Portugal’s industrial structure heavily focuses on foreign trade as they leverage agricultural exports. But as they open the country to more investors, they have also expanded in more sectors. Tech start-ups have been opening all over the country, offering more opportunities to the Portuguese talent pool. In fact, Portugal has been ranked 32nd among the 158 countries in the Readiness for Frontier Technologies Index.
*Base on the latest data available
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Employers need to contribute 23.75% of the wages to social security contributions.
Employees pay 11% of their wages for social security contributions. This covers their family, pension and Unemployment benefits
The Income tax bracketing in Portugal is as follows :
The minimum wage in Portugal is averaged at 775.83 EUR per month.
Workers in Portugal are paid on a monthly basis. Wages are released a day before the end of the month.
13th month salary
Portuguese employees are given two bonuses each year: one in June and the other in December. Each bonus is equal to the employee’s monthly salary.
The general work hours are 8 hours a day or 40 hours a week. Work hours should not exceed 12 hrs per day or 60 hours a week.
Overtime work may be required for employees when it becomes necessary by the company. However, employees are compensated for the extra hours they have rendered outside their normal working time. Below are the percentage of additional pay
There are a total of 13 public holidays in Portugal and 8 regional ones. You may check all these holidays here.
Employees are to 22 business days of paid vacation leave per year. In cases of temporary contracts (up to 6 months), employees are given 2 days of leave for each completed month.
Employers are obligated to cover the first 3 days of the employee’s sick leave. Beyond that time, the employee will be receiving a sick leave allowance from their social security system.
The minimum mandatory paid leave for new mothers will be six weeks following birth. Female employees will also get to enjoy up to 30 days of parental leave before delivery.
Male employees have a mandatory paternity leave of 15 days within the first 30 days after delivery. Five days from it must be used following the date of birth
In Portugal, terminating an employee’s contract has many occurrences. It could be a collective dismissal due to a company that is downsizing, an employee’s retirement, an employee’s unsuitability for the current role, etc.
Employers are responsible to give their employees a notification in writing for not less than ten days before the effective date of termination. During the ten days, the employee or other personnel may express their opposition to the decision in writing. Employers will then have time to evaluate and reach a decision.
Employee’s notice period varies according to his years of service with the company:
The calculation for the employee’s severance pay is based on their seniority period. Basically, regular employees that are in service for 3 years will receive 18 days of their salary. For every year in excess of the 3 years, they will get an additional pay of 12 days. For employees who have less than 3 years of work in the company, they will be given a fraction of the 18 day-salary. You may read more about it here.
Probation period varies according to an employee’s new role within the company. Generally, employees are given 90 days. But it may be stretched to 180 days for complex and high trust roles and even 240 days for managerial or directorate positions.
Employers are mandated to provide work accident insurance coverage for their employees. This is in part of their obligation to keep a risk-free, safe and healthy workplace for their people. For more details on the insurance coverage that the employers should observe, you may refer here.
The Sales Tax rate in Portugal for 2021 is 23% and is projected to trend around the same value up until 2022.