer shall also provide the candidate with an employment contract or promise of employment contract.

Hiring a foreign employee who does not hold a residence visa or permit for carrying out a professional activity as an employee in Portugal may trigger an employer misdemeanour and in addition an order to suspend the employer’s activity may be issued for a time length of between 3 months up to 5 years. In setting annual overall quota of job opportunities available for non-EU citizens, the Portuguese Government may exclude sectors or activities where labour is not considered as needed; however, no quota has been set since 2009.

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

Foreign employers are not necessarily required to establish or work through a local entity to hire employees.

From a corporate perspective, and as a rule of thumb, if engaging local employers means that the foreign employer is intending to exercise its business activity in Portugal for more than one year, then a local permanent representation should be incorporated, adopting  the form of subsidiaries or branches.

In addition to the permanent establishment issues – and the interconnected corporate tax issues – having employees working from Portugal will, nevertheless, trigger new procedures and obligations that require measures to be taken with regards to: i) accident at work insurance; ii) social security benefits and contributions; and iii) employee income tax issues.

Limitations on Background Checks

There are some legal restrictions on conducting background verifications on job candidates and employees such as drug tests, financial and credit checks, criminal checks, academic qualifications or previous employments.

In what concerns the selection process, for example, there are some legal restrictions on information that may be sought in candidate screening, including information that the candidate may be asked to provide at an interview, during the hiring practices and in the employment agreement.

An employer is not allowed to request information on the candidate’s private life except for information that is strictly necessary or relevant to assess the candidate’s aptitude and abilities for the job. In such cases, the specific reasons for requiring such information must be provided in writing to the candidate by the potential employer.

The employer is also not allowed to request information about the candidate’s health or pregnancy, except when relevant in view of specific requirements imposed by the nature of the job role. Again, in such case, the potential employer must provide written information on such requirement to the candidate.

In this latter case, the information must be provided to a doctor who will merely inform the employer on whether the candidate qualifies or not for the job.

In what concerns the possibility of obtaining supporting documents such as previous employment contracts, educational certificates, past pay slips, and others, the screening of candidate supporting documents on previous employment experience and educational certificates may be requested from the candidate insofar as the information is relevant and not excessive for the purpose for which it is required.

Some legal restrictions also apply to conducting health checks and to selecting a candidate on the basis of health information.

In fact, except for general health exams that are specifically required to evaluate the candidate’s general physical and psychic conditions to exercise the role being engaged and to evaluate potential effects of the activity in question and working conditions on the employee’s health condition, the employer is not allowed to require any other health or medical tests or exam results from the candidate.

There are some exceptions, however, to this rule, namely:

• exams required for purposes of the employee’s own protection or safety or that of a third party; or
• exams justified by the specificities of the role / activity to be performed.

In both cases the potential employer must provide the candidate with due explanation, in writing, on the reasons for the additionally required tests or exams.

Under data protection laws, personal data must be maintained only for the period strictly required.

Restrictions on Application/Interview Questions

Restrictions or limitation on application or interview questions are in line with the above referred limitations on background check information, on information about the candidate’s private life and on the candidate’s health or pregnancy.

The Portuguese Labour Code requires employers to keep the following information on recruitment processes launched, disaggregated by gender of candidates, for a period of 5 years:

• invitations for available positions;
• employment-offer advertisements;
• number of candidates for Curriculum Vitae appraisal;
• number of candidates called for pre-selection interviews;
• number of candidates awaiting recruitment;
• admission or selection test results;
• social reports performed to assess possible gender discrimination in the access to job positions, training, promotions and work conditions.