🇵🇹 Hiring in Portugal

💡 Everything you need to know to hire and manage employees in Portugal through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 5-7 business days between submitting a new hire and their start date. Toku registers each new hire with Portuguese social security no later than the day before their start date, so start dates cannot move at the last minute.

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

Employer Costs

On top of gross salary, employers in Portugal pay the following:

As a rule of thumb, total cost of employment is roughly 124-126% of gross salary, and because of the mandatory holiday and Christmas allowances, the annual base equals 14 monthly salaries rather than 12. Budget accordingly when quoting a monthly salary.

Employees pay their own social security contribution of 11% and progressive income tax of 12.5-48% (plus a solidarity surcharge on very high incomes). These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in Portugal, and employees receive a detailed payslip each cycle. The national minimum wage for mainland Portugal is EUR 920 per month from January 1, 2026 (EUR 980 in Madeira and EUR 966 in the Azores), paid 14 times per year. The two extra payments are fixed by law: the holiday allowance is paid before annual leave and the Christmas allowance by December 15. Meal allowances are a common pay component and are tax-free up to EUR 6.15 per day in cash or EUR 10.46 per day via meal card.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire.
• The indefinite-term (permanent) contract is the default. Fixed-term contracts are only allowed for genuinely temporary needs, capped at two years and three renewals.
• Probation under Toku's employment agreement is 90 days, which is the general statutory period for most employees (Portuguese law allows up to 180 days for positions of special trust or complexity and 240 days for senior executives).
• During probation, either party can end the contract without cause; after 60 days of probation the employer owes 7 days' notice, and after 120 days, 30 days' notice.

Working Hours

The standard week is 40 hours over five days, with a maximum of 8 hours per day and a break of 1-2 hours after five consecutive hours of work. Overtime is capped at 2 hours per day and 150-175 hours per year (depending on company size), paid at 125% for the first weekday hour, 137.5% for additional hours, and 150% on weekends and public holidays. Night work carries a 25% supplement. Portugal also protects the right to disconnect: employers may not contact employees outside working hours except in cases of force majeure.

Leave Entitlements

Sick pay and parental leave are funded by Social Security rather than the employer, so their direct cost to you is limited. Annual leave accrues based on the prior calendar year (2 days per month up to 20 days in the year of hire) and cannot be paid out in cash except on termination.

Public Holidays (2026)

Portugal observes 13 national public holidays in 2026, and each municipality typically adds one local holiday.

Employees who work on a public holiday are typically entitled to compensatory time off or 150% pay.

Benefits

Portuguese employees are covered by social security (pensions, disability, unemployment, sickness, and parental benefits) and public healthcare through the National Health Service, funded through the payroll contributions shown in Employer Costs above, and are entitled to a minimum of 40 hours of professional training per year. Portugal's key employer-provided benefit is mandatory workers' compensation insurance, which Toku maintains for every employee with UNA Seguros. Toku also offers international health coverage through Remote Health by SafetyWing.

⚠️ Tell Toku before any new hire, termination, or salary change in Portugal. Toku's workers' compensation policy runs on a fixed premium, so Toku must notify the broker (Aon) before the change takes effect. Employees are only covered once registered with the insurer, and retroactive coverage is not guaranteed: an unregistered employee involved in a workplace accident may have no active cover.

Benefits at a Glance

Workers' Compensation Coverage

Workers' compensation insurance is compulsory for all employers in Portugal and covers all work-related accidents and occupational illnesses. Toku maintains the policy through UNA Seguros. Coverage includes medical assistance through UNA's clinical partner network, hospital and surgical care, accidents during international work travel (must be reported within 24 hours), expense reimbursements (transport, medications, hospital costs), and compensation payments: temporary disability is paid monthly during treatment, and permanent disability pensions are paid following Labor Court approval.

Costs & Who Pays

The premium is fully employer-paid; employees contribute nothing. The policy runs on a fixed-premium basis, recalculated at each annual renewal based on declared total gross remuneration per employee (base salary, meal allowance, vacation and Christmas allowances, overtime, commissions, and other recurring payments).

Supplemental Health Insurance

Toku offers fully sponsored international health coverage through Remote Health by SafetyWing, which employees can opt into during onboarding. For coverage, premiums and enrollment, see 🌍 Global Coverage: Remote Health by SafetyWing.

What You Need to Know About Benefits

• Advance notice is critical. Give Toku timely notice of Portugal hires, terminations, and any salary or compensation changes so Aon can update the policy before the effective date.
• Annual data refresh. The policy renews each December; Toku collects updated expected gross annual salaries for all Portugal employees in early November. Accurate, complete declarations (including all recurring compensation elements) keep coverage and premiums correct. For employee-facing detail on the health plan, see Remote Health, Your Global Insurance Plan for coverage details and enrollment.

Common Extras

Common extras in the Portuguese market include meal vouchers (the most widespread benefit, typically EUR 7-10 per working day), private health insurance, transport allowances, life insurance, and supplementary retirement plans. Meal allowances are tax-advantaged within the daily limits; most other benefits in kind are taxable. Toku can advise on the cost impact of any benefits you want to add.

Ending Employment

Portugal does not permit at-will termination: every dismissal needs just cause (disciplinary) or objective grounds (redundancy or unsuitability), each with a formal procedure, and unlawful dismissals can lead to reinstatement or significant compensation. Involve Toku before taking any steps. For the process, see How to Terminate an Employee or Contractor.

For dismissals on objective grounds under contracts signed since May 2023, severance is 14 days of base salary (plus seniority allowance) per year of service, with the salary base capped at 20 times the minimum wage and the total capped at 12 months' salary. Fixed-term contracts carry severance of 24 days per year of service. Pregnant employees, recent mothers, breastfeeding employees, and employees on parental leave have enhanced protection and cannot be dismissed without prior approval from the equality authority.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: Required. Outstanding accrued and proportional statutory vacation entitlements are generally included in the termination settlement.

Statutory carryover / look-back: The final calculation can involve prior-year entitlement, current-year entitlement, and proportional leave accrued in the termination year depending on the employee's dates of employment.

Admin responsibility: Keep vacation balances separated by entitlement year and do not agree a final unused-leave figure with the employee before Toku validates the termination calculation.

Important exceptions: The year of hire and termination timing can change how entitlement is calculated. Toku should reconcile prior-year and proportional current-year leave before final amounts are communicated.

See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.

Hiring Someone from Overseas?

EU, EEA, and Swiss nationals can work in Portugal without a permit. Other nationals generally need a residence visa and work authorization; the main routes include the standard work visa, the Tech Visa for highly qualified professionals, and the Digital Nomad Visa, with processing times ranging from several weeks to several months. Nationals of Brazil and several other Portuguese-speaking countries may benefit from simplified procedures. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last updated November 5, 2026 (onboarding link and annual leave guidance only). Last verified October 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.