Guide to hiring employees in Portugal

Employee Benefits in Portugal

13th and 14th-month salary

In Portugal, as said before, employees are entitled to two extra salaries per year. One in June, and one in December popularly known as the Summer and Christmas salaries. There’s a need to sign a written agreement stating that both 50% of this salaries will be paid on the due dates and the rest will be paid 12 times, together with the monthly payment.

Basic insurance

It is mandatory for workers to contribute to Social Security in Portugal. Everyone that contributes is covered for healthcare, pension funds, unemployment aid and paid parental leave by the government.

Wage fund

Companies have to contribute 1% of each employee's gross income to the Working Compensation Fund of Portugal and the Working Compensation Warranty Fund. This contribution protects workers from risks related to not getting their salaries or other financial problems that their employers might have.

Compensation insurance

Compensation insurance covers workers for accidents at, on the way to and from work. The goal of the insurance is to give employees and their families additional coverage in case of death, permanent or temporary disabilities and more.

Types of leave available in Portugal

Paid time off

Paid time off is set on a fixed-term contract as a minimum of 22 days per year, after the completing the first year at the organisation.

During the first year of employment, workers may take up to 20 days of leave, that they accumulate as two days per month. That being said, if the contract starts in the first semester of the year, the employee is entitled to a eight day leave after completing his first two months in the company. If the calendar year ends before and the worker hasn't completed his first six months, the day can be extended until the end of June of the following year.

Sick leave

In order to be eligible to receive sickness benefits, employees must be working for at least six months in the company. They also need a note by a health certified doctor stating that they’re unable to work and for how long. Check out the times and amounts:

• out of work for up to 30 days, the employee is entitled to 55% of the payment
• out of work for between 31 and 90 days, the employee is entitled to 60% of the payment amount
• out of work for between 91 to 365 days, the employee is entitled to 70% of the payment amount
• out of work for more a full year, the employee is entitled to 75% of the payment amount

The maximum periods of time are:

• up to 1,095 days for coastguard, employed workers and
• up to a year for self-employed and scientific research grant holders.

Maternity leave

Expecting mothers will receive their full payment, paid by Social Security for 120 days. However, to be eligible, they have to be working at the organisation for a full year plus an 80 days period prior to the due date of birth.

Paternity leave

The compulsory paternity leave is for 20 days and the optional is five days. New fathers must use their benefit in the six-week period after the birth and also use five days straight after the child’s birth. The payment of this leave consider the average salary of the employee in the last six months.

Parental leave

After using the six weeks of maternity leave and twenty days of paternity leave, the couple can decide who takes and additional period of 78 or 108 days of leave. If the parents decide for a total of 150 days, they will receive 80% of their paychecks, and if they choose to get 120 days, they will get payed the full amount of their salaries.

Bereavement, marriage and care leave

In Portugal, in case of family bereavement, workers can have up to five consecutive days of paid leave. There is also a 30 day paid leave per year to care for a family member younger than 12 years of age or 15 days for an older family member. If the employee gets married, they get 15 consecutive days of paid leave.

Public holidays in Portugal

There are 13 public holidays in Portugal. Here’s the list:

• New Year’s Day - January 1
• Good Friday (Last friday before Easter)
• Easter
• Freedom Day - April 25
• Labor Day - May 1
• Portugal National Day - June 10
• Corpus Christi - 60 days after Easter
• Assumption of Mary - August 15
• Republic Day - October 5
• All Saints’ Day - November 1
• Restoration of Independence Day - December 1
• Immaculate Conception - December 8
• Christmas Day - December 25

Attracting talent in Portugal

Portugal has a very competitive labor market and because of that, organisations have to compete for the best talent. It’s the so-called “talent war”, when companies have to go all the way to attract and retain the best candidates. It starts with the hiring process and is a continued relationship. And although it makes a difference, offering money isn’t the only way to win it.

Companies are making a true effort to add value and challenges to their jobs. Remote working, referral bonuses, the possibility to take a personal time off whenever, and investments on employer branding are all great steps on how to win the talent war. It all comes together when the very best talent is up for grabs.

A solid benefits package is the way to go

One of the best ways to stand out is by offering a globally competitive benefits package. That can be a kicker in order to attract top candidates and retain the best talent available. A great package can include:

• Meal Vouchers
• Public Transportation Allowance
• Supplementary Insurance
• Supplementary Pension
• Phone and Internet Bills
• Gym Membership
• Cash Bonus
• Learning Tuition

Provide better work life balance

Work life balance is the trending benefit for workers nowadays. The idea is to have, as the concept states, balance between time and effort spent at the job and at your personal life. The goal is to successfully combine personal life and work life, without giving up personal or family time. In the end of the day, it improves mental health, wellness and productivity of your employees.

Apart from all the allowances, vouchers, insurances, pensions and other financial incentives, it is known that today’s workforce highly value “meaningful benefits that solve daily problems. Work-life balance, flexible hours, offering high levels of remote work, and the opportunity to take personal time off whenever they need are incredible ways to attract the best candidates and make a case for your organisation.

Learning and development

A good way to keep workers interested and focused on building their future within the company is the creation of internal development programs. That makes people feel appreciated and more prepared for leadership positions and also can give teaching experience for more mature full-time employees.

According to the Global Leadership Forecast of 2021, only 28% of HR professionals believe that their companies have high-quality leadership, which shows how critical it is to develop better leaders at all levels of a business. All of this is to say that leadership courses are a great way to stand out among other companies while attracting and retaining the best talent possible.

Termination of employment in Portugal

The regular termination procedure in Portugal requires a notice period from the employer depending on the worker’s length of service.

• Six months or less of service: Seven days notice
• Forty-eight months or less of service: One month notice
• Two years or more of service: Two months notice

The only exceptions for the need of notice period are the cases where the company can provide cause for dismissal without notice, disobedience, ethical misconduct and other forms of dIsciplinary issues.

The severance pay depends on whether it is applicable or not. The contract, reason of termination and the role of the employee are all important factors in this case. If there is a severance pay, the minimum amount is 18 days of the salary rate for the three first years and 12 days for each of the years of service after that time.