When you need to legally and compliantly employ an internationally remote worker, one of the first things you have to come to terms with are the local employee rights. Below is a guide to the employee rights in Portugal, a third in a series that aims to help you understand employment rights legislation around the world (read about employee rights in Australia, Brazil, Canada, Croatia, Ireland, France, the UK, Poland, Germany, The Netherlands, Lithuania, and New Zealand). You will need to comply with these laws, regardless of where in the world you are based.
To employ someone in Portugal, you need to be a registered employer, which will require registering your foreign entity with the National Register for Legal Persons (Registo Nacional de Pessoas Coletivas) to receive a Portuguese tax number, as well as the Tax and Customs Authority (Autoridade Tributária e Aduaneira) and the Social Security Office (Segurança Social). To get a full overview of what that would take and see all the obligations you will have as an employer, please read our Portugal Country Guide.
Alternatively, you can work with an Employer of Record, such as Boundless, which will employ the worker on your behalf, sparing you all of these registrations and ensure compliance with employment law, process payroll, pay salaries, as well as file and pay taxes on behalf of your employees every month.
Regardless of the employment approach, all employees in Portugal are entitled to the following rights.
Generally, Portuguese employment contracts do not need to be in writing. However, for some types of arrangements (fixed-term, part-time, and secondment contracts, as well as contracts with foreign employees) the law requires a written document.
Within 60 days from the start of the employment, the employer has to inform the employee in writing about working conditions that include:
Employees are entitled to receive a monthly payslip from their employer (either hard copy or online) with details of their remuneration. The employer must keep payroll reports for at least five years and may be audited.
Employees in Portugal have the right to work in healthy, safe and hygienic conditions, which must be guaranteed by the employer. The employer must comply with the preventative principles, guidelines and rules relating to safety, hygiene and health at work.
Employers are obliged to ensure:
Each employee is entitled to a work accident risks insurance. The employer sets that up and informs the relevant regional service of the Authority for Working Conditions (ACT- Autoridade para as Condições do Trabalho).
Home Offices
Employees working from home have the same right to a healthy and safe environment, which their employer should provide. Employers are responsible for the installation, maintenance, and costs associated with home offices, such as workstation and tools.
Employees should make sure they work from an appropriate, safe and comfortable workstation that includes an ergonomic chair, footrest, elevated computer screen to meet the eyes, suitable light avoiding glares, a room exit without obstructions and cables, which are covered.
Regardless if working from home or the office, employees are entitled to regular health and eye exams, as well as appropriate equipment to protect their eyes.
Employees are protected from any form of harassment during hiring or employment. Harassment is seen as any undesirable behaviour that either intends to or directly affects the person's dignity, as well as creates an intimidating, hostile, degrading, humiliating or destabilising atmosphere.
Particular attention is placed on extending protections from any form of sexual harassment. That is seen as any undesirable behaviour of sexual nature, whether verbal, non-verbal or physical, that has harassment as its purpose or result.
A candidate or employee can take a civil action to seek compensation for any act of harassment under the Portuguese Civil Code. In addition, the employer can be subject to an administrative proceeding and be fined.
According to the Portuguese Labour Code, an employer cannot discriminate, directly or indirectly, based on:
A candidate or employee who has been a victim of discrimination will have to indicate who the individual/s that have discriminated them are. In turn, if any differences in the employee's working conditions are present, the employer will have to prove that they didn't result from discrimination and give an explanation. The protection against discrimination covers all parts of the employment contract - from hiring to training and promotion, and extend to work conditions, pay and termination. Employees who have been discriminated against are entitled to compensation for any damages.
If the company undergoes a business transfer, existing employment contracts transfer automatically to the new employer. Employees retain the length of service provided to the former employer, which must be recognised by the new employer.
The employee retains the former employer's rights and obligations under the employment contract before the transfer. The employee has to agree to any changes to the terms and conditions of employment.
Employees are protected against dismissal before and after a business transfer. However, if the employee refuses to perform work for the new employer, they are in breach of contract and could be dismissed. The only exception is if the new employer is not providing them with work, which gives employees the ability to resign with just cause and claim compensation.
Pregnant employees whose work duties might put the pregnancy at risk have the right to an alternate arrangement for work. The employer must:
Alongside the above, pregnant employees are also exempt from having to work night shifts, overtime or in concentrated working schedules. They also have the right to a leave to attend prenatal medical appointments, as well as breastfeed.
The Portuguese Labour Code contains several provisions regarding employee's right to privacy, including data protection, biometric data, medical test and exams, remote surveillance and correspondence, and access to information using the company's means of communication.
Personal data of employees in Portugal is protected by the EU General Data Protection Regulation (GDPR). Under GDPR, employers must comply with the following principles when handling the personal data of employees:
Organisations should have a Privacy Statement, which employees can easily access explaining what data is held and what it is used for. If you are working with Boundless to employ your remote workers in Portugal, this is one of many things we will handle for you. Since employees are allowed to access their data, employers need to have in place a procedure for how these requests are handled within one month.
Under GDPR legislation, employees have the right to:
Superior protection against dismissal is extended to pregnant workers, employees who have given birth in the past 120 days, breastfeeding mothers, and those on paternity leave.
In other circumstances, terminations require a valid reason and disciplinary procedure. The employer cannot unilaterally terminate employment without just cause.
Employers must provide employees with a notice period according to the number of years they have been working for the company. The process takes several weeks and, if not done correctly, the dismissal is considered unlawful and void. Reasons for termination include:
In cases of disciplinary dismissal, an employer isn't required to either pay compensation or to provide a notice period. However, the dismissal procedure must always be completed.
Dismissed employees can file a claim before a labour court to challenge the dismissal. Suppose the court decides that there was any illegal procedure or lack of reasons or formalities for a dismissal. In that case, employees may choose between being reinstated in the company or receive compensation ranging from 15 and 45 days of base remuneration plus a seniority bonus.
Each year, employees in Portugal have a right to receive a minimum of 40 hours of learning to enhance professional growth and relevance in their field. The training can be chosen by the employer and has to be facilitated by either an entity that provides training certification or an establishment recognised by the ministry of education. At the end of the training, the employee must receive a certificate. Depending on the type of training, the certificate may need to be added to the National System of Qualification (Caderneta Individual de Competências nos termos do regime jurídico do Sistema Nacional de Qualificações).
In Portugal, annual salaries are divided into 14 payments instead of the standard 12. The extra two salaries are provided as a Christmas bonus paid by the 15th of December and a holiday bonus paid before the employee's annual leave (usually June).
Workers who have contributed to social security are entitled to one of three kinds of unemployment benefits:
Unemployment benefits can be awarded for between 9 and 38 months, depending on the employee's age and the number of years they have worked and have made contributions. To be eligible for unemployment benefit, an individual must have worked at least 365 days consecutively or made voluntary contributions for two years. The unemployment benefits are calculated at around 65 percent of the average net earnings over the three months prior to losing employment.
The social unemployment benefit comes into place if the individual doesn't meet the 365 days of work requirement. If they have worked for 180 days in the 12 months preceding the date of losing employment, thye can avail of the social unemployment benefit. The social unemployment is also extended to people who are still unemployed after the regular unemployment benefit expires.
Partial unemployment benefit, on the other hand, is awarded if the individual has managed to find a part-time job after losing their full-time employment. It's paid from the time the part-time job begins until the end of the period during which the individual was entitled the full unemployment benefit. It corresponds to the difference between the unemployment benefit the employee was receiving plus 35%, and the pay for the new part-time job.
Employees who are terminated due to collective dismissal or redundancy are entitled to severance. The amount an employee will be paid depends on their seniority within the company.
Since 2011, severance entitlements have been reduced from 30 to 20 days of pay per year of service. In addition, since 2013, the severance maximum equals 12 times the employee's base salary, as well as any seniority pay. This means that when calculating severance, whether the employment existed before 2013 or 2011 respectively will impact the amount. The redundancy pay cannot exceed 20 times the minimum national wage (€740.8 as of September 2020).
The Compensation Fund (Fundo de Compensação do Trabalho) and the Guarantee Fund for Work Compensation (Fundo de Garantia de Compensação do Trabalho - FGCT) can be used to finance severance payments partly and is applicable in situations of both individual and collective dismissals.
Employees have the right to be absent from work for the following reasons:
These days are fully paid and come on top of the holiday entitlement. They are topped at 30 days per year.
To learn about all statutory benefits, as well as how good and great employers top that, download our Portugal benefits benchmark infographic.
Although not mandatory, employees have the right to set up work councils.
Adhering to employment law and employee rights in Portugal will require a commitment to learning and working with a lot of local regulations. We are here to help you on that journey and take the time to make sense of complex legislative information, which we turn into easy to understand resources and comprehensive country guides (check our guide to Portugal).
However, staying on top of Portuguese employment law may not be a top priority for you right now. That doesn't mean you should give up on employing your next remote worker out of Portugal or opt for hiring them as an independent contractor instead (hint: it's a bad idea).
Boundless can help you employ anyone in Portugal legally and hassle-free. We own and operate a Portuguese Professional Employer Organisation as part of our multi-country offering. Through the Employer of Record model, we act as the legal employer to your remote workers and take care of the many obligations that come with adhering to these employee rights. Learn more.
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