Looking for a PEO and EOR provider in Portugal? You've knocked on the right door! EuroDev's PEO and EOR solutions help companies hire employees in Portugal without establishing a legal entity. Hiring and employment in foreign country such as Portugal can be complex as a foreign employer. We're here to guide you. EuroDev is the leading provider of EOR & PEO solutions in Europe. We partner with North American businesses who want to expand their business into Europe. Portugal is a popular destination for many North American businesses. What should be taken into account when employing or hiring in Portugal? 

How it works - PEO in Portugal & EOR in Portugal

An Employer of Record (EOR) or Professional Employer Organization (PEO) is a company or organization that is legally responsible for paying employees, including dealing with employee taxes, benefits & insurances. As the EOR/PEO of your European or Portuguese employees, we provide you with tailored payroll, HR and compliance services. Through this construction, we decrease all the complications such as compliance issues, setting up a foreign establishment and setting up employment contracts in a different language. In other words, you can expand into Portugal without having a local entity. 

Benefits of using a Portuguese PEO & Employer of Record in Portugal

• Expand without an entity 
• Flexible and cost-effective solution to outsource payroll and HR functions for international expansion 
• In compliance with foreign local laws & regulations 
• Minimizes employment liabilities and risks 
• Reduced risk, as the risks of being an employer fall almost completely on the employer of record 
• Let's you focus on your core business 
• You manage your employees 
• EoR and /or PEO takes care of registration and contact with local authorities 

Employment Contracts in Portugal

What are the most common employment contracts in Portugal? Unless otherwise specified by the the employer and employee, employment contracts are deemed open-ended (i.e. permanent/indefinite employment). Fixed term contracts are permitted by law provided that they are executed in written form and provided they are meant to fill a role required on the basis of a merely temporary need of the employing company. Hence, if there is no written contract, the employment contract will be deemed to be an open-ended contract.

Portuguese PEO and EOR service providers will support you with the set-up of a local employment contract including the local requirements.

Employment Termination Portugal & Notice Period Portugal

There is no ‘at will’ termination in Portugal. In order to terminate the employment contract of an employee, sufficient reasoning must be provided. Compared to many other European countries, the notice period in Portugal is of short. The Portuguese employer must work with the following minimum notice periods which vary in accordance with each employee’s seniority:

Fixed-term contracts can be terminated automatically on their expiry date or upon completion of specified tasks. 

As the Portuguese PEO and EOR provider is the formal employer of your employees in Portugal, they are also responsible for terminating the contract while applying the applicable Portuguese terms. 

Social Security Contributions Portugal & Employer Taxes Payroll in Portugal

What are the primary social security contributions rates for employers in Portugal? Portuguese employers must, just like other employers in European countries, pay social contribution taxes. With 23.75%, the social security (employer) tax in Portugal is higher than the EU average. Below you can find an overview of the social security taes and other payroll contributions you as an employer in Portugal have to pay on an annual/monthly basis:

*The industrial injury insurance is calculated based on the type of industry, number of employees, and the used insurance company.

Also important: Portugal has 14 salaries; 12 months, holidays, and Christmas allowances.

Employee Income Tax Portugal

Average Salary Portugal & Average Employer Costs Portugal

In 2019, the average annual wage in Portugal was $26.633,72. This is lower than the average annual wage in the United States: $65.835,58. As an employer, the actual employer costs are around 26.5% higher than the gross annual salary. Based on a $26.633,72 annual salary, the employment costs would be $33.691,66.

To learn more about the average salaries in Europe and the actual employment costs in Europe, we invite you to read this article on Costs of hiring European employees.

Working Hours in Portugal

Business working hours in Portugal may be slightly different to what you are used to. A typical working day in Portugal starts at 9am until 1pm with a two hour break for lunch, and then resumes at 3pm until 7pm.

Paid Vacation Leave Portugal

All employees in Portugal are entitled to a period of paid annual leave of at least 22 working days per calendar year. The right to leave is acquired by entering into a contract of employment and takes effect as of 1 January of each calendar year. 

To learn more about the average paid vacation days in Europe and how Portugal compares to the rest of Europe, we invite you to read our blog on paid vacation days Europe.

Public Holidays Portugal

• 1 - January New Year's Day

• Good Friday
• Easter Sunday
• 25 April (Freedom Day)
• 1 May (Labour Day)
• Corpus Christi (May/June)
• 10 June - Portugal Day
• 15 August - Assumption Day
• 5 October - Establishment of the Republic
• 1 November - All Saints Day
• 1 December - Restoration of Independence
• 8 December - Immaculate Conception
• 25 December - Christmas Day

Maternity and Paternity Leave Portugal

New mothers are entitled to maternity leave in Portugal at 100% of their pay for 120 consecutive days. They can take a maximum of 30 of these days before the baby's birth and they must take at least 42 days of leave (six weeks) after birth. To be entitled to parental leave in Portugal, you must have worked and made at least six months of social security contributions by the time of your claim.

Paternity leave in Portugal is allowed for working fathers for five consecutive days after the birth of the baby, plus an additional 10 days within 30 days of the birth, which do not need to be consecutive. After this period, a father has the option to take leave for an additional 10 consecutive days within the period that the mother is on maternity leave. If twins are born, an additional two days are added to each period for each child.

Learn more about PEO and EOR in Europe:

• PEO in Europe 
• EOR in Europe