Employer of Record in Portugal

With the help of Marzuna, Portugal EOR (Employer of Record) solutions, your business may grow into Portugal without the need to create an entity. With our centralized and automated global HR platform, you can expedite the onboarding process for your remote workers and effectively manage their payroll, benefits, and other requirements. We assist you in simplifying the process of worldwide expansion with the informed assistance of our extensive global network.

Overview of Portugal

• Estimated Population: 10,304,434
• Currency: Euro (€)
• Capital: Lisbon
• Languages spoken: Portuguese and Mirandese and English
• GDP: 238.8 Billion USD (2019)

Employment Landscape In Portugal

In Portugal, the prevailing hiring culture heavily favors referrals, often relying on recommendations and personal connections within both professional and social circles. Trust and relationships play a paramount role, making it somewhat challenging for international businesses and corporate organizations to navigate the local labor market. Establishing a foothold in this environment is crucial.

Employment in Portugal is contingent on a formal employment contract that mandates comprehensive inclusion of all pertinent details regarding the new employee. This encompasses information on their compensation, benefits, additional remuneration, and the terms of termination.

Portugal’s economy showcases vibrant sectors such as tourism, hospitality, automotive, electronics, transportation, construction, footwear, and textiles. As of June 2020, the country reported an overall unemployment rate of 5.6%, with a youth unemployment rate of 25.6%. The recruitment of foreign workers has been on the rise over recent years, presenting opportunities for both employees and employers alike.

Labour Laws in Portugal

Entitlements	Explanation
Labour Code	It is Portugal’s primary statute managing the labour market. The Labor Code has undergone several changes during the last 30 years.
Code of Contributory Regime	The law regulates the Social Security System.
Collective Bargaining Agreement (CBA)	a contract that governs unions and employer groups.

Terms of employment contracts in Portugal

The prohibition of discrimination based on factors such as gender, age, sex, marital status, family history and circumstances, religion, origin, genetic heritage, ideological opinions, economic condition, parenthood, trade union involvement, limited labour ability, and impairments is a significant part of Portuguese law.

Title	Explanation
Minimum working age	The minimum working age is 16, and people can start working under an employment contract at age 18 even if they haven’t finished high school.
Types of employment contracts	Fixed-term – this agreement has a set time frame, often six months. It might be less than this or as long as three years. Unspecified term contract: This employment agreement may last for as long as six years, but not longer. A contract with a very short length is one that lasts only 60 days. The contract is applicable to seasonal employment, such as the growing and tourism seasons. Part-time contract: Part-timers are only permitted to work up to 75% as many hours per week as full-timers. Intermittent contract – under this kind of employment arrangement, employees work on an as-needed basis. Employers must provide full-time contracts with a minimum term of six months and a minimum requirement of four consecutive months of work. Except for extremely brief-term contracts, employment agreements in Portugal must be in writing.
What details are included in the Employment Contract?	As per laws of Employment in Portugal, the employment contract should include: Employer’s identification Employee identification Job responsibilities and duties Payment terms The object of the contract Start date and last date of the contract. Duration of employment and justification for the same Day-to-day work timing Job location
Working hours	In Portugal, the standard workweek is 40 hours, or 8 hours each day. In Portugal, a normal workday lasts from 9:00 am to 1:00 pm and from 1:00 pm to 5:00 pm. Lunch is for two hours.
Overtime	In businesses with 50 or more employees, overtime is limited to 150 hours per year; in businesses with less than 50 employees, it is limited to 175 hours.

Leaves

Title	Explanation
Public holidays in Portugal	All employees in Portugal get a day off on public holidays. These are: New Year – January 1 Good Friday – March 30 Liberty Day – April 25 Labour Day – May 1 Corpus Christi – May 31 Portugal Day – June 10 Assumption of Mary – 15th Augusts Establishment of the Portuguese Republic – October 5 All Saints’ Day – November 1 Restoration of Independence – December 1 Immaculate Conception – December 8 Christmas – December 25
Annual Leave	Statutory paid yearly leave is twenty-two days long, and unused days accumulate. The employer is responsible for providing greater paid leave than is required by law.
Bereavement leave	Employees who have lost a family member are entitled to up to two days of paid bereavement leave in Portugal. The employee must provide these two documents: (a) a copy of the death certificate of the family member; and (b) a copy of the probative document that was sent to the employer by the authorities.
Sick Leave	While sick leave is available to employees, a minimum of four consecutive days of leave is required. Social Security covers paid sick time
Maternity Leave	Maternity leave is covered by Social Security, and it is available to new moms for 120 days.
Paternity Leave	The father is given a mandated 20-day leave. Five extra days are optional. The money for the leave is handled by Social Security.
Other types of leaves	Marriage Leave: Employees are eligible to take up to 15 consecutive days of leave when they get married. Study Leave: Workers may use this time off the day before and the day of the test. Family Care Leave – Employees are permitted to take up to 30 days off work to care for a family member who is under the age of 12. Employees may request up to 15 days of absence for elder care.

Contractors vs Full-time Employees

Under the Portuguese Labor Code, individuals are classified into two primary categories: employees and independent contractors. Employees engage in providing intellectual or manual services for an employer or organization, while independent contractors undertake specific projects or deliver particular types of work without a legal subordination to the beneficiary.

For employees, the employer exercises legal subordination in various aspects, including:

• Setting working hours
• Defining job duties and descriptions
• Determining the work location
• Providing necessary tools and equipment
• Ensuring regular payments in accordance with the employment contract
• Evaluating employee performance
• Integrating the employee into the work environment

In the case of contractors, the beneficiary is responsible for making timely payments to the contractor and integrating them into the work environment.

Additionally, there’s a distinction in the tax treatment between employees and contractors. Employees share social security contributions with the employer, with the employee contributing 23.75% and the employer contributing 11% according to the employment agreement in Portugal. Conversely, contractors are solely responsible for their own social security contributions, which amount to 29.6%.

Furthermore, independent contractors often fall under Value Added Tax (VAT) regulations, as most of the services they provide are subject to VAT. However, there are exemptions from VAT in specific cases for independent contractors.

Simplifying the process of hiring a local workforce, managing onboarding, payroll, taxation, compliance, and legal obligations in Portugal can be made easier by partnering with an Employer of Record (EOR) like Marzuna. Selecting a strategic EOR in Portugal can enhance the efficiency and cost-effectiveness of your entry into the country, as they can handle various aspects of employment administration on your behalf.

By collaborating with an EOR like Marzuna, you can navigate the intricacies of Portuguese labor regulations with confidence, ensuring compliance while concentrating on your core business objectives.

Hiring in Portugal

After making the strategic decision to enter the Portuguese market, the next critical phase involves swiftly assembling your team. However, this endeavor can pose challenges due to the intricacies of employment laws, compliance prerequisites, and the overall intricacies of the hiring process. By outsourcing your HR functions to us, you can streamline and simplify the team-building process.

When it comes to hiring employees in Portugal, you have a couple of viable options. You can tap into your existing networks and participate in networking events to establish your international team. Alternatively, you can leverage prominent online platforms like Indeed, Adecco, Net-Empregos, BonsEmpregos, Expressoemprego, Alertaemprego, and other reputable hiring firms in Portugal to identify top talent.

The typical hiring process in Portugal begins with the formulation of a comprehensive written employment contract, covering all essential details including compensation, employee benefits specific to Portugal, probationary periods, termination procedures, and all financial matters specified in Euros, the local currency. It is equally vital to address any provisions outlined in the Collective Bargaining Agreement (CBA). While there isn’t a strict requirement for the onboarding process, it is customary to establish an employee code of conduct and provide training for new hires.

Opting for an Employer of Record (EOR) solution in Portugal allows you to entrust the entire hiring and onboarding process to seasoned professionals well-versed in local labor laws, regulations, and compliance mandates. This ensures that your employment practices align seamlessly with the Portuguese Labour Code. To delve deeper into our services and discover how we can facilitate your expansion into Portugal, reach out to us today and explore the advantages of partnering with us.

Probation & Termination

In Portugal, the termination of employment can transpire for various reasons, encompassing job inadequacy, position elimination, collective dismissals, or disciplinary grounds.

When terminating an employee for disciplinary reasons, the employer is obligated to communicate this decision in writing, clearly articulating the grounds for termination. In such instances, a hearing should be conducted to afford the employee the opportunity to refute any allegations.

It is imperative that any dismissals are reported to both the Ministry of Labor and the employees’ representative. This protocol ensures transparency and adherence to labor laws, fostering a fair and just process.

Moreover, the company is mandated to compensate the employee for any accrued leaves and unused vacation days as part of the final settlement. This ensures that the employee receives all the entitlements due upon termination.

To maintain a workplace that is not only fair but also fully compliant with legal regulations in Portugal, it is vital to have a deep understanding of and adherence to these termination procedures. Seeking professional guidance or legal counsel is advisable to ensure strict compliance with relevant laws and regulations, promoting a harmonious and legally sound work environment.

Standard probation period Portugal

Title

Explanation

Trial Period

The same has been described as follows: The trial period is 240 days in the case of top management and director-level posts. The trial period is 90 days for standard employees and 180 days for those who hold senior positions that require technical expertise and are employed in the post of trust. The trial term for Fixed-Term workers is 15 days for contracts under six months and 30 days for those that are. During the trial period, either party may end the contract without giving the other any prior notice.

EOR Solution

Embarking on your journey to expand your business in Portugal is most efficiently achieved through a strategic partnership with a premier Employer of Record (EOR). With our flexible solution, you gain comprehensive support in the process of selecting and seamlessly integrating the finest talent for your company’s growth. Navigating the intricate terrain of foreign laws is essential, and it’s imperative that no local regulations are overlooked or circumvented while engaging with your workforce. Whether it’s during the hiring process, payroll management, or tax withholdings, an Employer of Record offers an all-encompassing HR solution that allows you to channel your efforts into business expansion while they adeptly manage all labor-related aspects.

Our company stands as one of the most accomplished and promising EOR providers in Portugal. Our cutting-edge online platform boasts an intuitive design and a wide array of features that can not only meet but exceed your needs for global expansion, extending well beyond Portugal. We offer around-the-clock access to cost-effective, tailored solutions to support your business endeavors.

Types of Visas In Portugal

With a Portugal work visa, you can reside and function in a nation that values peace and stability in both the political and social spheres. Additionally, it refers to the freedom of movement inside the EU, the ability to bring family members to Portugal, and the ability to seek Portuguese residence after five years.

Types of work visas in Portugal	Explanation
D3 Visa	The visa category is intended for those with highly developed technical capabilities.
D2 Visa	It is a visa category for independent contractors or business owners.
Startup visa	This category of visas is also intended for international businesspeople.
D7 Visa	It is a form of resident visa for those who want to live and work in Portugal.
Tech Visa	It is a unique kind of visa intended for businesses with a permanent establishment or a head office in Portugal.
Golden Visa	The best approach to getting a residency permit in Portugal is to make capital investments, real estate purchases, or stock purchases in Portuguese businesses.

Work Permits

To apply for a work permit in Portugal, certain documents are necessary. These include a valid passport, proof of accommodation in Portugal, a valid Portuguese residence visa, two passport-size photos, tax documents for foreigners seeking a Portugal work permit, a police verification certificate for background checks, an employment contract, and social security registration documents. It’s important to note that obtaining a Portugal work permit requires a job offer, as the employer must apply for the work permit after extending the job offer to the applicant.

Payroll & Taxes in Portugal

Payroll in Portugal

Wages	Portugal’s minimum salary has been set at 635 euros per month with 14 payments, or 740.8 euros per month with 12 instalments. In Portugal, there is no set deadline for paying employees’ salary. The pay or compensation must, however, be paid once every month.
Overtime pay	The standard hourly wage plus 25% for the first hour and 37.5% for each additional hour of overtime labour is paid.

Portugal Payroll Taxes

Portugal payroll tax rates – Employer

Tax	Percentage
Social Security	23.75%
Labor Accident Insurance	1.75%
Wage Guarantee Refund (WGF)	1.00%
Total Employment Cost	26.50%

Portugal payroll tax rates – Employee

Title	Percentage
Social Security	11.00%
Total Employee Cost	11.00%

Income Tax slabs for Employees

Earnings (EU)	Tax %
0 – 7,112	14.5%
7,112 – 10,732	23.0%
10,732 – 20,322	28.5%
20,322 – 25,075	35.0%
25,075 – 36,967	37.0%
36,967 – 80,822	45.0%
80,822 and over	48.0%

Understanding the corporate culture is of paramount importance when launching a business in Portugal. The Portuguese Companies Code outlines various business structures, each catering to different needs:

• Single-Person-Owned Business: This category includes a sole proprietorship, an individual limited liability establishment, and a single-member limited company.
• Companies with Multiple Owners: For businesses with two or more partners, a private limited company (Sociedade por Quotas) can be established with a minimum investment of €5,000.
• Public Limited Company (Sociedade Anónima): This structure requires a minimum of five shareholders and a €50,000 investment.
• Partnerships and Collectives: Partnerships or society by name collective are formed by two partners with personal obligations. A limited liability partnership, or Sociedade em Comandita, consists of two partners with unlimited responsibility and sleeping partners with limited liability.

Portugal provides a diverse range of business options, and establishing a holding company in Portugal offers several advantages. Notably, dividend income can be tax-free with a 10% stake, while the company’s capital gains are subject to a favorable tax rate. It’s advisable to seek expert guidance on this matter before embarking on business endeavors in Portugal.