Located on the Iberian Peninsula of Europe, Portugal is a nation with a rich history of discovery and seafaring, under Prince Henry the Navigator, King John II, and Vasco da Gama encouraging and engaging in global travel to new lands, establishing an empire and monopolizing trade (such as spices).
Portugal has developed into an increased and diversified service-based economy since becoming a part of the European Union. Resulting from a strong rebound in Portugal’s private consumption and export, the country overcame the economic slump attributed to the 2008 global financial crisis. Portugal’s GDP increased to 2.5% in 2017; however, the unemployment rate has remained disappointingly high.
Portugal itself has an estimated population of only 10.8 million, mostly Roman Catholics, but has left an indelible mark on culture and architecture in a world that now has over 300 million Portuguese speakers. Portuguese cuisine is diverse and influence by its former empire, including dry cod, grilled sardines, and caldeirada, a potato-based stew made from different types of fish. Some of the best-known Portuguese wines are Vinho Verde, Port, Madeira, and Moscatel.
In Portugal, indefinite-term contracts are the default form of employment contracts. Fixed-term agreements may only be concluded to satisfy the temporary needs of an employer for the period strictly necessary to meet those needs. Such temporary needs may include the replacement of absent employees, the performance of seasonal work or a short-term task, or the performance of additional work due to a sudden increase in business. Contracts that do not have any end term are considered indefinite term. Fixed-term contracts that continue after their end date or 3 renewals become open-ended.
The Labor Code of Portugal recognizes the validity of written, oral, and implied (by specific facts in the absence of an agreement) contracts. If a written contract is used, the labor code states that an employment contract must be made in multiple copies for the employee and the employer. A written labor agreement must contain several terms prescribed by statute in the Labor Code, including the amount of remuneration, the place of work, and the expected duration of the contract.
Portuguese Labor Law permits the use of non-compete agreements that take effect after an employment contract ends, under these conditions:
The agreement must be in writing, although it doesn't have to be part of the initial employment contract.
There must be a specific risk that the employee's future work could harm the employer's interests.
The employee must receive compensation for the period of restriction.
The restriction period can't exceed 2 years after the contract ends. However, for employees with high-trust roles or access to sensitive competitive information, this period can be extended up to 3 years.
Written contracts are mandatory for:
Fixed-term contracts
Unfixed-term contracts
Temporary-agency contracts
Part-time contracts
Telework
Intermittent work
Service commission contracts
Contracts with Foreign Employees
Portugal's Labor Code allows for temporary employment, as long as the temporary employment agency is properly licensed, and the employer provides acceptable justification for requiring a temporary employee. Temporary contracts are fixed-term employment contracts that terminate if certain objective criteria are met, such as the completion of an assignment or the return of an employee who was temporarily replaced. Temporary employment contracts must be concluded in writing and may not exceed 2 years.
Temporary workers can be assigned to more than 1 user, even if they do not have an indefinite employment contract for temporary assignment, if the contrary is not established in the respective contract. The user must prepare the worker's work schedule and schedule the period of vacations that are taken at his/her service. Temporary employees are entitled to pay between assignments.
In Portugal, the Labor Code sets maximum lengths for trial periods. A trial period may be excluded from the employment contract by the written agreement of both parties. The maximum trial period for the majority of employees is set at 90 days. It varies based on the criteria listed below:
For employees holding positions of technical complexity or a high degree of responsibility, positions requiring special qualifications, carrying out functions of trust, who are seeking their first job and are long-term unemployed, the probationary period is 180 days.
The maximum trial period for a manager or senior manager is 240 days.
For fixed-term employment contracts of six months or more, the maximum probation period is 30 days.
For fixed-term contracts of less than 6 months' length, the maximum trial period is 15 days.
Employees are entitled to standard employee protections and rights during their trial period. If the trial period lasts more than 60 days, the termination of the contract by the employer requires 7 days' notice. If the trial period lasts more than 120 days, the notice must be at least 30 days.
The Labor Code of Portugal stipulates that the regular working hours may not go over 8 hours per day and 40 hours per week. The maximum average hours of work per week (including overtime) cannot exceed 48 hours, measured over a reference period established in a collective labor agreement not exceeding 12 months or, in the absence thereof, in a reference period of 4 months, or 6 months in the cases provided for in the Labor Code.
Bill 790/XIV/2 guarantees the right to professional disconnection. Bill 745/XIV/2 contains changes to the legal and labor regime for teleworking, ensuring greater protection for workers.
Portugal's labor law provides employees the right to paid annual leave of 22 working days. Employees can take leave after 6 months of working with the same employer and accrue 2 vacation days per month of work in the first year, up to 20 days. If the employee's contract is under 6 months, the employee is eligible for 2 vacation days per month worked and may use the days immediately before the employment contract terminates. The law prohibits compensation in lieu of vacation.
Leave should be taken the year it expires, but can be taken until April 30th of the following year if the employee and employer agree.
Payments toward sick leave in Portugal come from the social security system, which is paid into by employees and employers. Employees receive a percentage of their regular wages while absent due to illness. To qualify for sickness benefit, an employee must have performed at least 12 days of paid work within the first 4 months of the 6-month period that ends in the month they stop working due to illness. These 12 days may occur in a single month or be accumulated across those 4 months. If a new period of incapacity begins within 60 days of the end of a previous sick-leave period, the employee is not required to meet the 12-day work requirement again.
Payment of benefits begins on the fourth day of leave. The exact amount varies based on the amount of time an employee is unable to work:
55% of regular wages for an incapacity lasting 4 to 30 days
60% of regular wages for incapacity lasting 31 to 90 days
70% of regular wages for an incapacity lasting 91 days to 1 year
75% of regular wages for an incapacity lasting more than 1 year
The daily amount of the sickness allowance in situations of incapacity for work resulting from tuberculosis is calculated by applying 80% or 100%, depending on whether the beneficiary's household includes up to 2 or more dependent relatives.
If the sickness benefit corresponds to 55% or 60% of the reference remuneration, it is increased by 5% if certain conditions are met.
The Labor Code of Portugal provides up to 30 days of maternity leave before birth, but requires 42 consecutive days of leave after giving birth. In addition, following the birth of a child, both working parents are entitled to 120 or 150 consecutive days of initial parental leave, which they may divide and share between them after the birth, while still respecting the mother’s exclusive rights outlined separately in the law. Parents may also choose to take this leave at the same time, provided it occurs within the 120–150-day period allowed.
An employee who intends to use part of the leave before giving birth must inform their employer and submit a medical certificate stating the foreseeable date of delivery at least 10 days before their leave. If medical urgency makes it impossible, the employee must attempt to provide the employer with a medical certificate at the earliest time possible.
The Labor Code of Portugal grants fathers a paid exclusive parental leave of 28 days, 7 of which must be taken consecutively and immediately after birth. The remaining days must be taken within 42 days of the birth. The father is entitled to 7 additional days of paid leave if they are taken at the same time as the mother's initial parental leave. In cases of multiple births, the father receives an extra 2 days of leave for each additional child. For the optional 7-day period, the father must give his employer at least 5 days' advance notice. The father is also entitled to be absent from work for up to 3 consecutive days in the case of gestational bereavement (pregnancy loss), where the mother takes her interruption-of-pregnancy leave or the corresponding 3-day absence.
Portugal's Labor Code requires the employer to give written advance notice to employees who are being dismissed. The duration of the advanced notice period varies based on the seniority of the employee:
15 days for the service of under 1 year
30 days if the worker has been employed between 1 and 5 years
60 days if the worker has been employed between 5 and 10 years
75 days for service over 10 years
Employees on probation are also entitled to a notice period for termination of their contract. If the trial period lasts more than 60 days, the termination of the contract by the employer requires 7 days' notice. If the trial period lasts more than 120 days, the notice must be at least 30 days.
Per the Labor Code of Portugal, severance pay for dismissed employees is 24 days of compensation per year of service.
In collective dismissals, severance pay is calculated as 14 days of base pay and seniority payments for each full year of seniority, limited to 240 times the guaranteed minimum monthly salary. The value of the worker's monthly base salary and seniority to be considered for calculating the compensation cannot exceed 20 times the guaranteed minimum monthly salary.
