Employer of Record Services for Portugal

Employing in Portugal

Considered an emerging market, Portugal offers excellent potential for long-term growth and the near-term benefit of lower wage costs than are typical in surrounding countries. Both minimum wage and average wage are among the lowest in the EU. And those with a green agenda will be impressed with the levels of renewable energy the country produces, ranking behind only the Nordic countries among the EU states.

Portugal's employment landscape is characterised by its Labour Code, emphasising compliance with social security contributions and tax obligations under the Personal Income Tax Code. Employers must adhere to these regulations, ensuring proper labour practices and financial reporting. This framework supports a balanced and fair work environment, safeguarding both employee rights and employer responsibilities.

Our Expertise

Managing a global workforce in Portugal

TopSource Worldwide offers expertise in navigating Portugal's employment laws and payroll complexities. Our services facilitate compliance with local labour regulations, including social security and tax requirements, ensuring seamless management of your workforce in Portugal. With our support, businesses can focus on growth and operations, confident in their adherence to Portuguese employment standards.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

See our customer stories

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Portugal

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Portugal. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Portugal-based employees.

End-to-end Portugal payroll services

Looking to expand into Portugal? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Portugal expansion initiatives.

Global entity management

Venturing into the Portuguese market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Portugal

Entering the Portuguese market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Portugal.

Start your Portugal expansion

Portugal Insights

Key insights into Portugal's landscape

VAT rates: Portugal has a standard VAT rate of 23%, with reduced rates of 13% and 6% for specific goods and services.

Ease of Doing Business rank: Portugal ranks 34th in the World Bank's Ease of Doing Business Index, indicating a moderately favourable business environment.

Consumer Confidence Index: As of 2022, Portugal's Consumer Confidence Index was 100.6, reflecting stable economic sentiment.

Employee maternity/paternity leave: Maternity leave is 120 to 150 days, and paternity leave is 20 days, supporting work-life balance for new parents.

Employee termination period: Standard notice for termination varies but is typically 30 to 60 days, depending on employment contract terms and duration.

Employee salary pay date: Wages are usually paid monthly, with specific pay dates outlined in employment contracts and subject to labour laws.

Bank holidays: Portugal observes national holidays, including New Year's Day, Liberty Day, and Christmas, with a total of 13 public holidays in a year.

Country guidelines

Salary

In Portugal, there’s a legal requirement to pay two additional months’ salary.

• Month 13 is paid out in June
• Month 14 is paid out in November

Please be mindful of this when negotiating terms with new candidates. Clients can determine that the salary on offer includes these statutory payments, which will be reflected in the contract of employment. However, this should be made known to candidates in the pre-hiring stage.

We invoice for these additional salaries monthly and funds are accrued to be paid out at the appropriate time.

Vacation allowance

Employees are entitled to a vacation allowance, which is dependent on salary, at the time of vacation.

Meal allowance

The meal allowance (or food allowance) is a benefit awarded daily to employees in Portugal. TopSource Worldwide provides a meal voucher scheme through Sodexo. Each month, we top up the individual’s meal voucher scheme based on their number of working days that month. The statutory daily minimum is Euros 4,50 but can be paid up to Euros 7,63 tax-free. Employees can ‘spend’ their allowances in cafés, restaurants or supermarkets.

Social security

Social insurance in Portugal is composed of:

Statutory maternity/paternity pay
Temporary sickness/incapacity
Long-term sickness
Disability benefit
Unemployment benefit
Pension benefit

Employers are responsible for registering their employees with the relevant social insurance office. They may be registered with different insurance institutions depending on their profession and the province they’re working in. Social insurance contributions are deducted by the employer and paid over to the local tax office.

Employer costs

As a guide, the following employer costs are payable in Portugal: Social security: 23.75% plus 1% for FCT (Workers’ Compensation Fund) and FCGT (Guarantee Fund for Work).

Accident insurance

Accident insurance is mandatory in Portugal, and TopSource Worldwide provides coverage through Tranquilade.

Other provisions

Working hours

The regular working hours are eight hours per day (40 hours per week).

Probationary period

The minimum is 0 months with a maximum of 240 days (depending on the job description). If the performance is not satisfactory, it's not possible to extend beyond the maximum limit.

Overtime

This is a complex subject in Portugal with employees entitled to overtime if they work in excess of 40 hours per week.

Businesses can, however, adopt what is known in Portugal as a ‘schedule exempt regime’ whereby they deem that part of the salary is to cover any overtime. It should be noted that this doesn’t include work rendered on rest days and has a maximum threshold of 48 working hours per week on average over a period of four months.

Based on the employee’s job role and proposed salary, our Portuguese legal team can determine the extent of any additional gross overpay required to be stipulated in the employment contract.

Notice periods

The employer must observe the following minimum notice periods, which vary in accordance with each 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 10 years of service
75 days for employees with more than 10 years of service

During a probationary period, either the employer or the employee can terminate the contract without providing notice. However, if the probationary period has lasted longer than 60 days, the employer shall abide by a seven-day notice period. If the probationary period has lasted longer than 120 days, the employer shall abide by a 15-day notice period.

Termination

According to Portuguese law, the termination of an employment contract depends on stringent rules that demand the gathering of grounds and several formal procedures.

The employment contract may terminate in the following situations:

Expiry
Mutually agreed termination
Dismissal for disciplinary grounds subject to prior internal dismissal disciplinary procedure
Collective dismissal (for economical, structural or technological reasons) subject to an internal procedure and prior to notice periods which depend on the seniority of the employee
Dismissal for employee's failure to adapt to a working position (also subject to internal formalities and prior notice periods)

Individual employees are not entitled to pay in lieu of notice according to the Portuguese Labour Code. However, in case of collective dismissal, should the employer fail to comply with the required notice period, the employment contract will not end until the statutory notice period has expired and the employer is then required to pay the employee a sum equal to the salary equivalent to the missing period of notice.

Holiday entitlement

Holidays in Portugal are determined by articles 237 to 247 of the Portuguese Labour Code which provide for 22 days per year. The regular holiday year runs from January to December, and holiday can be carried forward to 30 April of the following year.

With regards to calculating pro-rated holiday entitlement for employees who start partway through the year, it should be noted that pro-rata leave is calculated on fully completed months. So, an employee will not accrue any leave if they start after the first week in a month

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Discover our payroll benefits

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Portugal

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

Speak to our team

Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Portuguese employment solutions

What is an Employer of Record in Portugal?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Portugal. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Portugal?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Portugal. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Portugal?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Portugal. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.