Hire Employees in Portugal: 2026 EOR, Payroll and Employment Guide

A Lda can be incorporated quickly through Empresa na Hora, often within a day, though a Portuguese tax number for foreign shareholders and a bank account add time. Registration with the Segurança Social and mandatory work accident insurance follow.

An EOR reaches payroll in two to three weeks without any of it.

EOR for the first hires; entity once Portugal is a settled base.

Contractors on recibos verdes are common and are also the most frequent misclassification finding. Where a contractor earns more than half their income from one client, that client owes an additional social security contribution — and the ACT can requalify the relationship entirely.

The contribution rate is 23.75% for the employer with no ceiling, set by article 53 of Lei 110/2009 and unchanged for 2026. That flatness makes Portugal easy to model — the percentage is identical for a support associate and a director.

The two extra months are what foreign employers miss. Holiday and Christmas subsidies are each a full month of pay, mandated by articles 264 and 263 of the Labour Code, and each attracts the 23.75% on top. Fourteen months is the norm, not a bonus.

The minimum wage rose to €920 on 1 January 2026 under Decreto-Lei 139/2025, with higher regional figures in the Azores at €966 and Madeira at €968. The tripartite agreement targets €1,020 by 2028.

Relief is available: half the employer rate for five years on first-job hires and three years for the long-term unemployed.

Four representative profiles at the 2026 rates. Salaries are illustrative market midpoints, not GX operating data. The percentage is identical at every salary because there is no ceiling. The two extra months are shown separately and themselves attract the 23.75%. For real market data on your roles, ask for a costing.

Fourteen payments a year is the statutory position: twelve monthly plus the holiday and Christmas subsidies. By agreement the subsidies may be paid in twelfths across the year, which smooths cash flow without reducing cost.

IRS is withheld using the published retention tables, which differ by region, marital status and dependants. The 2026 minimum-existence threshold of €12,880 means a full-time employee on the minimum wage pays no IRS at all.

IRS is withheld using published retention tables that differ by region, marital status and number of dependants. The 2026 minimum-existence threshold means a full-time employee on the minimum wage pays no IRS at all.

The IFICI regime — the successor to the old non-habitual resident scheme — offers a 20% flat rate on qualifying employment income for inbound workers in eligible activities, for ten years.

The Código do Trabalho governs, supplemented by sector agreements. Twenty-two working days of holiday, a 40-hour week, fourteen payments a year, and dismissal that requires both cause and a formal procedure.

Work accident insurance is compulsory and sits outside social security — an employer without a policy is personally liable for the full cost of an injury.

The indefinite contract is the default. Fixed-term contracts require a justified reason stated in writing and are capped in duration and renewals; an unjustified term makes the contract indefinite.

Probation is 90 days for most roles, 180 for positions of technical complexity or responsibility, and 240 for senior management. It is longer for first-job hires and the long-term unemployed.

Forty hours a week and eight a day is the statutory maximum, with the collective agreement often setting less. Overtime is capped at 150 hours a year in most companies and paid at premiums set by the Code.

Employers must record working time and keep the records for five years.

Twenty-two working days of paid holiday a year, accrued from the start of employment. In the year of hire the employee accrues two days per month worked, capped at 20 days.

The holiday subsidy is paid in addition and is equal to a full month of pay — it is not a payment for the holiday itself.

Thirteen mandatory public holidays a year, plus a municipal holiday that varies by locality — Lisbon on 13 June, Porto on 24 June. Employers may also grant Carnival Tuesday, which is customary but not mandatory.

Parental leave: the initial period is 120 or 150 days shared between parents, paid by Social Security at 100% or 80% respectively. Where both parents share, a further 30 days is added.

Father’s exclusive leave: 28 days, of which the first seven must be taken immediately after the birth.

Sick leave: paid by Social Security from the fourth day at rates rising with the length of absence. The employer does not pay the first three days unless the collective agreement requires it.

Dismissal requires cause and a formal written procedure. The permitted grounds are disciplinary justa causa, redundancy of the post, collective redundancy, or unsuitability — each with its own process, and the process is scrutinised as closely as the reason.

Notice on employer-initiated termination runs from 15 to 75 days depending on length of service. An employee resigning gives 30 or 60 days.

Compensation for redundancy is 14 days of base pay and seniority payments per full year of service, calculated pro rata for part years. Dismissal without a valid reason exposes the employer to reinstatement or compensation of 15 to 45 days per year of service, set by the court.

Termination during probation requires no reason, but notice applies once probation has run beyond 60 days.

EU, EEA and Swiss nationals need no permit. For others, the residence visa for highly qualified activity and the D8 digital nomad visa are the usual routes.

Processing has been slow since the AIMA transition, so allow three to six months rather than the two to four often quoted, and build that into start dates.

The ACT inspects actively. The recurring findings are false green-receipt contracting, missing work accident insurance, mishandled holiday and Christmas subsidies, and failure to communicate a hire before the start date.

The 24-hour pre-notification is absolute: an employee who starts before it is filed is treated as undeclared, with penalties per worker.

Article 12 of the Labour Code presumes employment where several indicators are present — the client’s premises and equipment, set hours, periodic payment, and integration into the organisation. The burden then shifts to the employer.

Answer for the Portugal-based person you currently pay on invoice. Indicative only — not legal advice.

Communicate the hire to the Segurança Social at least 24 hours before the employee starts. This is the single most-missed obligation for foreign employers in Portugal.

Confirm before the offer: whether a sector agreement applies, that work accident cover is in place, and how the two subsidies will be paid — in full or prorated across twelve months.