Segurança Social pays, and the employer pays nothing by law. Sickness absence is a justified absence under the Código do Trabalho, and where the employee is covered by the state sickness scheme the employer owes no pay for the days lost. The benefit, the subsidio de doenca, is paid by the Instituto da Segurança Social straight to the employee.

Two qualifications sit around that rule. A collective agreement, the contract or a written company policy can promise a top-up, and once promised it binds the employer. And the benefit is calculated on reference pay recorded with Segurança Social rather than on this month’s payslip, so an employee on sick leave almost never receives what they would have earned at their desk.

The employment relationship carries on throughout. Annual leave in Portugal does not depend on attendance, so the 22 working days a year keep accruing while the employee is away, and the Christmas subsidy is pro-rated for any period in which the contract is suspended. The published rules on eligibility and rates sit in the practical guide on the Segurança Social site.

Because the sickness benefit carries a three-day waiting period for employees. Days one to three attract no state benefit and no statutory pay from the employer, so a short absence is normally unpaid unless something in a collective agreement or a company policy fills the gap.

The waiting period is waived in three situations: admission to hospital, day surgery, and tuberculosis. In each of those the benefit runs from the first day of the absence.

The practical effect is that a one or two-day absence in Portugal costs the employee money and costs the employer nothing beyond the disruption of covering the work. Employers that want to remove that effect tend to do it deliberately, by writing a top-up into the contract and putting a figure for it in the payroll budget, rather than paying case by case.

The benefit is a percentage of reference pay that rises the longer the absence lasts. The 2026 rates are 55% for absences of up to 30 days, 60% from day 31 to day 90, 70% from day 91 to day 365, and 75% beyond a year.

Two adjustments change those figures.

• The 55% and 60% rates rise by five percentage points where reference pay is €500 or less, where the employee has three or more dependent children, or where a dependant receives a disability supplement
• The maximum period an employee can draw the benefit is 1,095 days

Eligibility is tested twice. The employee needs six months of contributions, which do not have to be consecutive, and a work record showing at least 12 days of work within the first four of the six months before the absence starts. Someone in their first weeks of employment in Portugal can therefore fall outside the scheme altogether, which is worth flagging to a new joiner who is moving from a system with company sick pay.

A long absence steps through the bands as it runs, so a six-month absence is paid at three different rates in sequence rather than at one average rate. An absence of 45 days, for instance, is paid at 55% of reference pay for the first 30 days and at 60% for the remaining 15. The bands apply to the days that fall inside them rather than to the absence as a whole.

An employee can declare a short illness themselves through the SNS 24 digital service, on their word of honour and without seeing a doctor. The declaration covers up to three consecutive days and can be used at most twice in a calendar year. It has worked that way since 1 May 2023, and the limits are the same in 2026.

Because those days sit inside the three-day waiting period, a self-declaration produces no pay. What it produces is protection at work: the absence is justified, so it cannot be treated as unjustified absence for disciplinary purposes or docked as unauthorised leave.

For the employer, the record matters as much as the payment. A self-declared absence is still an absence that has to be logged, with the dates and the form of justification kept together, which settles later questions about whether it was justified and feeds the annual reporting an employer files on its workforce. Managers who see a pattern of self-declared days around weekends should deal with it through the normal absence process rather than by refusing the declaration, which the employee is entitled to make.

Anything longer, or a third short absence in the same year, needs certification through the health service. Employers sometimes assume the allowance has been widened, because a labour reform bill discussed during 2026 touched on how self-declarations are policed. Parliament rejected that bill in June 2026 and none of it became law, so the position stands at three consecutive days, twice a year.

In cash terms, very little. The employer’s real costs are administrative, plus a small number of health-related absences that the Código do Trabalho does make payable by the employer.

• Up to three consecutive days a month, at full pay, for an employee with disabling pain from endometriosis or adenomyosis
• Any top-up promised by a collective agreement, the contract or an established written policy
• Cover for the absent employee, which is the cost that actually bites in a small team
• Holiday that keeps building up while the employee is away

The paid endometriosis and adenomyosis absence was added to the Código do Trabalho in 2025. It is an employer cost rather than a state benefit, so it belongs in the payroll plan alongside the meal allowance and the 14 payments a year.

Collective agreements deserve more attention than most incoming employers give them, because the agreement that applies follows the employer’s own registered activity rather than the employee’s job title. An agreement can improve on the Code but cannot fall below it on pay guarantees, so a sick-pay top-up written into one is binding on the employer for as long as the agreement applies.

The provider is the legal employer, so it records the absence, adjusts the month’s payroll, keeps the contributions and declarations in order, and tells the client what the invoice will look like. Employer of Record Portugal employs staff through its own Portuguese company, which means the sickness rules described here apply to the contract as written rather than to a freelance arrangement that offers the employee no cover at all.

What the client does is short.

• Tell us the first day of absence and how it has been justified
• Agree any top-up before it is promised to the employee
• Plan cover for the role, because the contract continues throughout
• Expect the payslip to change for as long as the state benefit is running

Everything from the certificate to the payslip sits with us, and the monthly cost stays at the same flat €499 per employee. For a new hire, contracts are usually ready within hours and onboarding typically takes one to two days for EU nationals once we have the details.

Sick pay is one line in a wider set of monthly obligations. Our guide to Portuguese payroll covers the 14 payments a year and the reporting deadlines, our guide to social security and pensions in Portugal explains the contributions that fund this benefit, and if you are comparing providers our page on the best EOR provider in Portugal sets out what to ask before you sign.

No. A Portuguese employer can end an open-ended contract only where it has just cause based on the employee’s conduct, or where it follows one of the objective procedures written into the Código do Trabalho. There is no dismissal at will, and offering a sum of money instead of running the correct procedure does not make the exit lawful.

Article 340 of the Código do Trabalho lists every route by which a contract can come to an end.

• Expiry (caducidade), which covers a fixed-term contract reaching its term
• Mutual agreement in writing (revogacao)
• Dismissal for the employee’s own fault, which is the just cause route
• Collective dismissal
• Redundancy of a single post (extinção do posto de trabalho)
• Dismissal for unsuitability (inadaptacao)
• Resignation by the employee with cause (resolucao)
• Resignation by the employee without cause (denuncia)

The route decides three things: which procedure has to be run first, how much notice is owed, and whether compensation is payable. A mutual agreement is the quickest exit because the parties record the terms themselves, but it needs genuine agreement on both sides and cannot be used to paper over a dismissal the employer would otherwise have to justify. The full text of the Code sits on the official consolidated version at the Diario da República.

Just cause means culpable conduct by the employee that makes it immediately and practically impossible to carry on the working relationship, under article 351 of the Código do Trabalho. The bar is high, and the Code gives worked examples: five consecutive days of unjustified absence, or ten separate days in the same calendar year, is one of them.

The procedure carries as much weight as the facts.

• A written statement of charges, the nota de culpa, setting out the alleged facts in detail
• Time for the employee to answer in writing and ask for evidence to be heard
• A written decision with reasons, issued within 30 days

Where a dismissal for just cause stands up, no notice and no compensation are due. Conduct cases that fail in a Portuguese court usually fail on the paperwork rather than the behaviour: charges drafted too vaguely to answer, a decision issued outside the 30 days, or facts raised at trial that never appeared in the nota de culpa.

Portugal recognises three objective grounds, and each rests on the business rather than on anything the employee has done. Collective dismissal under article 359 applies where two or more employees in a micro or small company, or five or more in a medium or large company, are dismissed within three months for market, structural or technological reasons. Worker representatives have to be consulted, and the decision cannot be issued earlier than 15 days after the notice of intent.

Redundancy of a single post covers the closure of one role. It is lawful only where the reason is nobody’s fault, no fixed-term employee is doing equivalent work, no other suitable post is open, and the numbers are too small for a collective dismissal. Where several identical posts exist, the employer has to choose between them in the order the Código do Trabalho sets: worst performance review, then lowest qualifications, then highest cost to keep, then least experience in the role, then shortest service.

Dismissal for unsuitability (inadaptacao) is the narrowest ground. It covers a continuing fall in output or quality, repeated damage to equipment, or safety risks, and for technical and management roles it extends to missing objectives that were agreed in writing.

One consequence catches employers out after the event. For 12 months after a collective dismissal or a redundancy, the employer may not buy in outside services to cover the work the dismissed employees were doing.

Employer notice for the objective grounds runs on a seniority scale: 15 days below one year of service, 30 days from one to under five years, 60 days from five to under ten years, and 75 days at ten years or more. Notice that falls short has to be paid in money. Where two spouses or partners lose their jobs in the same collective dismissal, the next band up applies to them.

An employee resigning without cause gives 30 days’ notice with up to two years of service, and 60 days with more than two years, so exactly two years still sits in the 30-day band. A contract or a collective agreement can stretch that to as much as six months for directors, managers and senior specialists. On a fixed-term contract the employee gives 30 days, or 15 days where the contract runs for less than six months. An employee who leaves without working the notice owes the employer base pay for the days missed.

Notice is counted in calendar days rather than working days, so a 60-day period starting in mid-December ends in mid-February, public holidays included. Booking that date into payroll early matters, because the final payment is tied to it.

Compensation for the objective grounds is 14 days of base pay plus seniority payments (diuturnidades) for each full year of service, with part-years counted pro rata. The daily rate is the monthly figure divided by 30. Where a fixed-term contract reaches its term and the employer lets it expire, the rate is 24 days for each full year instead.

Two caps apply in 2026. The monthly pay used in the calculation is capped at 20 times the national minimum wage, which is €920 a month, giving €18,400. The total is capped at 12 times monthly base pay, or at 240 times the minimum wage, €220,800, where the first cap applies.

Take an employee on base pay of €3,000 a month with four full years of service, all of it completed after 1 May 2023, no seniority payments in the contract and a figure comfortably below both caps. The daily rate is €100, each year earns €1,400, and the compensation is €5,600. Payment falls due by the end of the notice period. Accepting the full amount is treated as accepting the dismissal, unless the employee hands the money back.

Service completed before 1 May 2023 is a separate layer. The 14-day and 24-day rates apply only from that date, and earlier service is calculated at the older transitional rates, which depend on when the contract was signed. For anyone hired before 2023 the final figure is assembled from more than one period, so the bands that apply to that particular contract need checking before any number is put in front of the employee.

An unlawful dismissal obliges the employer to compensate the employee for all loss, material and non-material, and to reinstate them. Back pay runs from the dismissal to the final judgment, which is why a slow case gets more expensive rather than safer.

The employee can take an indemnity instead of the job. The court sets it at between 15 and 45 days of base pay and seniority payments for each year or part-year of service, with a floor of three months’ pay. In micro-companies, and for directors and managers, the employer can ask the court to rule out reinstatement; the indemnity then rises to between 30 and 60 days a year with a floor of six months. Where the grounds are proven and only the procedure was defective, the indemnity is halved.

The deadlines are short. An individual dismissal has to be challenged within 60 days of the employee receiving the decision, or from the end date if that falls later, using a set court form. A collective dismissal can be challenged within six months of the contract ending, and only a court can declare one unlawful.

The provider is the legal employer, so it runs the procedure, issues the documents and pays what the law requires, while the client decides that the role is ending and supplies the facts behind that decision. Employer of Record Portugal employs people through its own Portuguese company, so the contract being ended is a Portuguese employment contract governed by the Código do Trabalho rather than a services arrangement with a freelancer.

A clean exit usually turns on a handful of practical points.

• Deciding at the outset which route applies, because the procedure differs at every step
• Writing the reasons down while the evidence is still fresh
• Pricing compensation in layers where service started before May 2023
• Putting the notice period into the payroll calendar so the final payment lands on time
• Keeping proof of every document sent to the employee

Cost is straightforward to state in advance. Our fee is a flat €499 per employee per month, and statutory compensation is passed through at the amount the law sets. Our team works on Portugal every day, and the detail behind each stage is set out in our Portugal EOR services, in the wider guide to employing in Portugal, and in our guide to Portuguese employment contracts, which covers what the contract has to say about notice before anyone needs it.

It means paying someone as a service provider while working them like an employee. Portuguese practice has a name for it: falsos recibos verdes, from the green receipts a self-employed worker issues for their invoices. The receipts are genuine; the description of the relationship is not.

Being a trabalhador independente in Portugal is entirely legitimate. Consultants, designers, contractors and agencies work that way every day, and they register with the tax authority and Segurança Social in their own right. The problem starts when the person has fixed hours, a company laptop, a desk in your office and a fixed monthly sum, and the only thing separating them from a colleague on payroll is the invoice.

Two features of Portuguese law make this riskier than it looks from outside. The first is that the label on the contract carries very little weight, because the Código do Trabalho looks at how the relationship actually runs. The second is that the law does not wait for the worker to complain: the labour inspectorate can open the question on its own initiative, and a public prosecutor can take the case to court on the worker’s behalf.

Article 12 lists five characteristics, and the presence of two of them is enough to presume an employment contract. The consolidated text of the Código do Trabalho is published on the official gazette site.

• The work is carried out in a place belonging to the client, or in a place the client decides.
• The equipment and tools used in the work belong to the client.
• The client sets the start and finish times for the work.
• A set amount is paid to the worker at regular intervals.
• The worker performs a management or supervisory role within the client’s organisation.

Read that list against a typical long-term contractor and the exposure becomes obvious. Someone who works from your office on your laptop already meets two indicators before anyone looks at the hours or the monthly invoice.

The presumption can be rebutted. It shifts the burden, so the business has to show that the relationship is genuinely independent: real freedom over hours and method, the worker’s own tools, the ability to send a substitute, other clients, and commercial risk that sits with the worker. Evidence of that kind has to exist in practice, because a clause in the contract saying the worker is independent proves nothing on its own.

Platform work has a parallel test in article 12-A, added by Lei 13/2023. There the presumption looks at whether the platform sets pay or pay limits, directs or supervises the work including by algorithm, restricts the worker’s freedom over hours, tasks or substitutes, exercises disciplinary power such as deactivating an account, or owns the equipment. The platform can argue that an intermediary is the real employer, and the court then decides who employs the worker.

Portugal has a dedicated court procedure for this, and it moves on short deadlines. It starts with ACT, the Autoridade para as Condicoes do Trabalho, which inspects workplaces and can act without any complaint from the worker.

Where an inspector finds indications that a services arrangement is really employment, the employer is notified and has 10 days to regularise the position or respond. If the employer does not, ACT sends the file to the Public Prosecutor within 5 days, and the Public Prosecutor has 20 days to bring an action asking the labour court to recognise the existence of an employment contract. The court action suspends the parallel administrative offence proceedings until the status question is settled.

Two points deserve emphasis. The worker does not have to bring the claim, and does not have to agree with it; the action proceeds on the state’s initiative. And the court does more than apply a label: it fixes the date the employment relationship began, which is the date every other consequence is measured from.

The same procedure is used where a fixed-term contract should have become open-ended, so a business with a string of renewals for the same role sits in the same enforcement path as one using contractor invoices.

Using apparently self-employed labour under employment conditions is classed as a very serious offence (muito grave) under article 12(2). Fines are expressed in court fee units (unidades de conta), and the unit is €102 in 2026, frozen by the State Budget.

The band depends on the employer’s turnover and on whether the breach was negligent or deliberate. For a very serious offence the range runs from 20 units at the bottom to 600 units at the top, which in 2026 money is roughly €2,040 to €61,200. An employer that does not declare its turnover is treated as being in the highest turnover band. The fine is not always the worst of it:

• Repeat offenders can be barred for up to two years from public subsidies and grants, including tax, social security and EU funds, and from public tenders.
• The employer, companies in the same group and the managers themselves can be jointly liable for the fine.
• Contributions have to be regularised from the start date the court fixes, at the general regime rates of 23.75% for the employer and 11% for the worker, with late payment interest running from the original due dates.
• The worker becomes an employee with employee rights, so holiday pay, the holiday and Christmas subsidies, and any severance entitlement can be claimed for the period concerned.
• Income tax withholding that was never operated becomes the employer’s problem to sort out with the tax authority.

Social security debts are generally time-barred after five years from the end of the relevant payment deadline, and certain collection steps interrupt that period, so a long-running arrangement can produce several years of back contributions in one assessment.

Plenty of contractor relationships in Portugal are sound, and this article is not an argument for putting every supplier on payroll. A genuine trabalhador independente registers a start of activity with the tax authority, invoices for defined work, decides how and when it is done, uses their own equipment where that is realistic and carries the commercial risk of the engagement.

The contributions look different too. A self-employed worker pays social security at 21.4%, and the contribution base is relevant income taken as 70% of service income, averaged over the quarter. Sole traders and single-member companies of certain kinds contribute at 25.2% instead. The ISS practical guide for the self-employed sets out the regime.

A business can also pick up a bill of its own without any misclassification finding. Where a company accounts for more than half of a self-employed worker’s annual income from activity, it becomes a entidade contratante, a contracting entity, and owes a contribution of its own: 7% where the dependence is between 50% and 80%, and 10% where it is above 80%. This applies where the worker’s annual income is above six times the social support index, which is €3,222.78 in 2026.

That rule is a useful early warning. If one client provides nearly all of a contractor’s income, Segurança Social has already noticed the dependence, and the article 12 indicators are usually not far behind.

The reliable fix is to employ the person properly, and the reason most companies avoid it is that they have no Portuguese company to employ them through. That is the gap an employer of record fills. Employer of Record Portugal becomes the legal employer through its own Portuguese company, while the person carries on doing the same work for your team.

What changes in practice is the compliance layer around the role:

• A written Portuguese employment contract with the terms the Código do Trabalho requires, including probation and any non-compete restriction, which is capped at two years and has to be paid for.
• The comunicação de admissão filed with Segurança Social before the first working day.
• Monthly payroll with 11% withheld from the employee, 23.75% paid by the employer, and income tax withheld on the 2026 tables.
• The DMR filed with the tax authority by day 10, withheld tax paid by day 20, and contributions paid by the 25th under the 2026 cycle.
• Workplace accident insurance in place from day one, and the statutory holiday and Christmas subsidies paid when they fall due.

Timing helps. Moving someone before an inspection rather than after it means the only open question is the past period, and that is far easier to handle than a court-fixed start date. Our employment services in Portugal cover the transfer end to end, and the wider process is set out in our guide to hiring an employee in Portugal. Contracts are usually ready within hours, and onboarding is typically 1 to 2 days for EU nationals once we have the details.

Take the gross annual salary and add about a quarter. Employer social security, the Taxa Social Única or TSU, is 23.75% for a for-profit employer in 2026 and there is no earnings ceiling, so the rate applies to the whole salary however senior the role. Workplace accident insurance and a handful of smaller statutory items sit on top of that.

The figure that surprises people is the number of payments rather than the percentage. Portuguese salaries are paid 14 times a year: twelve monthly payments, a holiday subsidy and a Christmas subsidy. A salary quoted as €5,000 a month is therefore €70,000 a year, and the employer contribution is charged on all 14 instalments. Our guide to the holiday and Christmas subsidies covers how each one is calculated and when it falls due.

Two rates that do not apply here are worth ruling out early. Non-profit employers contribute at 22.3% rather than 23.75%, and members of statutory bodies are on a different rate again. Reduced rates also exist for hiring someone with a disability or someone who has been out of work for a long time.

The employer’s bill has one large component and several small ones. The large one is the TSU. The employer pays 23.75% and withholds a further 11% from the employee, then pays both across to Segurança Social together. The rates and payment rules are published on the government services portal.

What goes into the contribution base matters as much as the rate. Salary, the holiday and Christmas subsidies and commissions all count. A meal allowance is excluded up to the exempt limit, which in 2026 is €6.15 a day in cash or €10.46 a day on a meal card, with anything above the limit brought back into the base.

The smaller items are easy to leave out of a first estimate:

• Workplace accident insurance, compulsory under Lei 98/2009 from an employee’s first day. The premium depends on the insurer, the activity code and the claims record, so treat it as a quote to obtain rather than a rate to assume.
• Occupational health and safety services under Lei 102/2009, including admission and periodic medical examinations.
• At least 40 hours of training a year for each employee under article 131 of the Código do Trabalho.
• Contributions to the FGCT compensation fund, which are suspended to the end of 2026, so nothing is payable this year.

One charge in the Código Contributivo is often quoted at employers and rarely paid: a surcharge of up to 2% on companies with an unusually high share of fixed-term contracts. It is provided for by law but has never been put into operation, because the sector benchmark behind it was never set. Leave it out of a budget and keep an eye on it.

Here is the full arithmetic for a €70,000 salary in 2026. Every assumption is stated, because changing any one of them changes the answer.

• 2026 rules throughout, mainland Portugal, so no Madeira or Azores rates or tables.
• Gross €70,000 a year, paid in 14 equal instalments of €5,000.
• The employee is single, with no dependants, and resident for tax in Portugal.
• No IRS Jovem and no IFICI incentive, both of which would cut the tax bill sharply.
• No meal allowance, no bonus and no benefits in kind in the package.
• General regime contribution rates: 23.75% employer, 11% employee, no ceiling.
• Monthly withholding under Table I of the 2026 tables, which covers a single taxpayer with no dependants.
• Workplace accident insurance excluded from the totals, since the premium is quoted per employer.

On the employer’s side, TSU at 23.75% of €70,000 is €16,625. Total employment cost is therefore about €86,600 a year before accident insurance, with nothing due to the FGCT in 2026. Spread over the 14 instalments, each €5,000 payment carries €1,187.50 of employer contribution.

On the employee’s side, the 11% contribution is €7,700 a year, or €550 per instalment. Monthly withholding uses the Table I row that covers pay up to €5,547 in 2026: 39.69% of the payment less a fixed €531.62, which gives €1,452.88 withheld from each instalment. Net in the hand is €2,997.12 per payment. Tax on the two subsidies is calculated separately from the month’s salary, so the December payslip does not jump into a higher row.

The employee on this example ends the year with about €43,200 net, and gets some of the withholding back. Monthly withholding and the final tax liability are two different calculations in Portugal, and on these figures they do not match.

The annual calculation starts with a specific deduction for employment income, which for 2026 is €4,587.09 or the employee’s compulsory social security contributions if those are higher. Here the contributions are €7,700, so that is the figure deducted. Taxable income is €62,300, which falls in the band running from €46,566 to €86,634 at 44.6% with a fixed €8,441.48 subtracted, giving tax of about €19,344. Assuming at least €250 of general family expenses are claimed against tax due, the bill lands near €19,094, an effective 27.3% of gross. The solidarity surcharge does not bite, because it starts at €80,000 of taxable income.

Withholding across the year came to €20,340, so the employee should expect a refund of roughly €1,250 on assessment, and more if there are health, education or housing receipts to claim. The rule behind the specific deduction sits in article 25 of the personal income tax code.

Several Portuguese entitlements cost money without ever appearing as a line on a payslip, and they belong in a hiring budget.

Paid annual leave is at least 22 working days a year, alongside 13 mandatory public holidays. Holidays that fall at a weekend are not moved to a weekday, and four of them do in 2026. In the year someone joins, leave accrues at two working days per month of contract up to a maximum of 20 days, and can be taken after six full months.

Remote work has its own small cost. Where telework is agreed in writing and the employee uses their own equipment, the employer compensates the extra household costs, and up to €1.00 per full telework day is free of tax and social security, or €1.50 where a collective agreement sets it.

Ending a contract has a price as well. Severance for an objective dismissal runs at 14 days of pay per year of service, capped at 12 months’ pay or 240 times the national minimum wage, which is €220,800 in 2026. Fixed-term contracts that simply expire carry 24 days per year of service instead. None of this is a reason to avoid hiring in Portugal, but a two-year plan that ignores it is incomplete.

For a first hire or a small team, the question is usually whether to incorporate an Lda or to employ through a provider. The employment cost itself, salary plus 23.75% plus insurance, is the same either way. What differs is the overhead around it.

Incorporating is not expensive on paper. Empresa na Hora creates a company on the day for €360, share capital can be as little as €1 per quota, and a bespoke company name adds a name certificate. The running obligations are where the effort goes: a certified accountant is compulsory, the start-of-activity declaration goes to the tax authority, the beneficial owner register has to be filed within 30 days and confirmed each year, a bank account has to be opened, and accident insurance and health and safety services have to be arranged before anyone starts. Accountancy support for a small company running a payroll is commonly quoted at around €150 to €500 a month, which is an indicative market range rather than a fixed scale.

An employer of record replaces all of that with a monthly fee. Employer of Record Portugal employs your hire through its own Portuguese company for a flat fee from €499 per employee per month, on top of the employment cost itself, with no company for you to set up or wind down. Full details are on our pricing page, and the trade-offs are compared in our guide to an employer of record against your own Portuguese company.

The national minimum wage in Portugal, the salário mínimo nacional, is €920 a month in 2026. It was set by Decreto-Lei 139/2025 and has applied since 1 January 2026. The figure is gross: the employee’s own social security contribution and any income tax due are taken out of it.

Portuguese pay is quoted by the month rather than by the hour, and the statutory floor follows the same convention. It covers an employee on normal full working time, which the Código do Trabalho limits to eight hours a day and forty hours a week. The guaranteed minimum monthly pay for 2026 is published by DGERT, and the rate is announced in the Diario da República before it takes effect.

One number does the work for the whole private sector. Portugal has no lower youth rate, no separate apprentice floor and no regional opt-out from the national figure on the mainland. What varies is the ceiling rather than the floor: a collective agreement or an individual contract may promise more, and many do.

A rate for 2027 has been discussed by the Government and the social partners, but no decree-law has been published. Plan on the 2026 figure and revisit budgets once a new rate reaches the Diario da República.

Portuguese employees are paid 14 times a year: twelve monthly salaries, a holiday subsidy (subsidio de férias) and a Christmas subsidy (subsidio de Natal). At the 2026 minimum that is 14 payments of €920, or €12,880 across the year.

The two subsidies are statutory pay, not discretionary bonuses. The Christmas subsidy is governed by article 263 of the Código do Trabalho and falls due by 15 December. The holiday subsidy is governed by article 264 and is paid before the holiday is taken unless something else has been agreed. Both are pro-rated in the year someone joins, in the year a contract ends, and while a contract is suspended.

Some employers agree in writing to spread the subsidies across the year in twelfths, which Portuguese practice calls duodécimos. That changes the rhythm of the payments rather than the annual total, and it needs a written agreement or a collective agreement behind it, so check the current position with your accountant before setting it up.

Tax on the subsidies is worked out separately from the month’s salary under article 99-C(5) of the personal income tax code, so a subsidy never pushes the monthly salary into a higher withholding row. At the minimum wage this is academic in practice: Table I of the 2026 withholding tables applies a zero rate up to €920.

They do, and both are above the mainland figure. Madeira set a regional minimum of €980 a month for 2026 through Decreto Legislativo Regional 1/2026/M, applying from 1 January. The Azores set €966 a month from the same date. An employee working in either region has to be paid the regional floor.

Across 14 payments that puts the Madeira floor at €13,720 a year and the Azores floor at €13,524, against €12,880 on the mainland. The gap is small in monthly terms and easy to miss in an offer letter written from a mainland template.

Two other regional differences matter once someone is on payroll. Income tax rates in both regions are lower than the mainland rates, and each region has its own withholding tables, so a payroll run for an employee in Funchal or Ponta Delgada does not use mainland tables. Madeira applies a 30% regional differential that was extended in 2026 up to the ninth income tax bracket. Social security is national: the 23.75% employer rate and the 11% employee rate are the same in every region.

Which floor applies follows where the employee actually works, not where the employing company is registered. Working hours deserve a second look too, because the Azores run an hour behind the mainland and Madeira.

Budget for roughly €15,939 a year in salary and social security for a full-time employee on the 2026 national minimum. That is the €12,880 pay floor plus employer social security (TSU) at 23.75%, which comes to €3,059 on that base.

The TSU has no upper ceiling in Portugal, so the rate applies to the whole of pay however high it goes, and the base includes both subsidies and any commission. The employee’s own 11% contribution is withheld from pay and handed over by the employer with its own share. Our guide to the total cost of hiring in Portugal works the same arithmetic through a much larger salary.

Four further items sit outside that headline figure:

• Workplace accident insurance, compulsory for every employee under Lei 98/2009. The premium is set by the insurer from the activity code and claims record, so get a quote for the actual role rather than assuming a rate.
• A meal allowance (subsidio de alimentação), not required by statute but close to universal and often written into a collective agreement. In 2026 it is free of tax and social security up to €6.15 a day in cash or €10.46 a day on a meal card, per day worked.
• Occupational health and safety services under Lei 102/2009, including the medical examinations that go with them.
• At least 40 hours of training a year under article 131 of the Código do Trabalho, pro-rated for shorter fixed-term contracts.

Contributions to the FGCT compensation fund are suspended to the end of 2026, so a new employer pays nothing into it this year. The position for later years has not been settled, which is worth a note in any multi-year model.

The minimum wage is a reference point in several rules that have nothing to do with low pay, so a change to it moves numbers elsewhere in the system.

Severance for an objective dismissal is calculated at 14 days per year of service, and two caps use the minimum wage: the monthly pay fed into the calculation is capped at 20 times the minimum, which is €18,400 in 2026, and the total is capped at 12 months’ pay or 240 times the minimum, which is €220,800.

The tax-free meal card limit is derived from the minimum wage as well, at 70% of it divided by 22 days and multiplied by 1.70, which is how €10.46 a day is arrived at for 2026. The zero-rate band in the monthly withholding table also sits at €920, matching the floor exactly.

Immigration rules borrow the figure too. The D8 residence visa, covered in our guide to the Portuguese digital nomad visa, tests average monthly income over the previous three months against four times the national minimum wage, which is €3,680 a month in 2026. That route is for people working for employers or clients outside Portugal, so it is not an alternative to being employed here.

A collective instrument can raise the pay floor for a role well above €920, and where one applies its scale is the number the employee can enforce. Portugal calls these instruments instrumentos de regulamentacao coletiva de trabalho. The negotiated kinds are the contrato coletivo at sector level, the acordo coletivo signed by several employers and the acordo de empresa covering a single company.

There are non-negotiated instruments as well. A portaria de extensao extends an existing agreement to employers and workers in the sector who were not party to it, which is how a sector scale reaches a company that belongs to no employers’ association. Agreements are deposited with DGERT and published in the Boletim do Trabalho e Emprego, and they cannot fall below the standards in the Código do Trabalho except where the Code itself allows a variation.

Which agreement applies follows the employing company’s activity and its membership of an employers’ association. That is a point to raise with any employment partner, because the employer of record is the legal employer and its own activity code drives the answer. When you work with Employer of Record Portugal, ask which instrument is applied to the role and what scale sits behind the salary you have agreed.

Paying the right rate is the easy half. The rest is a monthly filing rhythm that Portuguese authorities expect to see, and an inspection by ACT, the labour inspectorate, will look at the paperwork as well as the pay.

• File the comunicação de admissão with Segurança Social before the employee’s first day.
• Issue a payslip (recibo de vencimento) every month showing pay, the 11% employee contribution and any income tax withheld.
• Send the DMR to the Autoridade Tributária e Aduaneira by day 10 of the following month.
• Pay withheld income tax by day 20 and social security contributions by the 25th under the 2026 cycle.
• File the annual Relatorio Único on staff, pay, training and safety within the window set for the year.

Fines for labour offences are expressed in court fee units (unidades de conta), and the unit is frozen at €102 for 2026. The band depends on the seriousness of the offence, the employer’s turnover and whether the breach was negligent or deliberate, and an employer that does not declare its turnover is treated as being in the largest band. Underpaying against a statutory or collective floor rarely stays a single-month problem, because arrears carry through the subsidies as well.

Employers without a Portuguese company reach the same outcome through an employer of record, which runs the contract, the filings and the payments. The wider set of obligations, from probation to holiday entitlement, is covered in our guide to employing people in Portugal.

Each month the employer calculates gross pay, withholds IRS on the official table, deducts the employee’s 11% social security, adds its own 23.75% on top, issues a recibo de vencimento and then files and pays. The calculation is arithmetic. The compliance sits in the reporting that follows it, and in the fact that the two authorities involved, the Autoridade Tributária e Aduaneira and Segurança Social, keep separate deadlines and separate channels.

The gross figure includes more than base salary. Social security is charged on salary, on the holiday and Christmas subsidies and on commissions, and the meal allowance joins the contribution base to the extent it exceeds the exempt limit.

Two obligations run alongside the calculation and are easy to forget in a first payroll. Every employee must be covered by workplace accident insurance from their first day under Lei 98/2009, and every employer must organise occupational safety and health services under Lei 102/2009. Contributions to the FGCT compensation fund are suspended until 31 December 2026, so nothing is currently payable into it.

If none of this is work you want to own, it is the whole of what Employer of Record Portugal does: the employee sits on our Portuguese payroll, and the calculation, the payslip, the returns and the payments are ours to get right.

Because two statutory subsidies sit on top of twelve monthly salaries. The subsídio de Natal, the Christmas subsidy, is one month’s pay and is due by 15 December. The subsídio de férias, the holiday subsidy, matches base pay plus the payments tied to how the work is performed, and is paid before the holiday is taken unless the parties agree otherwise. Together they turn an annual salary into fourteen equal instalments in most contracts.

Both subsidies are pro rated rather than all-or-nothing. In the year of hire and the year the contract ends, the Christmas subsidy is proportional to the time worked, and the same applies during a suspension of the contract. An employee who joins in September does not receive a full month’s subsidy in December, and one who leaves in March takes a proportion of both subsidies with them.

Paying the subsidies in twelfths, known as duodécimos, is a common arrangement made by written agreement or under a collective agreement, and it spreads the two extra months across the year instead of paying them in lumps. The rules on how the tax is split in that case sit in the Código do IRS, and the position is worth confirming with your accountant before you set it up, because it changes the monthly withholding even though it does not change the annual total.

For budgeting, the practical point is that an advertised monthly salary in Portugal is usually not a twelfth of the annual cost. A salary quoted at €2,000 a month is €28,000 a year before employer contributions, not €24,000. Our post on the holiday and Christmas subsidies sets out when each one falls due.

IRS is withheld monthly under the tables approved by Despacho n.º 233-A/2026, which apply to employment income and pensions paid from 1 January 2026. There are seven tables for the mainland, and the Azores and Madeira have their own. Table I covers single taxpayers with no dependants, and married couples where both spouses have income. The formula is the same in every table: monthly pay multiplied by the marginal rate, less a fixed amount called the parcela a abater, less €21.43 for each dependant.

The tables start at zero. Monthly pay up to €920 attracts no withholding at all, which matches the national minimum wage. From there the rate climbs: pay up to €1,819 is withheld at 24.10% less €193.33, pay up to €3,305 at 38.36% less €487.66, and pay up to €5,547 at 39.69% less €531.62. The published tables carry the full set of rows.

Withholding is not the final tax. The annual assessment applies the 2026 bands, which run from 12.5% on taxable income up to €8,342 to 48% above €86,634, with a solidarity surcharge of 2.5% on taxable income between €80,000 and €250,000 and 5% above that. Employment income also carries a specific deduction, which for 2026 is €4,587.09, or the employee’s compulsory social security contributions where those are higher. Most employees therefore receive a refund or a bill when the return is assessed.

The subsidies are handled separately and this catches out imported payroll systems. Withholding on the holiday and Christmas subsidies is always calculated on its own and never added to the month’s salary, which stops a single payment pushing an employee into a much higher withholding row. Where a subsidy is paid in instalments, the proportional share of the tax is withheld from each payment.

It does not stop. The Taxa Social Única is charged at 23.75% on the employer and 11% on the employee, a combined 34.75%, and Portugal applies no upper contribution ceiling to employees. The rates run on the full gross however high the salary goes, which is the single biggest difference between budgeting a senior hire in Portugal and budgeting one in a country that caps its contribution base.

The employer withholds the employee’s 11% and pays it across together with its own share, so Segurança Social receives one payment covering both. The base is the same for each: salary, both subsidies, commissions and any meal allowance above the exempt limit.

Some rates differ from the general one. Non-profit employers pay 22.3% rather than 23.75%. Members of statutory bodies are charged at 20.3% for the entity and 9.3% for the member, although managers and administrators stay on 23.75% and 11%, with a minimum contribution base of one IAS, which is €537.13 in 2026. Employees with a recognised disability attract a reduced employer rate of 11.90%, and hiring someone who is long-term unemployed or seeking a first job can carry a temporary reduction on the employer rate.

One charge exists on paper and not in practice. An additional contribution of up to 2% on employers whose use of fixed-term contracts exceeds their sector average is provided for in the Código Contributivo, but the indicator it depends on was never regulated and it is not being collected in 2026. It belongs in a risk register, not a cost model. For a full build-up of what an employee costs, see our note on the cost of hiring in Portugal.

The subsídio de alimentação is paid per day actually worked and has two tax-free limits in 2026: €6.15 a day when it is paid in cash with the salary, and €10.46 a day when it is loaded onto a meal card. Anything above the applicable limit is treated like salary, so it attracts IRS withholding and enters the social security base for both the employer and the employee.

The gap between the two limits is the reason meal cards are so widely used. The card limit is derived from the minimum wage, at 70% of it divided by 22 days and multiplied by 1.70, and it tracks the public sector meal allowance, which was set for 2026 by Portaria n.º 51-B/2026/1 with effect from 1 January. Paying €10.46 a day on a card delivers more to the employee for the same employer outlay than paying the same amount in cash would.

The allowance is not required by the Código do Trabalho. It is nonetheless close to universal in Portuguese offers, and a collective agreement covering your sector may well make it compulsory and set the amount.

Two practical points follow for payroll. The allowance is paid on days worked, so it flexes with absence, holidays and part-time schedules rather than being a fixed monthly line. And because the exempt portion sits outside the contribution base, it has to be recorded separately on the payslip rather than being folded into gross pay.

Three dates govern the month after payment. The Declaração Mensal de Remunerações, which reports employment income and the IRS withheld from it, is filed with the Autoridade Tributária e Aduaneira by day 10. The IRS withheld is paid over by day 20 under article 98 of the Código do IRS. Social security contributions are paid by the 25th under the 2026 contribution cycle. Where a deadline lands on a weekend or holiday it moves to the next business day.

The social security side is mid-reform and the detail depends on the employer. Under the new cycle introduced by Decreto-Lei 127/2025, the monthly remuneration return is replaced by a declaration that Segurança Social pre-calculates and the employer confirms by day 20 of the following month, with silence treated as acceptance and August allowed until day 25. Contract changes go into the same monthly return, which is due by day 10. Employers with ten or more workers move onto the interoperability platform; those with fewer than ten may keep using Segurança Social Direta. Joining is voluntary during 2026 and compulsory from 1 January 2027.

Beyond the monthly cycle there are two annual filings worth diarising. Modelo 10 is due by 10 February and covers income not already reported through the DMR. The Relatório Único, reporting staff, pay, training and health and safety, has a legal window of 16 March to 15 April, although the 2025 report was pushed to 7 June 2026 in practice.

Take an employee on €70,000 a year, paid in fourteen equal instalments of €5,000. The assumptions matter: 2026 rules, resident on the mainland, single with no dependants, not using IRS Jovem or the IFICI regime, and with no meal allowance included. Change any one of those and the numbers move.

On the employer side, TSU at 23.75% on €70,000 is €16,625, giving a total employer cost of about €86,600 plus workplace accident insurance, which is priced by the insurer against the activity and claims record and has to be quoted rather than estimated.

On the employee side, the 11% contribution is €7,700 across the year, or €550 from each €5,000 payment. IRS withholding uses Table I at the €5,547 row, so 39.69% of €5,000 less €531.62 gives €1,452.88 withheld from each instalment, an effective withholding rate of about 29%. Net pay per instalment is therefore €2,997.12.

The annual assessment then trues it up. The specific deduction is the higher of €4,587.09 and the employee’s social security contributions, so €7,700 applies, leaving taxable income of €62,300. Tax on the 2026 bands is €19,344, and a €250 deduction for general family expenses, which assumes enough qualifying spending, brings the liability to about €19,094, roughly 27.3% of gross. No solidarity surcharge arises, because €62,300 is below the €80,000 threshold. Net pay works out at about €43,200 for the year on a final-liability basis, and because withholding across fourteen payments exceeded the liability, the employee can expect a refund of roughly €1,250.

Running that every month, on the right table and with the subsidies withheld separately, is routine for a Portuguese payroll. If you would rather compare providers than build it, our review of the best EOR providers in Portugal sets out what to ask for.

Work backwards from the start date. Before anyone can be paid there has to be a registered employer, an employee with a NIF from the Autoridade Tributária e Aduaneira and a NISS from Segurança Social, a signed set of terms, workplace accident insurance in force, and an admission notice lodged with Segurança Social. Those items have a sequence, and the sequence is what people get wrong on a first hire.

The employer question comes first because everything else hangs off it. Either a Portuguese company employs the person, or a foreign company registers itself with Segurança Social as an employer without a permanent establishment, or an Employer of Record employs them on an existing Portuguese payroll. All three produce a genuine Portuguese employment contract. They differ only in who carries the registrations and the monthly returns.

If the employer already exists, a new hire is largely administrative. If it does not, the timetable is set by the slowest item in the chain, which is almost always a bank account or a document that has to be apostilled abroad. That is the gap an EOR is built to cover, and it is why companies with a signed candidate and no entity often employ through Employer of Record Portugal first and incorporate later.

Two numbers set expectations for the offer itself. The national minimum wage on the mainland is €920 a month in 2026, paid across 14 payments for a total of €12,880 a year, with higher regional minimums of €980 in Madeira and €966 in the Azores. On top of that the employer pays TSU at 23.75% of gross pay, with no ceiling, so the budget for any candidate is the salary plus roughly a quarter again.

Every employee needs two identifiers before payroll can run. The NIF is the tax number issued by the Autoridade Tributária e Aduaneira and it drives IRS withholding and the annual return. The NISS is the social security number and it drives contributions, sick pay, parental benefit and the pension record. A Portuguese resident who has worked before will have both. Someone arriving from another country may have neither, and the employer can request a NISS on their behalf.

The employer itself registers once with Segurança Social. A company incorporated through Empresa na Hora receives its social security number as part of the incorporation. Any other employer, including a foreign company operating without a permanent establishment, applies to be registered as an employer before it takes on its first worker.

Workplace accident insurance is a condition of employing, not an employee benefit. Lei 98/2009 requires the employer to transfer its liability for workplace injuries to an authorised insurer, and cover has to be in force from the employee’s first day. Alongside it, Lei 102/2009 requires occupational safety and health services, which most small employers buy from an external provider, together with a medical examination at admission.

An EU, EEA or Swiss citizen needs no visa or work permit to take a job in Portugal. Someone staying beyond three months registers with the câmara municipal within the following 30 days and receives a certificate of registration, which costs €15 online or €18 in person for applicants aged 25 or over.

Before the employee starts work. Since 1 January 2026 the comunicação de admissão is due by the time the contract begins to be performed, tightened from the previous rule of filing within the 15 days before the start date. There is a narrow exception for justified cases such as very short seasonal contracts, tourism events and some shift work, where the notice can follow within 24 hours of work starting.

The consequence of missing it is worth understanding, because it is unusually blunt. Where an employer has failed to notify, the law presumes the employment relationship began on the first day of the third month before the failure was detected, and contributions follow that presumed date. The employer is left proving a negative about a period it never intended to be liable for.

How the notice is filed depends on size. Employers with fewer than ten workers can continue to make their communications and declarations through Segurança Social Direta. Employers with ten or more move permanently onto the interoperability platform under the new contribution cycle, which is voluntary during 2026 and compulsory from 1 January 2027. The Segurança Social service pages set out which channel applies to a given employer.

An open-ended contract in Portugal does not legally require a special form, so a verbal agreement can bind. That is not a reason to rely on one. A fixed-term contract must be in writing and must state the parties, the job and the pay, the place and hours of work, the start date, the term, and the specific facts that justify using a fixed term at all. A fixed term without a stated justification is exposed to being treated as open-ended.

Separately from the contract, the employer has to give the employee written information on at least 18 items. The core items, covering identity, place of work, the job, the dates, the term, pay, working hours and the probation period, are due within seven days of the contract starting. The remainder follow within a month. Paper or electronic delivery is fine, and the employer keeps proof of delivery, because failing to provide the information is a serious administrative offence.

The probation clause carries a specific trap. If the information about the probation period is not delivered on time, the parties are presumed to have excluded probation altogether, and the employer loses the simplest route out of a bad hire. Our guide to Portuguese employment contracts goes through the clauses that matter in practice.

Telework is its own document. Remote working requires a written agreement covering the usual place of work, hours, pay, who owns the equipment and how often the employee comes on site. The employer supplies the equipment and compensates proven additional costs, which are tax free up to €1.00 for each full day of telework, made up of €0.10 for electricity, €0.40 for internet and €0.50 for the computer, and rising by half where a collective agreement sets the amount.

Probation on an open-ended contract runs for 90 days as standard. It extends to 180 days for technically complex or highly responsible roles, roles needing special qualifications, positions of trust, and for people seeking a first job or coming out of long-term unemployment. Directors and senior managers can be given 240 days. Fixed-term contracts get 30 days where the contract lasts six months or more, and 15 days where it is shorter.

Either side can end the contract during probation without giving a reason and without compensation, but the employer owes notice once time has passed. After more than 60 days of probation the employer gives seven days’ notice, and after more than 120 days it gives 30 days’ notice. Notice that is not given has to be paid.

Probation shrinks in some situations and it is easy to overlook. Time already served with the same employer on a fixed-term contract, an agency contract, a services contract or a traineeship counts against it. For a first-job seeker, a fixed-term contract of 90 days or more with any employer counts, as does a positive traineeship of 90 days or more in the previous 12 months.

Two reporting duties attach to ending a probation. Where the employee is pregnant, has recently given birth or is breastfeeding, is on parental leave or is a recognised carer, the employer notifies CITE within five working days. Where the employee was a first-job seeker or long-term unemployed, the ending is reported to ACT within 15 days.

The applicable agreement follows the employer, not the employee. Portugal regulates collectively through instrumentos de regulamentação coletiva: negotiated instruments such as the contrato coletivo, the acordo coletivo and the acordo de empresa, and non-negotiated instruments such as the portaria de extensão, which widens an agreement to employers and workers who never signed it. Which one applies is determined by the employer’s registered business activity and what it actually does, so two people doing identical work for different companies can sit under different pay scales.

An agreement can depart from the Código do Trabalho unless the Code says otherwise, and in a protected list of subjects, including equality, parental rights, maximum working time, minimum rest, holidays, pay guarantees, safety and termination, it can only depart in the worker’s favour. An individual contract can improve on the agreement but not undercut it. Agreements are deposited with the DGERT and published in the Boletim do Trabalho e Emprego.

For a foreign employer this is the least visible cost in a Portuguese offer. A sector agreement can set a minimum salary above the national minimum, a meal allowance the law does not require, extra holiday days or a different overtime structure. Checking it before the offer is issued is cheaper than discovering it during an inspection.

Statutory terms attach immediately and cannot be traded away. Normal working time is capped at eight hours a day and 40 hours a week. Paid annual leave is at least 22 working days a year, and in the year of hire the employee earns two working days for each month of the contract, up to 20 days, which can be taken after six full months of service. Portugal has 13 mandatory public holidays; Carnival Tuesday and a municipal holiday apply only where the contract or a collective agreement provides for them, and holidays falling at a weekend are not moved.

Pay comes in 14 instalments, because the holiday subsidy and the Christmas subsidy sit on top of 12 monthly salaries. The Christmas subsidy is one month’s pay and is due by 15 December, pro rated in the first and final years. The holiday subsidy is paid before the holiday is taken unless something else is agreed.

A meal allowance is not required by the Código do Trabalho, but it is close to universal and many collective agreements make it compulsory. In 2026 it is free of IRS and TSU up to €6.15 a day when paid in cash and €10.46 a day when paid on a meal card, per day actually worked, with anything above those limits taxed and charged to contributions like salary.

Two further duties start immediately. Each employee is entitled to at least 40 hours of training a year, pro rated on fixed-term contracts of three months or more, with unused hours becoming a paid time credit and being paid out when the contract ends. And the right to disconnect applies to everyone, not only teleworkers: the employer must not contact an employee during rest periods except in cases of force majeure, and breaching it is a serious offence. Our guide to employing in Portugal collects these entitlements in one place, and you can talk the specifics through with us before you make an offer.

You can either incorporate a Portuguese company and become the employer yourself, or you can use an Employer of Record that already holds one. The first route usually means a sociedade por quotas (Lda), or a sociedade unipessoal por quotas where there is a single owner. The company is registered at the commercial registry, registers as an employer with Segurança Social and runs payroll under its own name. The second route leaves the legal employment with the EOR while you choose the person, set the work and manage them day to day.

An EOR is a different animal from a temporary work agency. An empresa de trabalho temporário needs a licence from the IEFP under Decreto-Lei 260/2009 and supplies workers to whichever client needs them. With an EOR you pick the individual, that individual works for your business alone, and the paperwork is an ordinary employment contract under the Código do Trabalho.

There is a third option that sits between the two. A foreign company with no permanent establishment in Portugal can obtain a Portuguese tax number, file a start-of-activity declaration and register with Segurança Social as an employer without incorporating anything. That removes the formation step, but every registration, insurance policy, monthly return and payment stays with you.

Employer of Record Portugal employs staff through its own Portuguese company, a sociedade unipessoal por quotas registered at the commercial registry in Lisbon. The employee signs with that company, holds a Portuguese contract, and appears on a Portuguese payroll from the first payment.

The incorporation itself is the easy part. Under Empresa na Hora a company is created the same day at the counter for €360, and the founders leave with the articles of association, an access code for the certidão permanente, an access code for the company card and the company’s Segurança Social number. All partners have to attend in person. Registering a trade mark at the same time adds €200 for one class and €44 for each further class.

The online route, Empresa Online, costs €220 if you accept a pre-approved model of articles and €360 if you draft your own, with an urgent service at €440 and €720 respectively. It needs a qualified digital signature, so in practice a Cartão de Cidadão, the Chave Móvel Digital or a lawyer or solicitor acting for you. A bespoke company name means a certificado de admissibilidade from the RNPC, at €75 normally or €150 urgent.

Capital is rarely the obstacle. Partners set the amount freely as long as each quota is at least €1, and cash contributions can be deferred to the end of the first financial year. Under Empresa na Hora the founders declare that the capital will be deposited, and the deposit window is five business days.

What follows the incorporation is where the work sits: a start-of-activity declaration with the Autoridade Tributária e Aduaneira within 15 days of the registry filing, a beneficial owner entry in the RCBE within 30 days, a contabilista certificado to take responsibility for the accounts, workplace accident insurance in place before anyone starts, occupational health and safety services, and a company bank account. Banks ask for the certidão permanente, the company card, the RCBE entry and identification for every partner and signatory, and those checks take as long as they take when the owners sit outside Portugal.

The registry fees are small and the running costs are not. Incorporation is €360 at the counter or €220 online with model articles, plus €75 if you need a name certificate. After that, an accountant for a small Lda is quoted at roughly €150 to €500 a month, indicative and excluding VAT, with payroll often charged on top at about €15 to €30 per employee per month. Workplace accident insurance is compulsory for every employee and is priced by the insurer against your activity code and claims record, so it has to be quoted rather than assumed.

On the EOR side the comparable figure is our flat fee, which starts at €499 per employee per month and covers the employment, the payroll and the filings. See what the monthly fee includes before you model it against an entity.

One number does not move. The employer’s TSU of 23.75% is a statutory cost of employing somebody in Portugal in 2026, and it is charged on both routes, on salary, on the holiday and Christmas subsidies and on commissions, with no upper limit. Comparing routes on social security is a dead end. Compare them on overheads.

That is why headcount decides so much of this. A single hire has to absorb the whole accounting retainer, the insurance minimums and the finance time on its own. Five or ten employees spread the same fixed costs, and at some point the entity is simply cheaper.

A Portuguese company that employs people files something every month. The Declaração Mensal de Remunerações goes to the Autoridade Tributária e Aduaneira by day 10 of the following month, the IRS withheld from pay is paid over by day 20, and social security contributions are paid by the 25th under the 2026 contribution cycle. Each new employee has to be notified to Segurança Social before they start work, and the same applies to changes and to leavers.

The annual layer is smaller but no less compulsory. The Relatório Único on staff, pay, training and safety is filed in the window from 16 March to 15 April, the RCBE entry is confirmed each year by 31 December, and the statutory accounts go through the contabilista certificado. Our post on how Portuguese payroll works month by month sets out the calculations behind those filings.

Employment law adds its own duties whoever the employer is. Written information on at least 18 items has to reach the employee, with the core items inside seven days of the start. Every employee is entitled to at least 40 hours of training a year. Accident insurance and occupational health services are not optional extras.

Collective agreements are the part foreign finance teams miss. In Portugal the applicable instrumento de regulamentação coletiva follows the employer’s own business activity, not the employee’s job title, so the activity code your company registers can pull it into a contrato coletivo or a portaria de extensão with pay scales and conditions you did not plan for. Agreements are deposited with the DGERT and published in the Boletim do Trabalho e Emprego, and they can be searched before you choose an activity code.

Set against each other, the difference is the size of the thing you are taking on. An EOR is a monthly fee and an employee. A company is an asset with obligations attached, and those obligations run whether or not the person you hired stays.

Neither column is the “right” one. The left column is a way to have somebody employed and paid correctly in Portugal without building anything. The right column is what you build when Portugal becomes part of how the business operates rather than a place where one person happens to live.

Incorporate when the company is doing more in Portugal than employing people. If you are invoicing Portuguese customers, holding assets, applying for grants or bidding for public work, you need the entity for reasons that have nothing to do with payroll, and once it exists the marginal cost of employing through it falls sharply. The same applies when a Portuguese team reaches the size where a local accountant and a payroll routine would exist anyway.

A branch is worth knowing about as a halfway house. A foreign company can register a sucursal at the commercial registry for €170 online or €200 at the counter, with an urgent service at €370 and €400. A branch has no separate legal personality, so the parent carries the liability, and the parent’s own constitutional documents have to be produced with certified translations.

An EOR earns its place in the cases where an entity would be premature. A first hire in a market you are testing. A specialist you found in Porto who will not wait while a bank completes its checks. Cover for a role while an entity is being put together. Short projects, fixed-term work and acquisitions where staff need an employer on a specific date. Our EOR services in Portugal page sets out what is covered for the monthly fee.

Moving between the routes is normal and it is not wasted effort. Companies commonly employ through an EOR while the Lda is being formed and the bank account opened, then transfer the employees across once the company can run payroll properly. The employment history, seniority and accrued entitlements move with the employee, so the decision you make now is not a decision you are stuck with.

Start here, because the answer decides how much of the rest matters. Some providers employ people through a company they own and control in Portugal. Others sign you up and then place the employee with a local partner, an arrangement you often discover only when the first payslip arrives with an unfamiliar company name on it.

The difference shows up in three places. Liability is the first: if the employing company is a third party, your contractual protection runs through the provider to a business you have never assessed. Speed is the second, because every contract change, salary adjustment and termination decision travels through an extra party. Cost is the third, since a partner takes a margin that ends up inside the fee you are quoted.

The question to ask is short. Which company will appear on the employment contract and on the recibo de vencimento, and what is its NIPC? A provider employing on its own entity can answer immediately and can point you to the certidão permanente for confirmation. Employer of Record Portugal employs on its own sociedade unipessoal por quotas registered at the commercial registry in Lisbon, and the same company is named throughout.

• Ask for the employing company’s name and NIPC in writing.
• Ask whether any part of the employment is subcontracted, and to whom.
• Ask who holds the employee’s personal data and under which company’s privacy terms.
• Ask what happens to your employee if the provider changes its partner.

A provider that knows Portugal will give you a full cost breakdown before you sign, not a percentage uplift. The figure that dominates is TSU: in 2026 the employer pays 23.75% of gross pay and the employee 11%, and there is no upper earnings ceiling, so a senior salary attracts employer contributions on every euro. A quote that caps social security at some threshold has been copied from another country.

The second thing to check is whether the quote is built on 14 payments. Portuguese employees receive twelve monthly salaries plus a subsídio de férias and a subsídio de Natal, and both attract TSU. A quote built on twelve payments understates the annual cost by roughly one seventh.

Then look for the items that are easy to leave out. Workplace accident insurance is compulsory for every employee under Lei 98/2009, and premiums vary by insurer and by the risk class of the role, so it should appear as a named line rather than an assumption. A meal allowance is almost universal and often required by a collective agreement, and it is tax free only up to €6.15 a day in cash or €10.46 on a meal card in 2026. FGCT contributions are suspended until 31 December 2026. The excessive fixed-term turnover surcharge of up to 2% exists in law but is not currently applied, so it should not be sitting in your quote as a routine cost.

Our own fee is flat, from €499 per employee per month, with employer costs listed separately. If you want to sanity-check a quote you have been given, our breakdown of the cost of hiring in Portugal sets out every element for 2026.

Whoever picks up the phone should be the person who can act, and they should be reachable in your working hours. The reason is arithmetic rather than service quality: Portuguese employer deadlines are fixed, and a provider that takes four days to answer a question about a salary change cannot meet them reliably.

The DMR goes to the AT by day 10 of the following month. IRS withheld from pay is due by day 20. Social security contributions are paid by the 25th under the 2026 cycle, and under Decreto-Lei 127/2025 the new pre-filled declaration has to be confirmed by day 20, with silence counting as acceptance of whatever Segurança Social has calculated. That last point deserves a direct question: a provider that lets a pre-calculated declaration go through unchecked is accepting figures on your employee’s behalf.

Ask what happens in three specific situations. An employee goes on sick leave and wants to know why the first three days are unpaid, which they are, because the ISS benefit carries a three-day waiting period. ACT, the labour inspectorate, asks the employing company a question about a contract. An employee resigns and wants their final amounts explained. In each case you want to know who replies, how quickly, and whether the answer comes from someone who works on Portugal every day or from a general service desk.

Support terms are worth putting in the service agreement rather than leaving to the sales conversation: named contacts, response times, and who is authorised to approve a change. If you would like to test the response, our contact page reaches the team that handles Portuguese employment directly.

Collective regulation in Portugal comes through instrumentos de regulamentação coletiva, and a provider should be able to say which one, if any, applies to your employee and why. The negotiated instruments are the contrato coletivo, signed between unions and employer associations, the acordo coletivo and the acordo de empresa, plus the acordo de adesão. The non-negotiated ones include the portaria de extensão, which stretches an agreement to employers and workers in a sector who are not members of the signatory bodies.

There is a nuance here that is specific to the EOR model and that weaker providers miss. The applicable instrument follows the employer’s activity and its association membership, not the job the employee happens to do. Because the EOR is the employer, its own activity code can determine which agreement reaches your employee, and that agreement may set pay floors, extra holiday or benefits above the statutory minimum. Agreements are deposited with DGERT and published in the Boletim do Trabalho e Emprego; DGERT runs a public search at dgert.gov.pt.

The contract itself deserves the same scrutiny. Probation under article 112 is 90 days as standard, 180 days for roles needing special qualifications or positions of trust, and 240 days for directors and senior managers, and it has to be set at the outset. A fixed-term contract must be in writing and must state the specific facts justifying the term. A non-compete clause is void unless it is in writing, the activity could genuinely harm the employer and the employer pays compensation, and it may run for at most two years, or three for roles of special trust. Ask to see a sample contract before you commit.

Strong providers answer in specifics and weak ones answer in adjectives, and the gap is usually obvious inside one call. The test that works best is to ask for a figure, a company name or a date, and see whether it arrives without a follow-up email.

• Green flag: the employing company’s NIPC, given without hesitation, matching the name on the draft contract.
• Green flag: an annual employer cost in euros, built on 14 payments, with TSU at 23.75% applied to all gross pay.
• Green flag: a named contact, a stated response time, and a sample Portuguese contract you can read before signing.
• Red flag: social security quoted with a ceiling, or a cost built on twelve monthly payments.
• Red flag: a fee described as a percentage of salary with no breakdown of what it covers.
• Red flag: vagueness about who actually employs the person, or a partner introduced after the contract is signed.

One distinction is worth confirming explicitly. An Employer of Record is not a temporary work agency. An empresa de trabalho temporário needs a licence from the IEFP under Decreto-Lei 260/2009 and supplies its own workers to a user company for a defined assignment. With an EOR, you choose the person, they work only for your business, and the contract is an ordinary open-ended or fixed-term one. If a provider describes itself loosely as a staffing arrangement, ask which model it is actually operating.

Fees are the last thing to compare, and only once the rest matches. A flat monthly amount per employee is easy to forecast; a percentage of salary quietly increases every time someone gets a pay rise. Our review of what to look for in the best EOR provider in Portugal compares the published prices of the main providers alongside the questions above.

Three things are settled before any paperwork moves: who is being hired, what they will be paid, and what the arrangement costs your company in full. Everything after that is administration, and most of it belongs to the provider rather than to you.

The commercial side is a service agreement between your business and the provider. It names the employee, the gross salary, the start date and the fee, and it sets out notice on both sides, data protection terms and what happens if the employment ends. A good agreement also states who carries the cost of statutory severance, since that is the one number that can move sharply later.

The cost side should be settled at the same time. In 2026 a Portuguese employer pays TSU at 23.75% on all gross pay with no upper ceiling, and pay is delivered in 14 instalments rather than 12. Workplace accident insurance is compulsory for every employee under Lei 98/2009, with premiums set by the insurer according to the risk class of the role, so it belongs on the quote as its own line. Contributions to the FGCT are suspended until 31 December 2026.

Employer of Record Portugal works to a flat fee from €499 per employee per month, with the employer costs shown separately rather than folded into a percentage. You can see how the fee is structured on our pricing page.

Portuguese payroll cannot run until the employee has a NIF from the AT and a NISS from Segurança Social. Both are ordinary requests, and an employer can ask Segurança Social for a NISS on behalf of a new foreign worker, but neither number arrives instantly, so they are the first thing the provider asks for.

• NIF and NISS, or the information needed to obtain them.
• A Portuguese IBAN for salary payment.
• Marital status, whether the spouse earns income, and the number of dependants, because these decide which of the 2026 withholding tables applies.
• Residence, since the mainland, Madeira and the Azores use separate withholding tables and separate minimum wages: €920, €980 and €966 a month respectively in 2026.
• Whether the employee is claiming IRS Jovem or the IFICI regime, either of which changes the tax treatment.
• The meal allowance arrangement: cash, which is tax free to €6.15 a day in 2026, or a meal card, tax free to €10.46.

Non-EU nationals add a step before any of this. They need a residence visa, most commonly the D1 for subordinate work, which requires a signed employment contract or a binding promise of one, so the contract is issued earlier in the sequence. Residence permits are then handled by AIMA, and the timelines there are measured in months rather than weeks.

The contract is drafted by the provider in its own name, sent to the employee for signature, and registered with Segurança Social before the first day of work. An open-ended contract needs no special form under article 110 of the Código do Trabalho, but a fixed-term contract must be in writing and must state the specific facts that justify the term, or it risks being treated as open-ended.

Probation is set at this point and cannot be fixed afterwards. Article 112 gives 90 days as the general rule for open-ended contracts, 180 days for technically complex or high-responsibility roles, roles needing special qualifications, positions of trust, first-job seekers and the long-term unemployed, and 240 days for directors and senior managers. Fixed-term contracts get 30 days, or 15 days where the contract runs under six months. If the employer fails to give the employee written information about probation on time, article 111(4) presumes the parties excluded it altogether.

Two filings sit around the start date. The comunicação de admissão must reach Segurança Social before the employee starts work, which is a change from the previous rule of notice within the 15 days before the start date; the service is described on gov.pt. Separately, article 107(4) requires written information on the core terms, including identity, place of work, job, pay, hours and probation, by day 7 after the contract starts, with the remaining items inside a month.

If the role is remote, a written telework agreement is needed as well. It covers the usual place of work, the schedule, pay, who owns the equipment and how often the employee attends on site.

The first pay run produces a recibo de vencimento showing gross pay, the employee’s 11% TSU, the IRS withheld and the net amount. The employer’s own 23.75% does not appear on the payslip but is paid across with the employee’s share.

Take a salary of €70,000 paid in 14 equal instalments of €5,000, to a single mainland resident with no dependants who is not claiming IRS Jovem or IFICI and receives no meal allowance. Under Table I of the 2026 withholding tables, the row up to €5,547 applies a marginal rate of 39.69% less a fixed €531.62, giving IRS of €1,452.88 for the month. Employee TSU is €550. Net pay per instalment is €2,997.12. On the employer side, TSU for the year is €16,625, which is where the total employer cost of about €86,600 comes from, before accident insurance.

Two features of Portuguese withholding surprise people the first time. The tables are applied to the month in isolation rather than to a cumulative year-to-date figure, so the annual outcome is squared up in the tax return; in this example the employee has withheld roughly €1,250 more than the final liability and receives it back on assessment. And because employer TSU has no ceiling, the employer cost keeps rising in a straight line with salary, with no point at which contributions stop. Our guide to Portuguese payroll takes the calculation apart line by line.

Three deadlines govern the month, and they do not move for anybody. The DMR, the Declaração Mensal de Remunerações, goes to the AT by day 10 of the month after payment. IRS withheld from employees is paid over by day 20, under article 98 of the CIRS. Social security contributions are paid by the 25th under the 2026 cycle.

The social security side is mid-reform. Decreto-Lei 127/2025 replaces the old monthly remuneration return with a pre-calculated declaração à Segurança Social, which the employer confirms by day 20 of the following month; silence counts as acceptance. Contributions are then payable between day 1 and day 25. Joining is voluntary during 2026 and becomes mandatory on 1 January 2027, and employers with fewer than ten workers may continue to use Segurança Social Direta. Changes to employment contracts are reported by day 10.

Annual filings sit on top of the monthly ones. The Relatório Único, covering staff, pay, training and health and safety, has a legal window of 16 March to 15 April for the previous year, though the deadline has been extended in practice in some years. Modelo 10 is due by 10 February for income not already reported through the DMR.

For a company using an EOR, none of these calendars appear in its own accounts. They are the provider’s obligations, carried out under the provider’s tax and social security numbers, which is the main practical difference between using a provider and running Portuguese payroll yourself.

Portuguese employees receive 14 payments a year, and the two extra payments have their own timing rules. The subsídio de férias, governed by article 264 of the Código do Trabalho, equals base pay plus the payments tied to how the work is performed, and is due before the holiday is taken, or proportionally where the holiday is split, unless the parties agree otherwise. The subsídio de Natal, under article 263, is one month’s pay and must be paid by 15 December.

Both are pro-rated in the first year of employment, in the year the contract ends, and across periods when the contract is suspended. An employee who joins in September therefore receives a part-year Christmas subsidy that December, not a full month’s pay, and the same logic applies on the way out.

Tax on the subsidies is calculated separately from the month in which they land. Article 99-C(5) of the CIRS requires the withholding on each subsidy to be worked out on its own rather than added to that month’s salary, which is why an employee receiving salary and holiday subsidy in the same month does not jump into a higher withholding row. Where a subsidy is paid in twelfths across the year, which is allowed by written agreement or by a collective agreement, article 99-C(6) requires the proportional share of tax to be withheld from each payment; check with your provider which approach it applies as standard.

The subsidies also count towards TSU, so the 23.75% employer contribution applies to all 14 payments. Our article on the holiday and Christmas subsidies covers the pro-rating rules in detail.

After the first quarter the work becomes routine, and the provider is handling absence, leave, changes and statutory reporting rather than set-up. Employees earn at least 22 working days of paid annual leave, and in the year of hire they earn two working days per full month of contract up to 20 days, usable after six full months of service.

Sick leave is a common first test. Under article 255(2)(a) of the Código do Trabalho the employer does not pay sickness absence where social security protection applies, and the ISS benefit has a three-day waiting period, so the first three days are unpaid unless a collective agreement or company policy tops them up. The benefit is then 55% of reference pay for up to 30 days, 60% for days 31 to 90, 70% for days 91 to 365 and 75% beyond that. Employees can self-declare illness through the SNS 24 service for up to three consecutive days, at most twice a year.

Changes are handled by addendum: you decide on a pay rise, a promotion or a move to telework, and the provider drafts the document for signature. Each employee is entitled to at least 40 hours of training a year under article 131. When the arrangement ends, the route depends on the reason. Resignation carries 30 days’ notice up to two years of service and 60 days above that. Redundancy of a post carries employer notice of 15, 30, 60 or 75 days by length of service, and compensation of 14 days’ base pay per full year of service for time worked from 1 May 2023, with earlier service calculated on the transitional rates.