Expand your organization into Portugalwithout an entity
The Southern European country of Portugal has a rich, vibrant culture, a developed economy, and is an overall fantastic place to do business.
However, Portugal’s unique employment laws and bureaucracy can present difficulties for businesses trying to expand. The language barrier is an obvious hurdle, but you will also need to deal with complex business and employment legislation, drawn-out administrative procedures, and more.
At New Horizons, we specialize in helping organizations expand internationally, including into Portugal. Our professional employer organization (Portugal PEO), employer of record, and payroll outsourcing services provide everything necessary to expand your business into Portugal, whether or not you have registered an entity there already.
Our in-house recruitment team can also source, recruit, and onboard your local workforce, as well as handling any ongoing HR administration. Our dedicated team will provide everything you need to expand into Portugal in a matter of days, and can potentially save you thousands in expansion costs.
Our Portugal Employer of Record & PEO simplifies your expansion
New Horizons enables your business to expand its operations into Portugal, without setting up a legal subsidiary.
Employment & Labor Laws in Portugal
Employment contracts in Portugal
It is always important to provide your employees in Portugal with a formal contract of employment, including all relevant details of employment such as salary and benefits. It should also be written in the Portuguese language and use the Euro currency.
By partnering with our Portugal PEO & Employer of Record, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Portugal
Normal working hours in Portugal are between the hours of 9am and 7pm, with two hours usually taken for lunch. Working hours are generally limited to 40 hours per week and eight hours per day. Overtime rates should be paid for any time beyond this.
Public holidays in Portugal
Employees in Portugal are entitled to nine public holidays, which are recognized nationally:
There are also various regionally recognized holidays, so it is important that you understand the local customs wherever you are operating. The following is an expanded list of the most common holidays celebrated throughout the country:
New Year’s Day
St. Joseph’s Day
Day of the Azores
Feast of St. Anthony
Feast of St. John the Baptist
All Saints’ Day
Restoration of Independence
Immaculate Conception Day
Portugal vacation leave
Employees in Portugal are entitled to at least 22 days of paid vacation leave. For the first year of employment, there is a lower allowance of 20 days. Up to five unused days can be carried over until April of the next year. Employers cannot offer pay to forego vacation days, so it is important that you always offer all the days to your employees.
Portugal sick leave
Employees in Portugal are entitled to sick leave benefits when absent from work through sickness. They are covered for a maximum of 1,095 days (approximately three years), at a rate of between 55% and 75% of normal pay. These benefits are paid by the government, not employers.
Parental leave in Portugal
Mothers in Portugal can take 120 days of leave, and must take a minimum of 30 days before their child’s birth, and six weeks after birth. They are entitled to normal pay during this time. If they wish, they can also choose to take 150 days of maternity leave, but at 80% of normal pay.
Fathers can take 10 days of paid leave, which must be taken within 30 days of their child’s birth, and a minimum of five must be taken together.
Terminations and severance in Portugal
Employees in Portugal who are not in a probation period are entitled to notice of termination. The length of notice varies based on length of time with their employer:
- Under one year of employment = 15 days of notice
- Between one and five years = 30 days of notice
- Between five and ten years = 60 days of notice
- Over ten years = 75 days of notice
In some cases, employees may be entitled to severance upon termination. The usual rate is roughly 20 days of pay for every year of employment.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Portugal PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Portugal
In Portugal, employees and employers are required to contribute to social benefit funds. For employees, the contributions equal roughly 10% to 15% of salary, and for employers, the contributions are roughly 25%.
The progressive income tax rates are between 14.5% and 48% of salary, depending on income. The corporate tax rate in Portugal is 21%.
Health coverage in Portugal
Healthcare in Portugal is nationalized, so there is no need for employers to offer private health insurance. However, some employers may choose to offer insurance as part of their benefits packages.
Portugal compensations & benefits
Compensation laws in Portugal
The minimum wage in Portugal is €740.83 per month as of mid-2020. Most employees are also entitled to two annual bonuses, usually paid in June and December, that equal one month’s salary.
Benefit management in Portugal
Setting up your Portuguese benefits system can be a confusing process if you are not familiar with the complex labor laws, language, and cultural differences, so it is common to encounter delays.
New Horizons can help you avoid this complex part of your Portuguese expansion, saving you time and money and simplifying the entire process. Our team will offer advice and outsourcing of your benefit system setup and management, freeing you focus on the rest of your expansion.