Social Security
by the Social Security System. Several sectorial compensation funds mostly incorporated during the second decade of the twentieth century and in a nationwide basis are at the origin of the Portuguese Social Security system. These insurance funds were included in the Social Security System in the 70s, giving rise to the unified Social Security System. However, the General Retirement Fund, established in 1929 to ensure the protection of civil servants, maintained its autonomy, allowing employees of public administration benefit from a special regime.
The employer and the employee are subject to social insurance contributions, which must be paid on a monthly basis. The global contributory rate is 34.75% of the contribution base. The employer is in charge of 23.75% and the employee of 11%. Nevertheless, the employer has to deduct the employee’s contributions from its gross wage and to deliver them to Social Security. Civil servants have a specific welfare protection scheme also subject to compulsory contributions.
At the same time, the scope of social protection granted to dependent employees covers the events of sickness, parenting, unemployment, professional illnesses, invalidity, old-age and death as well as a payment of an additional 1% must be contributed for the Work Compensation Funds (Fundo de Compensação do Trabalho and Fundo de Garantia de Compensação do Trabalho). The employer may bear the costs of contributing either under a public capitalisation scheme or under a supplementary scheme for voluntary personal insurance (in the form of pension savings plans, life assurance, etc.) to any particular employee or group of employees.
Furthermore, there is a public capitalisation scheme under which one can voluntarily complement its old-age pension amount through the payment of additional contributions during working age, that are converted into retirement certificates. The due value of contribution may be 2.4 or 6% (the latter only if the subscriber is over 50 year old) of the contribution base (as settled out in the context of compulsory contributions), according to the subscriber’s choice.
The total amount of contributions and income generated by the capitalisation will be available at the date of the subscriber’s retirement, who may also choose to convert it into an annuity or to transfer it to children or spouse, if they are subscribers too.
In general, the contribution base comprises all the remunerations, whether in money or in kind, paid to an employee in exchange for the work rendered, as established in the employment agreement, in the collective bargaining agreement, law or practices (i.e. base remuneration, seniority payments, holiday and Christmas allowances). At the same time, bonuses paid are also reflected in the contribution base if frequently paid every five years or less and the employee is entitled to receive them in accordance with objective and general criteria. The law expressly excludes some benefits from the contribution base, such as values assigned to complement social security benefits, family benefits or reimbursement of medical expenses.
The Social Security System covers (i) sickness, (ii) maternity, paternity and adoption, (iii) unemployment, (iv) professional diseases, (v) disability, (vi) old age and (vii) death.
24 hours before the employment agreement takes effect, the employer shall report the hiring of the employee and the main contractual terms to the Social Security Office through its official website (Segurança Social Directa). The employer must also inform on the termination or suspension of the employment agreement and respective main reasons, as well as on any change on the agreed type of contract (permanent or fixed-term, part-time, and others.)
The employee is deemed to have started rendering work on the sixth month preceding the infringement’s date. This assumption is rebuttable if the employer gives evidence of the date in which the employee actually started to render work. The employee is considered to continue to render work to the employer while the Social Security Office is not informed on the termination or suspension of the employment contract, thus continuing the duty of paying compulsory social contributions.
Once the employer reports the hiring of a new employee to the Social Security Office the following main obligations arise and must be complied with on a monthly basis and regarding each employee: (i) reporting the remuneration that comprises the contribution base, the working time, and the applicable contributory rate; (ii) payment of the value due as mandatory contributions, borne out by the company (23.75%) and the employee (11%): the deadline for payment is between the 10th and 20th of the month after the one with which the contributions refer to.
Healthcare and Insurances
The employer does not have a duty to provide any specific fringe benefits to an employee, such as health insurance, life insurance, etc. In a number of cases, nevertheless, this type of benefit is established in collective bargaining agreements and will be required and apply accordingly. Some companies also provide these benefits under agreements individually agreed to with employees, or certain groups of employees, or in accordance with benefit policies issued and adopted by the company or group of companies, to which the employer belongs. If provided, those fringe benefits may, in some cases, be subject to social security contributions paid monthly by the employer and employee. All employers are required to retain insurance for the protection of employees against work related accidents.
Required Leave
Holidays and Annual Leave
Employees are entitled to 22 business days of paid vacation per year. In the case of temporary contracts lasting up to 6 months, the employee is granted 2 working days of holiday for each completed month of service, and in the case of those lasting up to 12 months or ending in the year subsequent to the year of hiring, the employee is entitled to a holiday leave period proportionate to the duration of the contract.
Maternity and Paternity Leave
Parental leaves granted for the birth of a child are provided under Portuguese law. These may be shared between the parents (in which case the total parental leave period may be 180 days). The mother may also enjoy up to 30 days of the parental leave before delivery.
The employed mother will, in any case, be entitled to a minimum mandatory period of leave (six weeks following the birth).
The father has a specific mandatory paternity leave of 15 days, to be used in the 30 days following birth (5 such days must be used immediately following the date of birth).
In case of adoption of a child under the age of 15, the adopting employee has the right to a license equal to the Initial Parental Leave.
The father and mother are entitled to supplementary parental leaves for child care (no more than 6 years of age).
The father and mother can enjoy any of the following types of regimes consecutively or up to 3 interpolated periods. One parent may not overlap his/her right with the other parent’s right. During the enjoyment of any of the following, the employee cannot carry out employed work for other entities or activities that implies absence from his usual residence:
- extended parental leave for 3 months;
- part-time work for 12 months, with a normal working period equal to half the full time;
- interim periods of extended parental leave and part-time work (the total duration of absence must be equal to the normal working period of 3 months);
- interpolated absences from work with a duration equal to normal working periods of up to 3 months, if they are provided for in a collective labour regulation instrument.
The employee who wishes to enjoy any of the above must inform the company in writing at least 30 days in advance. After the right referred to above has been exhausted, the parents are entitled to childcare leave, on a consecutive or interpolated basis, up to a maximum of two years. In the case of a third child or more, the leave is limited to three years.
Parents are entitled to leave of up to six months, extendable to four years, to care for a child with a disability, chronic illness or cancer. If the child with a disability, chronic illness or cancer is 12 years old or older, the need for assistance needs to be confirmed by a medical certificate.
Parents of children affected by a disability or chronic illness, under one year of age, are entitled to a five-hour reduction in the normal weekly working period, or other special working conditions, to care for their child. This right shall not be exercised if one of the parents is not engaged in a professional activity, and is not prevented or totally inhibited from exercising parental responsibility.
An employee with a child under the age of 12 or, regardless of age, a child with a disability or chronic illness, provided that they are part of the same household, is entitled to work part-time or to work flexible working hours, which may be exercised by either or both parents.
Sickness and Disability Leave
Employees are entitled to receive a sickness allowance from the social security system when temporarily unable to work due to illness. The sickness leave suspends the employment contract as of 30 days and has no maximum period.
Employees have the obligation to communicate absences due to sickness as soon as possible and may be required to present medical documentation attesting the sickness (employer may request medical, hospital or health service declaration within 15 days from the communication of absence). The employer may also ask for documentation to verify temporary or permanent incapacities related to the employee, who is on sick leave
The employer must continue to pay the salary during the first 3 days of absence, after which, payment of the sickness allowance falls to Social Security. Most employees are entitled to 1095 days of paid sick leave, independent workers and research fellows to 365 days of paid sick leave. The amount of the sick leave allowance depends on several factors and will range between 55% and 100% of the worker’s reference remuneration.
There are two types of disability leave and benefits in Portugal: 1) Disability pension and 2) Special protection in disability. The disability pension is a benefit attributed to persons who are permanently incapacitated for work. The permanent incapacity can be partial – the beneficiary cannot obtain an amount corresponding to more than a third of his remuneration from the normal exercise of his profession, and is presumed not to be able to recover within 3 years from the corresponding sickness or accident leave, more than 50% of the remuneration – or absolute – definitively and permanently incapacitated for any occupation or work where the beneficiary does not have remaining earning capacity, nor is he/she expected to recover before reaching the legal age for retirement.
The special protection in disability is aimed at people who are incapacitated for work with a prognosis of rapid evolution, to a situation of loss of autonomy with a negative and irreversible impact on the profession they carry out, caused by specific diseases (familial paramiloidosis, Machado-Joseph disease, AIDS – virus human immunodeficiency virus (HIV), multiple sclerosis, cancer of the skin, amyotrophic lateral sclerosis, Parkinson’s disease, Alzheimer’s disease and rare diseases or other diseases of non-professional or third party liability, sudden onset or early onset).
Any Other Required or Typically Provided Leave(s)
After the right to a supplementary parental leave has been exhausted in any of the aforementioned modalities, the parents are entitled to leave for childcare. This license can be taken consecutively or interpolated and lasts for a maximum of 2 years or 3 years, in the case of up to 2 children or more, respectively. During the enjoyment of this license, the employee cannot carry out any work activity for other employers or activity that implies absence from his usual residence.
Parents are entitled to leave for up to 6 months (extendable up to 4 years) for assistance to a child suffering from disability or chronic illness. If the child is 12 years of age or older, the need for assistance must be confirmed by medical certificate.
Other licenses or leaves of absence are provided for in the following situations:
- exemption from work by a pregnant or breastfeeding employee, in order to protect her safety and health;
- waiver for prenatal consultation;
- exemption for evaluation for adoption;
- waiver (reduction of working hours) for breastfeeding;
- waiver from some forms of working time organisation;
- exemption from the provision of overtime;
- exemption from night work.
Pensions: Mandatory and Typically Provided
The typically provided pension, besides those previously mentioned for illness and disability cases, is the old-age retirement pension, which is comprised of a monthly amount paid to protect the beneficiaries of the general social security scheme, in the old-age situation, replacing the remuneration of work. In 2018, the retirement age was set at 66 years and 4 months, and has increased by one month for 2019 and 2020, being 66 years and 5 months.
In 2021, it is set at 66 years and 6 moths. If the person in question is younger than the aforementioned ages, they may be eligible for one of the following: i) early retirement due to long-term unemployment; ii) early retirement under the age flexibility scheme; and iii) special schemes for anticipating the age of access to the old-age pension – exercise of activity in certain professions. In general, employees must have a minimum of 15 calendar years of work with records of remunerations, or 144 months with records of remuneration – beneficiary covered by voluntary social insurance.
