Overview

Capital
Lisbon
Currency
Euro (€) (EUR)
Date Format
dd/mm/yyyy (ce)

calendar icon Public holidays calendar

Taxes

Employer
23.75% - Social Security
1.75% - Labor Accident Insurance
1.00% - WGF (wage guarentee fund)
Employee
11.00% - Social Security
14.50% - Up to 7,091
23.00% - 7,091 - 10,700
28.50% - 10,700 - 20,161
35.00% - 20,161 - 25,000
45.00% - 25,000 - 36,856

Minimum Wage

General

In Portugal, there are 3 different minimum wages based on the region:

  • Mainland Portugal - €600
  • Madeira - €615

Azores - €630

Working Hours

General

A full-time work week is 40 hours. 

Overtime

Overtime should not exceed:

  • 2 extra daily working hours with a maximum of 48 weekly hours
  • 150 hours per year for employees at companies with at least 50 employees
  • 175 hours per year employees at companies with at less 50 employees
  • Up to 200 annual overtime hours can be performed if within collective labor agreement or force majeure.

Calculation for overtime pay:

  • 1st hour is hourly rate plus 25% and hourly rate plus 37.5% for the following hours.
  • Overtime on rest day or holiday is normal working hour plus 50%.

VAT

General

There are 3 standard/general VAT rates in Portugal – 23% in Continental Portugal, in Azores it is 18% and in Madeira it is 22%

Payment

Payroll Frequency

There is no official legal date that salaries must be paid, however, it must be paid at least once a month and by the last working day. It is also possible to pay employees bi-monthly.  

Mandatory Benefits

Pension Fund

Both employees and employers are charged flat rate for social security taxes and pension. There is no salary ceiling.

Social Security

Pension contributions are made though the Segurança Social towards the centro nacional de Pensoes (CNP).

The age for retirement is 66 years and 5 months for both men and women.

From the combined social security contributions, 20.21% goes towards old-age benefits, 4.29% finances disability, and 2.44% goes towards survivor benefits.

13th Salary

In Portugal, there is a mandatory 13th and 14th salary which are paid out in June and December.  

Additional Pay

Holiday pay: Equal to one months salary paid before holiday leave period. Christmas bonus: equal to one months salary paid by December 15th.

WGF – WAGE GUARANTEE FUND (FUNDO DE GARANTIA SALARIAL)

Employer mandatory contribution for all employment contracts signed after 01.01.2013 and aims to ensure the payment of the debts of the employers to their workers, when they cannot pay them, because the employer is in a situation of insolvency or in a difficult economic situation. The fund is owned by the Portuguese government through Social Security. In practical terms it is an extra contribution to Social Security. It’s 1% on top of the base gross salary (13th and 14 month salary are not subject to the WGF contribution, neither bonus or allowances).

Termination

Termination Process

Employers are required to provide notice to employees with fixed-term contracts or if the employer has decided to terminate an employee a trial period that has lasted over 60 days. In order to have grounds for dismissal an employer must have just cause, redundancy, closure, or the employees’ failure to adapt.

Advance Notice

Notice periods depend on the employee’s seniority.

  • 15 days for employees with less than one year of service
  • 30 days for employees with one to five years of service
  • 60 days for employees with five years or more and up to ten years of service
  • 75 days for employees with more than ten years of service
Severance Pay

Employees who are terminated due to collective dismissal or redundancy are entitled to severance. The amount an employee will be paid depends on their seniority within the company.