If you plan to hire an employee based in Portugal, you’ll want to stay apprised of how your benefits package must stay compliant with Portuguese labor laws. Portugal is known for having a great deal of worker protections thanks to the labor laws of the European Union, the Portuguese Constitution, and the Labor Code, which include regulations around employee benefits.
Here's everything you need to know to offer benefits that meet Portuguese labor laws—plus, how to go above and beyond for a competitive benefits package that can retain and maintain top talent in that country.
What employee benefits are mandatory in Portugal?
If you employ a full-time Portuguese worker and fail to offer them the required benefits, you may be fined or become the subject of a lawsuit. If you’d like to appeal to a larger talent pool, consider offering benefits beyond the minimum requirements.
While these benefits are mandatory for full-time employees, independent contractors are not entitled to benefits in Portugal. However, regulations restrict how Portuguese contractors can engage with your business. For example, contractors can only work for a company for up to four years and, during that time, they have the power to determine where and when they complete their work.
In Portugal, pension plans are handled by the government’s Ministry of Labour, Solidarity, and Social Security. Both employees and employers contribute to the plans at the following rates:
- Employers make a payroll contribution equal to 26.5% of an employee’s wages.
- Employees have 11% of social security tax deducted from each paycheck.
While Portuguese social security covers unemployment, sick leave, parental leave, orphan and widow pension, and disability leave, employers are required to have worker’s compensation insurance in case of a workplace-related accident. Under worker’s compensation, employees and their dependents are entitled to compensation for loss or damages resulting from an accident or an occupational disease. If you don’t carry this insurance, you may be fined and may also be responsible for any claims that may arise from your employee or their dependents.
When you make an offer to a full-time employee, give them information about your accident insurance policy and employee compensation funds, including your occupational accident insurance policy number and insurer name.
Full-time workers in Portugal are entitled to 22 working days of paid leave each year. Employees are allowed to carry over vacation time from one year until April 30th of the next year. Employers can’t offer employees extra compensation in exchange for forfeited vacation days.
Sick leave is considered different from vacation entitlements. Portuguese employees are entitled to sick leave if they are unable to work for more than three days—sick leave isn’t paid for by the employer but, rather, by Portuguese social security.
There are also 13 national holidays, plus several regional and optional holidays, which are not included in those 22 days of paid leave. If a holiday falls on a weekend, employees are typically given a substitute day off (usually on the first working day following the holiday).
Full-time employees in Portugal must receive at least 40 hours of training per year to enhance their professional growth. Employers must either provide this training or allow their employees to pursue training at their convenience during regular work hours.
What employee benefits are optional in Portugal?
By Portuguese labor law, the benefits we’ve covered so far are regulatory minimums that all employers must offer their full-time employees. However, many employers go above and beyond those requirements. Robust benefits plans and perks can help entice and retain employees. Popular supplementary benefits include the following:
Meal allowance or meal voucher
It’s very common in Portugal for employers to pay meal allowances for each work day. These meal allowances are taxable unless paid through a tax-exempt card or ticket/voucher, in which case they are tax-exempt at up to €8.32 per day.
Health, dental, and vision insurance
All employees who contribute to social security get covered for healthcare, pension, unemployment, and paid parental leave from the government. However, while they have access to the public healthcare system through the National Health Service, wait times can be long, particularly for specialized care. Private health benefits can fill in those gaps. Dental and vision insurance are particularly popular offerings. You may also consider offering mental healthcare services, such as counseling or therapy.
Additional paid time off
You may consider offering additional time off beyond the required 22 days and Portuguese holidays. This might include paid personal days, flexible leave policies, or other plans.
Parental leave is protected by Portuguese law, and anyone who has contributed to social security for at least six months is entitled to it. Initial parental leave for all parents has a duration of 120 days to 150 consecutive days, with options for extensions. In the cases of multiple births, 30 days are added per twin. Maternal leave exclusively for the mother can be taken for 30 days prior to birth, plus six weeks must be taken following the birth. Paternity leave exclusively for the father includes taking 15 working days off during the first month after birth.
As an added perk, you may consider giving parents flexible work hours or additional leave time to spend with new children, adoptees, or foster children.
Childcare vouchers are a particularly popular benefit, but you may also consider offering benefits for those with elderly family members, such as care coaching or paid leave time.
In Portugal, it’s common to offer up company cars. In other cases, you may give employees car or transportation allowances.
Life insurance can be a huge help to an employee’s family in the case of their accidental death, whether or not their death is work-related. Life insurance may pay for funeral expenses, pay off debts, replace lost income, provide for dependents, and more. Employers can choose to pay part or all of the premiums for supplemental life coverage for their employees.
If you have a smaller company, you may consider offering your employee’s family an allowance in the case of death rather than arranging for life insurance.
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Running a global workforce isn't easy. It can be a challenge for global companies just to keep their benefits compliant—let alone managing offer letters, equipment, payroll, and everything else global employees and contractors need.
That's why, if you're going to hire employees, contractors, or remote workers globally, you need Rippling. Rippling makes it easy to onboard, manage, and pay employees and contractors around the world—in one system that's always compliant with local employment laws and regulations.
Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.