Portugal 11 min

Employee benefits in Portugal: All you need to know

Written by Bruce Gilbert
Bruce Gilbert


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If you’re looking to expand your team globally, you’ll soon discover that hiring employees in other countries can be tricky. Understanding what benefits are required and expected from talent outside your home country can pose a serious challenge.

Perhaps you’re on the verge of expanding into the Portuguese labor market and you’re beginning to work through an unfamiliar roster of employment regulations. There is a collection of mandatory benefits you must provide to your Portuguese employees, and although the prospect of managing unique requirements for a different country might seem intimidating, non-compliance can attract hefty fines and penalties.

We want to make it easy to understand your obligations as an employer of Portuguese talent. As an experienced employer of record with entities all over the world, Remote knows that managing a competitive and compliant benefits package across multiple countries (including Portugal) can be simple, inexpensive, and scalable.

In this guide to benefits for Portuguese employees, we’ll explain the mandatory benefits you must provide as well as additional perks you can offer to give your business an edge in acquiring and retaining top talent in Portugal.

Who is entitled to benefits in Portugal?

The Portuguese Labor Code classifies workers into two major categories, namely:

  1. Employees

  2. Independent contractors

Workers are classified based on a collection of factors, but in general, the difference between a Portuguese employee and a Portuguese contractor boils down to a few key factors:

  • Full-time employees generally match one or more of the following:- take orders directly from an employer- work at a specific location- earn a fixed salary on a recurring basis

  • Independent contractors generally match one or more of the following:- autonomy over their working process- individual control over when and where they work- can freelance for numerous clients at once- work on short-term, part-time, or non-repeated projects

It’s important to understand these distinctions. With the exception of social security contributions, the majority of benefits stated in the Portuguese Labor Code only apply to full-time employees.

Regardless of whether you view a worker as an employee or a contractor, the Portuguese government's determination is what matters. If you’re found to have an employment relationship and you’ve neglected to provide statutory benefits, you’ll open your company up to serious risks of misclassification and subsequent fines or penalties.

For more detailed information about understanding this concept, be sure to read our dedicated guide to misclassification.

Offering benefits for Portuguese contractors

Employers shouldn’t refrain from offering a benefits package to Portuguese contractors just because these entitlements aren’t mandated.

If you value your contractors, benefits can build strong trust and connection with your business, especially in a remote context. You do still need to be careful of triggering misclassification dangers with the type of benefits you provide.

Value-based benefits like paid time off, flexible working hours, and parental leave provisions can often keep you on the safe side of this legislation (more on this in our guide to offering benefits to international contractors).

An employer of record (EOR) like Remote can give you more specific advice to minimize associated risks according to the employment legislation of Portugal (or any other nation).

Statutory employee benefits in Portugal

Statutory benefits, also known as mandatory benefits, are entitlements that employers are obligated by law to provide to their employees. Common examples include benefits like paid annual leave, parental leave, worker's compensation insurance, and paid sick leave.

Portuguese working conditions are relatively strong. On a scale of 1 - 5, (1 denoting best and 5, worst) Portugal ranks second on the International Trade Union Convention Global Rights Index that measures workers’ welfare across the world.

The Portuguese Labor Code guarantees extensive workers’ protections, protects employees from arbitrary dismissal, and provides a generous safety net for Portugal’s workforce of 5.1 million.

As a business looking to expand into the Portuguese labor market, you need to familiarize yourself with the benefits required by law in order to stay compliant while attracting the best talent Portugal has to offer.

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Portuguese annual leave entitlements

Portuguese employees are entitled to 22 working days of fully paid vacation every year.

Temporary workers who are contracted for up to six months of consistent work are entitled to two days paid vacation for each month worked, while temporary employees who are engaged for up to 12 months receive a prorated annual vacation.

Maternity leave in Portugal

Parental leave under Portuguese law is progressive and flexible. Both partners can choose to share their parental leave entitlements, or they can decide to reserve them for one partner only.

Partners opting to share their parental leave can choose between two options:

  • 150 days with full wages paid

  • 180 days off with 83% of their normal wages

If both partners opt for one partner to take maternity leave rather than sharing between partners, they will be entitled to one of two options:

  • 120 days of maternity leave with full pay

  • 150 days with 80% of normal wages

Portuguese paternity leave allowance

In line with amendments made to the Portuguese Labor Code in 2020, compulsory paternity leave now lasts for 20 days.

Five days of the allowance must be taken immediately following childbirth. That is, whether a father chooses to share the parental leave with a partner or not, it is mandatory to exercise his compulsory paternity leave within six weeks of childbirth, with five days off immediately after delivery.

Additional parental leave allowances

Mothers are entitled to 30 days of exclusive pre-natal leave (in case they’re sharing the parental leave with their partner) while compulsory maternity leave lasts for six weeks after delivery.

Parents can take up to 30 days off if their newborn is hospitalized and an additional 30 days off if the child is delivered prematurely.

Beyond the basic parental leave for childbirth, parents can take anywhere from six months to four years off, to care for a disabled or chronically sick child.

Pension plans and retirement contributions

Pensions and social security contributions are compulsory in Portugal and are administered by the Ministry of Labour, Solidarity, and Social Security.

Employers are required to pay a payroll contribution equal to 26.5% of an employee’s wages while an 11% social security tax is deducted from each employee’s paycheck. This provides for social security, occupational accident insurance, and unemployment benefits.

Independent contractors are liable for their social security contributions, at a rate of 29.6% of their earnings.

The only exception applies when an independent contractor earns up to 80% of their annual revenue (equal to €2,515.32 or more) from one or a group of clients. In that case, the client(s) would be liable for a 5% social security tax on any payments made to the contractor.


Working hours in Portugal are limited to 40 hours per week and the maximum overtime is capped between 80 to 200 hours per week depending on multiple factors including the industry, the size of the business, and the employee’s status (either part-time or full-time).

Regular overtime is compensated with a 25% premium for the first hour and 37% for the second onwards.

Any overtime work carried out on a holiday or on a predetermined weekly rest day is compensated with a 50% premium on the normal pay for the hours worked.

Insurance entitlements

Under Portuguese law, employers are not obligated to provide specific insurance benefitssince social security caters to unemployment, sickness and parental benefits, disability, and pensions. However, employers do have to carry workers' compensation insurance to protect against occupational injury.

Employers cover most insurance obligations through mandatory social security contributions. Some global companies may opt out of offering private health insurance to Portuguese employees, but it’s still common for many employers to offer secondary health insurance to their employees to help them access more specialized care (and to reduce wait times for more common treatment).

Indeed, offering a health insurance benefit or other additional insurance benefits (like dental insurance, vision insurance, and life insurance), can be such an effective way to build trust with new hires and separate your offer from that of a competitor.

link to [Webinar Recording] Managing a global benefits plan

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Additional benefits to consider for Portuguese employees

Portugal has one of Europe’s most competitive labor markets, especially in the software industry, so offering the bare minimum will reduce your chances of hiring the best Portuguese talent.

If you develop and offer a globally competitive benefits package to Portuguese talent, this might be the kicker to help you land a critical candidate over a competitor.

Job seekers are now conditioned to expect certain perks in a global talent market where remote work is readily available with businesses across the world (we explain in more detail in our values-based benefits guide).

Creating a globally competitive and compliant benefits package doesn’t have to be complicated. Remote cares passionately about providing perks and benefits to enable your global team to enjoy security, stability, and work-life balance. Our team of internal HR specialists and global benefits experts are constantly working with our customers to create customized and competitive benefits packages to attract top talent.

The size of your business shouldn’t prevent you from sourcing international talent either. If you’re a smaller business looking to employ Portuguese workers or other international talent, your benefits plan doesn’t have to be cost-prohibitive. This small business guide to affordable global benefits will help you find inexpensive perks that international employees will love.

How to set up and manage benefits for international employees

Whether you’re hiring a copywriter from Portugal, graphic designers from New Zealand, or UX designers from Costa Rica, you need to understand how benefits work in each situation to stay compliant and attract the best talent.

Most importantly, you need a solution that allows you to stay compliant with all of the local labor laws in each country of operation.

Instead of building a fully-owned local legal entity with a specialist HR function in each new market, an employer of record provides a cost-effective, fast, and secure alternative to help you grow your team across borders.

When should you use an employer of record?

If you don’t have an established process to manage the complicated parts of scaling global hiring (in Portugal or abroad), an employer of record like Remote will give you immediate relief.

Remote’s EOR service gives you the advantage of dedicated local employment experts that can offer the insight you need to create a strong benefits package, a compliant employment contract, and a competitive offer to your candidate.

We’ve previously dedicated an entire guide covering when you should use an employer of record, but there are a few critical trigger areas where an EOR can dramatically minimize your risk:

  • Creating a consistent and competitive global benefits package

  • Managing the delivery of benefits in compliance with all local labor laws

  • Terminating an employee in compliance with local regulations

  • Managing the nuances of IP & patents produced by your remote employees

An employer of record like Remote manages the complicated parts of international employment. Remote’s powerful software hub and team of global HR experts make it easy to organize all the tiny details of managing a distributed team. Remote powers your global employment while you focus on growing your business.

Our team of global employment experts handles the complexities of running your global HR operations in the backend, and our software puts everything in one dashboard where you can:

  • Manage payroll and time off

  • Handle local employment taxes

  • Stay compliant with statutory benefits

  • Offer competitive and equitable global compensation packages

  • Scale your global team faster

Learn how Remote simplifies international hiring so you can scale your distributed team faster.

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