Employment in Portugal is governed by the Labour Code (Código do Trabalho), with collective agreements often adding sector-specific terms. Salaries are paid 14 times a year, and dismissal is tightly regulated. Here is what employers need to know about leave, pay, tax and ending employment.
The Labour Code sets the minimum leave for all employees. Sick pay and parental benefits are paid by Social Security (Segurança Social) rather than by the employer, as long as the employee meets the contribution conditions.
Working days of paid holiday a year. In the year of hiring, employees earn 2 days per full month worked, up to 20 days, usable after 6 months.
Paid by Social Security after a 3-day waiting period, rising with the length of the absence. The employer does not pay sick days by law.
120 days at 100% or 150 days at 80% of reference pay, extendable by 30 days when both parents share it.
Working days within 42 days of the birth, 7 of them straight after it, plus 7 optional days. Paid at 100% by Social Security.
| Length of absence | Benefit |
|---|---|
| First 3 days | Nil (waiting period) |
| Day 4 to day 30 | 55% |
| Day 31 to day 90 | 60% |
| Day 91 to day 365 | 70% |
| More than 365 days | 75% |
Portugal uses a single parental leave system. The mother must take 42 days (6 weeks) after the birth and can start up to 30 days before it. The rest of the initial parental leave can be shared between the parents. After it ends, each parent can take up to 3 months of additional parental leave, which is paid by Social Security at a reduced rate.
Set up each Portuguese leave type in IceHrm with its own accrual, carry forward and approval rules, including the reduced entitlement in the year of hiring. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The national minimum wage (retribuição mínima mensal garantida) is updated each January by decree-law. Under the 2025 tripartite agreement it is planned to reach €1,020 by 2028.
Mainland Portugal from 1 January 2026 (Decree-Law 139/2025), paid 14 times a year. Higher in the Azores (€966) and Madeira (€980).
Up to 8 hours a day. Collective agreements and adaptability or hour bank schemes can spread hours differently.
A holiday allowance and a Christmas allowance (paid by 15 December), each equal to a month’s pay, are mandatory.
| When the overtime is worked | First 100 hours a year | Beyond 100 hours |
|---|---|---|
| Working day, first hour | +25% | +50% |
| Working day, each further hour | +37.5% | +75% |
| Rest day or public holiday | +50% | +100% |
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so the overtime supplements reflect what was actually worked. Time & attendance →
Personal income tax (IRS) is progressive. Employers withhold tax monthly using the withholding tables published by the Tax and Customs Authority (AT), and employees file an annual return the following spring.
| Taxable income | Rate | Deductible amount |
|---|---|---|
| Up to €8,342 | 12.5% | – |
| €8,342 – €12,587 | 15.7% | €266.94 |
| €12,587 – €17,838 | 21.2% | €959.26 |
| €17,838 – €23,089 | 24.1% | €1,476.45 |
| €23,089 – €29,397 | 31.1% | €3,092.77 |
| €29,397 – €43,090 | 34.9% | €4,209.94 |
| €43,090 – €46,566 | 43.1% | €7,743.27 |
| €46,566 – €86,634 | 44.6% | €8,441.48 |
| Over €86,634 | 48% | €11,387.17 |
Employers pay Social Security contributions on top of gross pay, including the holiday and Christmas allowances, and must insure every employee against workplace accidents.
Of gross pay under the general regime. There is no ceiling on contributable earnings.
Withheld from gross pay by the employer, together with IRS withholding.
Compulsory private insurance. Premiums depend on the insurer, the activity and the payroll insured.
Contributions are declared monthly to Social Security and paid by the 20th of the following month. Employers must also organise occupational health and safety services.
Build Portuguese pay the way you already structure it, with your own salary components, deductions and formula columns, such as Social Security or holiday allowance columns. Want to know how well IceHrm handles payroll calculations for Portugal? Contact us or see Payroll →
The Portuguese Constitution prohibits dismissal without just cause. An employer can only dismiss for disciplinary reasons or for objective reasons (collective dismissal, extinction of the job, or unsuitability), and each route has a formal procedure.
| Length of service | Employer notice |
|---|---|
| Less than 1 year | 15 days |
| 1 year, less than 5 years | 30 days |
| 5 years, less than 10 years | 60 days |
| 10 years or more | 75 days |
| Situation | Compensation |
|---|---|
| Collective dismissal or extinction of the job | 14 days per year of service |
| Employer ends a fixed-term contract at expiry | 24 days per year of service |
| Disciplinary dismissal for just cause | Nil |
Final pay includes accrued and unused holiday, plus the proportional holiday and Christmas allowances. Dismissing a pregnant, recently delivered or breastfeeding employee, or one on parental leave, requires the prior opinion of the equality commission (CITE).
Portugal has 13 mandatory public holidays. Carnival Tuesday and the local municipal holiday are optional holidays that many employers observe, often under a collective agreement.
Employees who work on a public holiday in a business that is not required to close are entitled to a 50% pay supplement or an equivalent rest period, unless a collective agreement provides otherwise.
Leave groups give each office its own holiday calendar, so teams in Lisbon, Porto or the Azores get their municipal and regional holidays automatically. Holiday calendars →
Open-ended contracts are the norm. Fixed-term contracts are only allowed for temporary needs listed in the Labour Code, and must be in writing and state the justifying reason.
| Contract and role | Maximum probation |
|---|---|
| Open-ended, most employees | 90 days |
| Open-ended, complex or high-responsibility roles, first-job seekers and long-term unemployed | 180 days |
| Open-ended, directors and senior managers | 240 days |
| Fixed-term of 6 months or more | 30 days |
| Fixed-term under 6 months | 15 days |
A fixed-term contract with a set end date can last at most 2 years including renewals, can be renewed up to 3 times, and the total length of the renewals cannot exceed the initial term. Contracts for an uncertain term are limited to 4 years.
Send contracts for e-signing, store them on the employee’s record, and track onboarding with task lists, including the Social Security notification, so nothing is missed on day one. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Portugal, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Portugal? Talk to us.
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