How to hire in Portugal through an EOR

Portugal treats employment contracts as a tool for job stability, not flexibility. That's the first thing to understand. Get the contract type wrong, or misclassify someone as a contractor, and you're looking at real liability. Here's what you actually need to know.

Contract types and when to use them

Open-ended (indefinite) contracts are the legal default in Portugal. If you don't specify that a contract is temporary, it's presumed to be indefinite. Most companies use them because they're simpler and they fit with Portuguese labor law's strong bias toward permanent employment.

Fixed-term contracts exist, but they're restricted. You can only use them for specific, temporary business needs: replacing absent workers, seasonal work, short-term projects, hiring someone from long-term unemployment, or exceptional activity spikes. You must state the reason in the contract itself. The maximum duration is two years, with up to two renewals, but the total duration including renewals can't exceed two years. After that, the employee has a legal claim to an open-ended contract.

Very short contracts (contrato de muito curta duração) are for seasonal or event work only. They're capped at 35 days per assignment or 70 working days per calendar year. You don't need a written contract for these, but you must notify social security electronically.

Part-time contracts must be in writing and specify the hours and days worked. Temporary agency contracts are also common, where an agency handles payroll and social security while the worker gets the same legal protections as any other employee.

What must be in the contract and how it must be documented

Certain contracts must be in writing by law: fixed-term contracts, contracts with foreign workers, part-time contracts, remote work contracts, and contracts with multiple employers. For all other types, verbal agreements are technically legal, but you must provide a written statement of core working conditions within 60 days of employment.

Every contract should include the employee's and company's names and contact details, job title and duties, salary or hourly rate, work schedule (days and hours), termination terms, and any confidentiality or non-disclosure clauses.

Probation periods are standard and last 30 days. Notice periods for termination depend on contract length: 15 days for contracts under 6 months, 30 days for contracts over 6 months. For open-ended contracts, either party can terminate with notice, but you as the employer need a valid reason, whether that's poor performance, misconduct, or redundancy.

Contractor vs. employee: where companies get burned

Portugal has strict rules about who qualifies as an independent contractor (a self-employed worker issuing "green receipts") versus an employee. The legal test comes down to control. If you dictate how, when, and where the work happens, they're likely an employee. If they work for multiple clients, set their own hours, and control their methods, they might qualify as a contractor.

Misclassification is expensive. You're liable for unpaid social security contributions, back taxes, and potentially damages. The worker can also claim employee benefits retroactively. Portuguese labor authorities take this seriously, so it's worth getting right from the start.

Non-compete and intellectual property clauses are enforceable in Portugal, but they need to be reasonable in scope, duration, and geography. A non-compete that's too broad or runs too long will be struck down by a court. IP assignment clauses are standard and enforceable if they're clearly stated in the contract.

Portugal requires employers to pay an annual leave bonus equal to one full month's base salary. That's on top of the minimum 22 days of paid vacation, which makes time off more generous here than in most of Europe.

Time off

Employees get a minimum of 22 working days of paid annual leave per year. In the first year, leave accrues at two days per month worked, up to 20 days. From year two onwards, it's 22 days, and you can't go below that legally.

At least 10 of those days must be taken consecutively. Unused days from the prior year carry over but expire by April 30. On top of that, there are 13 national public holidays plus one local municipal holiday depending on the area.

All leave types

Here's what the law requires for each leave type. Pay is at 100% unless noted, and job protection applies during leave.

Mandatory benefits

As an employer, you contribute 23.75% of gross salary to social security. Employees contribute 11%. That covers health, pension, and family benefits. Healthcare is provided through the public system (SNS), funded by those contributions. There's no separate private health insurance mandate.

Pension works the same way: employer at 23.75%, employee at 11%. The retirement age is 66.5 years as of 2025.

One thing worth knowing: that annual leave bonus (one month's pay) is mandatory, not optional. Many collective bargaining agreements also include meal vouchers, typically around €6-10 per day, or transport passes, but these aren't universal legal requirements. Check the relevant industry CBA for your employees.

What people actually expect

The legal minimums are a starting point, but if you want to compete for good candidates in Portugal, you'll need to go a bit further. Most top candidates expect 25-30 vacation days total. Offering that puts you ahead of employers who stick to the minimum.

Private health insurance matters a lot here. The public system has waiting times, and around 80% of companies offer supplemental coverage. Employees in tech and Lisbon-based roles tend to treat it as standard.

Remote work stipends of €20-50 per month for internet or home office costs are common, particularly since 2020. Meal cards (vale refeição) at €8-12 per day are close to expected in white-collar roles and are tax-free up to certain limits.

In many sectors, 13th and 14th month payments, covering holiday and Christmas bonuses, are the norm rather than a perk. If you skip private health cover or these extras, you'll likely lose candidates to employers who include them. Aiming for 25 days of leave plus these additions gives you a realistic shot at hiring well.

Letting someone go in Portugal isn't straightforward. Courts lean heavily toward employees, and if you get the process wrong, you're looking at reinstatement orders or double damages. An EOR can help you follow the right steps from the start.

Firing someone

Portugal's employment law is strongly employee-friendly. You can only dismiss someone for specific reasons: serious misconduct (theft, fraud) or objective business grounds like redundancy. Just cause can also include repeated absences, persistent underperformance, or failure to adapt to role changes.

Unfair dismissal happens when there's no valid reason, or when you skip a required step, like giving the employee a chance to respond. Some employees have extra protection: pregnant women, parents on parental leave, union representatives, and people with disabilities above 33%.

Mutual agreement is usually the cleanest route. Get it in writing, and note that the employee has seven days to change their mind unless the agreement is notarized. For a unilateral dismissal, you'll need to issue written notice, allow a response, and make a final decision within 30 days. Disciplinary dismissals follow a separate procedure and don't require notice or severance if the case is proven.

Notice periods

Notice length depends on how long the employee has worked for you and the type of contract. As an employer, you'll generally give more notice than the employee would. You can pay in lieu of notice if needed.

Severance

Severance is only required for objective dismissals like redundancy, not for just cause terminations. It's calculated on basic salary plus seniority pay per year of service. The formula varies by hire date: pre-2012 and post-2013 hires are calculated differently, and a 2023 change added further complexity for collective dismissals, moving to 14 days per year from May 2023 onward.

Fixed-term contracts now pay 24 days per year, up from 18. You'll need to include the severance calculation in the dismissal notice, and payment must be made by the end of the notice period or the dismissal can be considered unlawful.

Work permits and visas

You can hire foreign nationals in Portugal through an EOR. The EOR acts as the legal employer and sponsors the work permit. The main route for skilled roles is a standard work visa, which is tied to both the job and the sponsoring employer.

To qualify, you'll typically need a job offer, proof of the candidate's qualifications, and evidence that no suitable local candidates were available. Processing takes around 2-4 months through AIMA (formerly SEF). Portugal also has a digital nomad visa for remote workers earning at least €3,280/month (2024 figure). It's valid for one year and renewable, but it's not linked to a local employer, so you don't need an EOR for that route.

An EOR can manage sponsorship paperwork, renewals, and ongoing compliance. If your hire is highly skilled, it's worth checking whether they qualify for an EU Blue Card.

Other risks to watch

GDPR applies strictly in Portugal. Make sure you have proper consent before collecting or processing employee data, as fines can be significant. Unions are also fairly active, with over 20% of the workforce covered. Collective agreements often set higher minimums than the law requires on pay and working hours.

A few recent and upcoming changes are worth knowing about. A 2025 draft bill would simplify disciplinary terminations for companies with fewer than 250 employees by removing the investigation phase. Opposition to reinstatement is also being broadened. Fixed-term contract endings block you from rehiring someone in the same role. From 2026, expect changes to probation rules, expanded telework rights for parents of sick children, and restrictions on outsourcing after redundancies. An EOR will keep track of these changes as they take effect.