Employee termination
in Portugal.

It is relatively complex to terminate employment in Portugal. In order to process a termination request (assuming a standard contract), the following steps must be taken:

1. Provide written notice: 
   • Simple Termination Letter sent by email with confirmation of receipt
   • Inform the employee’s representative (if any)
2. Employer’s termination decision must be sent to Ministry of Employment.
3. Generate Certificate of Employment: 
   • This is mandatory. The certificate should include the start date and end date of employment.
   • Collect any other necessary documents for official purpose (e.g. social security).
4. Make any necessary severance payments to the employee.

When considering a termination in Portugal, keep in mind the following:

• Termination with reason:
  • Business-related reason i.e. the company’s financial state. In these cases it must be proven to be impossible to maintain employment.
  • Individual-related reason i.e. employee’s failure to adapt
• Termination without reason can have consequences such as mandated reinstatement of the employee or compensation up to 45 days salary per year of time served with the company
• In cases of termination, severance payment is required
• It is possible provide payment in lieu of notice

The risks of terminating employment in Portugal are most present if you terminate employment without reason. In such cases, an employee may be entitled to reinstatment or compensation of 45 days of salary per year of service to the company. If you are considering employee termination in Portugal, you should work with a local employment expert to fully understand the law before making any decisions.

You can mitigate termination risks by partnering with a firm like Horizons, who has employment experts on the ground in Portugal and can advise you on best practices in cases of employment termination.