Outsourcing Employment Through a GEO Employer of Record Service

When entering a new market, businesses must make numerous decisions, including whether to integrate in Portugal and what type of organisation to form.

If a business plans to hire employees in Portugal, it must determine whether to manage payroll and other Employer of Record obligations internally or through a Global Jobs Organization. A GEO Employer of Record solution is a compelling option in situations where.

• the company is looking to setup an office quickly
• the company wants to work within a defined budget
• the company wants to limit its initial commitment in Portugal
• the company needs help with tax, employment, immigration and payroll compliance in Portugal

Because of the complexities of employment legislation in Portugal, using a GEO in conjunction with local legal counsel is recommended to ensure full compliance with employment laws, such as the drafting of local worker contracts.

In Portugal, AtoZ Serwis Plus GEO offers a robust service that enables businesses to rapidly deploy their personnel at fair, clearly stated costs and timelines. The business has a direct deal with AtoZ Serwis Plus to hire and pay their employees in Portugal.

The Employer of Record is then AtoZ Serwis Plus GEO. AtoZ Serwis Plus GEO takes legal responsibility for these workers, sponsoring them for work permits, ensuring compliance with local labour laws, and processing their monthly payroll. The quickest and most cost-effective way to deploy local and foreign staff into Portugal is to use AtoZ Serwis Plus GEO.  Read more about outsourced employment through AtoZ Serwis Plus GEO.

Table of Contents

• Hiring, Negotiating and Doing Business in Portugal
• Employment Contracts in Portugal
• Bonus Payments in Portugal
• Portugal Working Hours
• Vacation Benefits in Portugal
• Sick Leave in Portugal
• Maternity and Paternity Leave in Portugal
• Termination and Severance Pay in Portugal
• Portugal Tax
• Health Insurance in Portugal
• Supplementary Benefits in Portugal
• Portugal Holidays

Hiring, Negotiating and Doing Business in Portugal

When negotiating the terms of an employment contract and offer letter with a Portuguese employee, the following standard benefits should be kept in mind:

Employment Contracts in Portugal

In Portugal, it is best practise to have a solid, formal employment contract in place that sets out the terms of the employee's pay, benefits, and termination conditions. In Portugal, the wage and any bonus amounts should always be specified in Euros rather than a foreign currency in the offer letter and employment contract.

Bonus Payments in Portugal

In June and December, workers usually earn a bonus equivalent to one month's salary. The bonus for the 13th and 14th months is known as the 13th and 14th month bonus.

Portugal Working Hours

For a 40-hour work week, the work day is 8 hours long. Overtime is described as working more than 40 hours in a week. Workdays usually begin at 9 a.m., break for two hours at 1 p.m., resume at 3 p.m., and end at 7 p.m.

Vacation Benefits in Portugal

The legal minimum is 22 days of work (20 in the first year of employment with the company). At least 15 days of paid leave must be used in the calendar year in which they are accrued; the remainder can only be used until April of the following year. Employers in Portugal are expressly prohibited from giving extra pay to workers for foregoing paid vacation days.

Sick Leave in Portugal

Employees who are absent from work due to sickness or injuries are paid a sick leave allowance by the Portuguese social security system. Employees are eligible for up to 1,095 days of sick leave. The pay ranges from 55 percent to 75 percent of the employee's annual salary.

Collective bargaining arrangements can include clear rules about employee sickness or disability in certain situations.

Maternity and Paternity Leave in Portugal

 Female workers are entitled to 30 days of paid maternity leave before and after the birth of their child. In Portugal, maternity leave can be taken in two parts: 30 days prior to the birth and 90 days after the birth. If the employee has children, she is entitled to a 30-day extension.

Alternatively, the employee will take 150 days of unpaid leave at a rate of 80% of her salary.

In Portugal, fathers are entitled to ten days of paid paternity leave within 30 days of the child's birth. Five of these days must be taken in a row.

Termination and Severance Pay in Portugal

In Portugal, the probation period of an employment contract is usually 90 days, although it can be extended to 180 days for workers in highly technical or high-level-of-responsibility roles. The probationary period for senior executives and managers could be extended to 240 days. Fixed-term contracts of less than six months will include a 15-day probationary period, which may be expanded to 30 days if the commitment is extended. Despite the fact that probationary periods are considered mandatory in Portugal, they can be waived or shortened by all parties in writing or by collective bargaining agreements.

Termination notice by the employee is dependent upon the number of years of service.

• 15 days is required for employees with less than 1 years’ service
• 30 days for those between 1 and 5 years’ service
• 60 days for those between 5 and 10 years’ service
• 75 days for employees with over 10 years’ service

When an employer terminates an employment contract in Portugal, the workers are entitled to severance pay if the termination was for objective reasons. Employees are generally entitled to reimbursement for termination, which is equal to 20 days' base pay for each year of service, subject to some caps.

Portugal Tax

Health Insurance in Portugal

The national scheme provides basic insurance coverage.

Supplementary Benefits in Portugal

Employees could be offered supplemental health benefits as a perk. While most senior executives require additional health and life insurance, smaller businesses may choose to have an allowance rather than arrange insurance.

In Portugal, several employers have meal and car allowances.

Portugal Holidays

There are 9 public holidays in Portugal including the following:

• New Year’s Day
• Good Friday
• Freedom Day
• Labor Day
• Portugal Day
• Assumption Day
• Immaculate Conception Day
• Christmas Eve
• Christmas Day

Employers must have paid leave or other days in lieu of these days, with the exception of employers with less than 10 employees, who are only entitled for substitute public holidays for up to 25% of the time employed. Regional holidays can be observed in addition to national holidays, depending on the venue. Republic Day, as part of austerity steps,The public holidays of All Saints Day, Restoration of Independence Day, and Corpus Christi will not be observed until 2019.