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Undoubtedly, payroll is a critical process for any organization. The pay cycle in Portugal refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

There is no official legal date that salaries must be paid by a particular period. However, it must be paid at least once a month.  

There are mandatory 13th and 14th salary payments in Portugal. The 13th payment is vacation pay, and the 14th is Christmas pay.  

The Official Gazette has published an increase in the guaranteed minimum monthly salary effective from January 1, 2024.

• The guaranteed minimum monthly salary increases to €820.00 from €760.
• This increase applies to all workers, including part-time workers.
• The minimum salary in the autonomous regions of Madeira and the Azores may be subject to different regulations.

In Portugal, overtime should not exceed:   

• 2 additional daily working hours with a weekly maximum of 48 hours.   
• 150 hours per year for employees at companies with more than 50 employees.   
• 175 hours per year for employees at companies with less than 50 employees.   
• Up to 200 annual overtime hours can be worked if a collective labor agreement or force majeure exists.   

Increase in minimum wage for Azores and Madeira region
With effect from January 1, 2023, Madeira’s minimum wage increased to 785 euros and The Azores’ minimum  wage increased to 798 euros per month, both have higher minimum wages than mainland Portugal.

Overtime pay is calculated as follows:  

• The first hour is hourly rate plus 25%, and the following hours are hourly rate plus 37.5 percent.  
• On a day off or a holiday, overtime is calculated at 50% of the normal working hour.  

Overtime work exceeding 100 hours per year will be paid as per updated rates.

In Portugal, tax records generally must be kept for a minimum of four years.  

This period may be extended if a criminal inquiry is initiated or if the Portuguese tax authorities determine that an entity's funds are connected to a tax haven and were not declared as such to the tax authorities.

Hiring of Employees: Preference and Discrimination  

The general prohibition of discrimination present in the law applies to all stages of the contract of employment, including hiring.  

In very specific cases, certain categories of employees are to be given preference in hiring; for example, those working under fixed-term employment contracts have priority in occupying permanent positions that become available.  

In Portugal, the following documents and information are mandatory to be provided:  

• Copy of identification documents containing the full name, date of birth, date of admission, modality of contract, professional category, promotions, retribution, social security, tax number, and bank details for salary payment (IBAN);
• Copy of the residence permit, if applicable (non-EU workers);  
• Identification and address of the person or people receiving a pension in the event of death resulting from an accident at work or occupational disease ;  
• Admission medical exams: to be carried out before starting the work or, in cases of urgency, within the 15 days following the start of the work. 

Optional documents:  

• Proof of address; 
• Contact person in case of emergency;  
• Level of studies  

The probation period duration is variable according to the type of contract:

Non-fixed term contracts:

• General employment – 90 days  
• Positions of technical complexity; positions of special trust; workers looking for the first employment and long-term unemployed workers – 180 days  
• Directors and top executives – 240 days 

Fixed-term contracts: 

• Six months or more – 30 days
• Less than six months / unspecific term – 15 days

Portugal specifies 13 mandatory paid public holidays.  

• Jan 1: New Year's Day
• Apr. 7: Good Friday
• Apr. 9: Easter Sunday
• April 25: Liberation Day
• May 1: Labor Day
• Jun. 8: Corpus Christi
• June 10: Portugal Day
• Aug 15: Assumption Day
• Oct 5: Foundation of the Republic
• Nov 1: All Saints' Day
• Dec 1: Restoration of Independence
• Dec 8: Immaculate Conception
• Dec 25: Christmas

Employees are guaranteed a minimum of 22 days of paid leave each calendar year. New employees with six months' service are entitled to two working days’ vacation for each month worked in the year of hire up to a maximum of 20 days.

Unused vacation may be carried over to April 30 of the following year, although no more than 30 vacation days may be taken in the same year. Any annual leave entitlement in excess of 20 days may be exchanged for cash.

Scheduling of annual leave is decided through an agreement between employer and employee. The leave can be broken into periods of no less than ten days.

Sick Leave:

Employees who have worked and made contributions to the social security system for at least six months and worked at least 12 days in the four months before the illness, are entitled to sick leave at partial pay.

For the first 30 days of sick leave, the social security system pays employees 55 percent of their average earnings,

31 days until 90 days of sick leave the social security system pays employees 60 percent of their average earnings,

91 days until 365 days the social security system pays employees 70 percent of their average earnings.

With more than 365 days of sick leave, the rate increases to 75 percent.
 

The maternity leave is paid by social security as follows: 

• 120 days (just mother) – pay 100%   
• 150 days shared leave (120 for mother +30 for father) – pay 100%   
• 180 days shared leave (150 for mother +30 for father) – pay 83%   
• 150 days – pay 80%  

Leave in a situation of clinical risk during pregnancy:

According to Article 37 of the Labor Code, a pregnant employee who is in a situation of clinical risk for herself or for her unborn child, and the employer does not provide her with work compatible with her state and professional category, shall be entitled to unpaid leave, for the period of time as stated by medical prescription and providing this information in advance of 10 days or, in case of urgency proven by the physician, as soon as possible.

Violation of the provisions is a very serious administrative offense.

Termination of Pregnancy Leave:

According to Article 38 of the Labor Code, in case of termination of pregnancy, an employee shall be entitled to unpaid leave between 14 and 30 days.

Parental Leave:

Parental leave shall consist of the following kind of leave –

1. Initial parental leave

In the event of initial parental leave over 120 days, after enjoying those first 120 days, both parents can now choose to cumulate the remaining period of leave daily with part-time work, corresponding to half the normal period of daily working time.

2. Exclusive initial parental leave for the mother

As per the Article 41

The mother may take up to 30 days of initial parental leave before giving birth and must take 42 consecutive days of leave following childbirth.

If a female employee plans to use some of her leave periods before giving birth, she must notify her employer of her intent and provide a medical certificate with the expected date of delivery. She is obligated to do so at least ten days in advance or earlier if the doctor certifies that it is urgent.

3. Initial parental leave to be enjoyed by the father due to the impossibility of the mother

As per the Article 42

The father or mother is entitled to unpaid leave in the following cases:

i) Physical or mental incapacity of the parent who is taking the leave, as long as it remains;

ii) Death of the parent taking the leave.

4. Exclusive parental leave from the father

As per the Article 43

In the case of initial parental leave exclusively for the father:

The father's exclusive parental leave goes from the 28 consecutive days, or interspersed days, of at least seven days, in the 42 days following the birth of the child, 7 of which must be taken consecutively immediately afterward.

The father can now enjoy seven additional days of leave, consecutive or Intersperesed, simultaneously with the mother’s initial leave.

Adoption Leave:

As per the Article 44,

In the case of the adoption of a child under the age of 15, employees are entitled to adoption leave of 120 or 150 consecutive days, the enjoyment of which they can share after the adoption of a child. 

In case of multiple adoptions, the period of leave shall be increased by 30 days or two days, regarding the days foreseen for initial parental leave and the father’s exclusive parental leave, respectively. 

The candidate adopter may take up to 30 days of initial parental leave during the transition and follow-up period. 

Exemptions and licenses are extended to employees who want to adopt or become a foster family.

Leave for prenatal consultation:

As per the Article 46,

1. The pregnant worker has the right to leave the work for prenatal consultations, for the time and number of times necessary.

2 - The worker should, whenever possible, attend the prenatal appointment outside working hours.

3 - Whenever prenatal consultation is only possible during working hours, the employer may require the

worker to provide evidence of this circumstance and to carry out the consultation or declaration of the same facts.

4 - For the purpose of the previous numbers, the preparation for childbirth is equated with prenatal consultation.

5 - The father is entitled to three leaves to accompany the worker to prenatal consultations.

Child Care Leave:

As per the Article 52,
Parents are entitled to consecutive or in part - unpaid childcare leave, up to a limit of 2 years. In the case of a third child or more, the leave is limited to 3 years.

Leave for Sick Child:

As per the Article 49,
An employee shall be entitled to leave from work to provide unavoidable and essential assistance, to a child under the age of 12 or, regardless of age, to a child with a disability or chronic illness, up to 30 days a year or throughout the period of eventual hospitalization.

The employee may be absent from work for up to 15 days a year to provide unavoidable and essential assistance in the event of illness or accident to a child aged 12 or over.

Leave for Assisting Grandson:

As per the Article 50,
An employee shall be entitled to leave for up to 30 consecutive days, following the birth of a grandson who lives in communion and who is the son of a teenager under the age of 16. The employee shall also be on leave, in substitution of the parents, to provide unavoidable and essential assistance, in the event of illness or accident, to a minor grandchild or, regardless of age, with a disability or chronic illness.

Complimentary Parental Leave:

As per the Article 51,
An employee (father and mother) are entitled to complemintary leave, for assistance to their birth child or adopted child of not more than 6 years, in any of the following modes:

a) Extended parental leave, for 3 months;

b) Part-time work for 12 months, with a normal working period equal to half the full-time;

c) Interim periods of extended parental leave and part-time work where the total duration of absence and reduced working time is equal to normal three-month periods of work.

The father and mother may be entitled to the leave in a consecutive manner or in part in 3 separate periods, whereby one parent can enjoy the leave at one time.

If both parents intend to simultaneously take the leave and are at the service of the same employer, the employer may postpone the leave of one of the parents, provided that the respective grounds are provided in writing.

Leave to take care of a child with chronic illness, disease, cancer, or disabilities:

As per the Article 53,

1. Parents are entitled to leave for a period of up to 6 months, extendable up to 4 years, to assist children with disabilities, chronic illness, or cancer.

2. If the child with a disability, chronic illness, or cancer disease is 12 years of age or older, the need for assistance is confirmed by a medical certificate.

3. The leave may be extended up to a maximum limit of six years, in situations of need to extend assistance, confirmed by a medical certificate.

4. Parents of minors with disabilities or chronic illness, aged no more than one year, are entitled to a reduction of 5 hours from the normal weekly working period, or other special working conditions, to assist the child.

Education Leave:

As per the Article 91,
An employee who is a student may take a leave of absence due to the provision of an assessment test –

1. On the day of the test and the immediately preceding it

2. In the case of tests on consecutive days or more than one test on the same day.

The days immediately preceding are as many as the tests to be given.

The immediately preceding days include weekly rest days and holidays. Absences cannot exceed four days per subject in each academic year. The right to leave can only be exercised in two academic years concerning each subject.

Employee shall be entitled to justified leave for traveling to a teaching establishment responsible for the education of a minor due to the educational situation of the minor, for the strictly necessary time, up to four hours per quarter, for each travel.

Marriage Leave

As per the labor code Article 249,
An employee is entitled to take 15 consecutive days of marriage leave in Portugal, this absence is paid by the company.

Bereavement Leave

As per the Article 251,

1. Up to 20 consecutive days, due to the death of a spouse not separated from persons and property or equivalent, child or stepchild;

2. a) Up to five consecutive days due to the death of a relative or similar in the 1st degree.

b) Up to two consecutive days due to the death of another relative in the second degree

Family Care Leave:

As per the Article 252,
An employee shall be entitled up to 15 days a year to provide unavoidable and essential assistance, in the event of illness or accident, to a spouse or partner, or relative living with the employee.

The right provided for in the previous number is also guaranteed to the caregiver worker who is recognized as a non-main informal caregiver, in case of illness or accident of the person cared for, under the terms defined in the applicable legislation.

15 days per year shall be added to the period of absence, in the case of urgent and essential assistance to a person with a disability or chronic illness, who is a spouse or lives in a de facto union with the worker.

Absences due to gestational mourning:

As per Article 38 -A,
Working mothers and fathers can take justified absence for gestational bereavement for up to three consecutive days.

The notice period in Portugal is executed in the following manner: 

• 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 ten years of service;  
• 75 days for employees with more than ten years of service 

The dismissed employee shall be notified in writing.  

The notice period in case of probationary periods and service commission agreements is also specified in the Labour Code. During a probationary period, either the employer or the employee can terminate the contract without providing notice. However, suppose the probationary period has lasted longer than 60 days. In that case, 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.  

Service commission agreements can be terminated without cause for certain types of employees, namely managerial staff, as long the employer abides by the already mentioned minimum notice period thresholds.  

Individual employees are not entitled to pay in lieu of notice according to the 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.

In the case of terminations for just cause for labor contracts signed after Nov. 1, 2011, and for all work performed after Oct. 31, 2012, employers must provide employees with indefinite contracts with the equivalent of 18 days of pay for every year of service for the first three years and 12 days of pay for each year of service after the first three years.

For defined contracts, employers are required to pay employees 18 days of pay for each year of service.  

In Portugal, most non-EU nationals will require a work permit before initiating employment there. Even under those circumstances, the work permit is only provided if the individual has obtained a secure job or is married to a Portuguese citizen.  

EU/EEA/Swiss nationals do not require a Portuguese work visa for their job or travel, but if they have exceeded their stay or work longer than six months, then they would be required to produce a Residence Certificate ((Certificado de Registo).

A person can apply for permanent residence in Portugal after being there for five years. If the stay exceeds six years, then they can claim Portuguese citizenship.

An employer cannot ask the candidate for information about their private life unless it’s strictly necessary for the job profile that they have applied for. Under such a situation, the reason must be clearly stated in a letter to the individual.

The same rules of restriction apply when concerning the candidate’s health or pregnancy when interviewing for the job unless, again, it’s highly essential and is pertaining to the job.

The employer can request general health exams to evaluate the candidate’s psychic and physical conditions to perform in the particular job; other than that, the employer is not supposed to ask for any other medical reports.

However, there are certain exceptions to that rule:

• The medical examination is a necessity to evaluate if the candidate is fitting to the role and job to be performed.
• Purpose of employee’s own safety or that of a third party.