What do you need to know to hire in Portugal?
Portugal requires a mandatory 13th and 14th salary payment every year. Employer social security (TSU) is 23.75%, annual leave is 22 days, and severance applies from day one of employment. Each guide below takes one layer.
· Portugal guide
How does Teamed handle Portuguese hiring for you?
Teamed becomes your legal employer of record in Portugal for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, contracts, and the full Portuguese employment law stack run on one platform.
Real HR and legal experts manage every Portuguese hire, from the first contract to the final settlement. An actual person, not a chatbot or a pooled queue, handles your Portugal team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
A Portuguese contractor who converts to employment keeps their record, and that same employee can graduate from EOR to your own Portuguese entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Portugal hire, until it isn't.
- Portugal legally requires a 13th and 14th salary payment every year. The Christmas subsidy (one month base salary, due by 15 December) and the holiday subsidy (one month base salary, paid before annual leave) are statutory obligations under the Labour Code. Most US buyers budget for 12 months and get a surprise. The cost breakdown guide shows the full annual cost with both subsidies included.
- Severance applies from the very first year of service. Portugal has no qualifying service threshold for redundancy compensation. If you dismiss an employee for objective reasons, severance is due from day one, at 14 days of base salary per year of service. Most competitor pages still describe an old minimum service rule that no longer applies.
- Unfair dismissal protection runs from the start of employment. Unlike Germany (6 months) or the UK (2 years for most rights), Portugal's constitution protects workers from arbitrary dismissal from the first day. You need a valid legal ground to terminate, and the employee can challenge it at a labour court straight away.
Hiring in Portugal adds roughly 123 to 124 percent of gross monthly salary when you include employer TSU at 23.75% plus the two mandatory annual subsidies.
Portugal pays payroll monthly. Employers file and remit withheld income tax and social security contributions by the 20 daysth of the following month.
Teamed runs Portuguese payroll, contracts, and compliance through an EOR entity with the required Portuguese registrations.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in Portugal in 2026?
A Portuguese hire costs roughly 123 to 124 percent of gross monthly salary once TSU and both mandatory subsidies are counted.
Employer TSU is 23.75% of gross salary, plus a Christmas subsidy and a holiday subsidy each worth one month of base salary every year.
The employer social security contribution (Taxa Social Unica) is 23.75% of gross salary. On top of that, two statutory subsidy payments add the equivalent of two extra monthly salaries per year: the Christmas subsidy (due by 15 December) and the holiday subsidy (due before annual leave). These are not discretionary bonuses. They are legal obligations under the Labour Code. Most US buyers miss them in the first year. Teamed's Portugal fee sits inside the total cost envelope.
Teamed's Portugal price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.
The full breakdown, with worked examples at current statutory rates including both subsidies, is in the cost guide.
Do you need a Portuguese entity to hire employees in Portugal?
No. An Employer of Record runs Portuguese payroll and contracts from day one.
Your own Portuguese entity becomes cheaper than EOR somewhere around 5 to 8 employees, depending on salary.
Incorporating a Portuguese Lda (Sociedade por Quotas) requires notarisation, registration with the Conservatoria do Registo Comercial, and a minimum share capital. Setup takes several weeks and comes with ongoing payroll, accounting, and annual filings. An Employer of Record is faster and cheaper at low headcount. Teamed runs Portuguese payroll, contracts, and compliance from day one.
The crossover point depends on salary levels and your local accounting costs. For most tech roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Portuguese entity on one platform under Teamed's Graduation Model, with tenure preserved.
What are the key employment law rules in Portugal in 2026?
The minimum wage rose to €920/month on 1 January 2026.
Unfair dismissal protection applies from the first day of employment. There is no qualifying service period.
The national minimum wage (Salario Minimo Nacional) for mainland Portugal is €920/month from 1 January 2026. Payroll must be filed and contributions remitted by the 20 daysth of the following month. Standard working time is capped at 40 hours per week and 8 hours per day under the Labour Code (Codigo do Trabalho art. 203).
Portugal's constitution protects workers from arbitrary dismissal from day one of employment. Termination requires a valid legal ground under the Labour Code. The hiring guide covers the contract types, probation rules, and day-one employer obligations in detail.
What benefits must you provide Portuguese employees in 2026?
The statutory floor is 22 days of paid annual leave, a mandatory Christmas subsidy, a mandatory holiday subsidy, and paternity leave of 28 days.
Sick pay from Social Security starts on day four of absence. The employer pays nothing directly for the first three days.
Statutory annual leave is 22 days of working days per year under Codigo do Trabalho art. 238. Portugal counts annual leave and public holidays separately. There are 13 national public holidays. The Christmas subsidy (one month base salary) and holiday subsidy (one month base salary) are both mandatory under the Labour Code, not optional extras.
For parental leave, the shared initial entitlement is 120 days at full pay. Fathers must take 28 days of mandatory paternity leave. Sick pay is funded by Social Security from day four of absence, at 55% of reference earnings for the first 30 days. The benefits guide covers each entitlement and the employer obligations in full.
Read the full Portugal benefits guide
What are payroll taxes in Portugal in 2026?
Employer TSU is 23.75% of gross salary. This single contribution covers pension, sickness, unemployment, and other statutory protections.
Employees pay 11% TSU plus income tax (IRS) withheld at source on a progressive scale starting at 12.5%.
Portugal's social security system uses a unified contribution (Taxa Social Unica). The employer pays 23.75% of gross salary. The employee pays 11%. There is no separate mandatory occupational pension contribution. The TSU covers pension, sickness, maternity, paternity, and unemployment protection in a single rate.
Income tax (IRS) is progressive with nine bands. The starting rate is 12.5% on earnings up to EUR 8,342. It rises to 48% above EUR 86,634. An additional solidarity levy of 2.5 to 5 percent applies at higher incomes. Employers file and remit withheld IRS alongside TSU by the 20 daysth of the following month. The tax and payroll guide sets out every band and threshold.
How do you terminate an employee in Portugal?
Portuguese statutory notice scales with tenure. It starts at 15 days for employees with less than one year of service.
Notice reaches 75 days at ten or more years of service.
Notice under the Codigo do Trabalho (arts 114, 357, 363) scales with service: 15 days for less than one year, 30 days for 1 to 5 years, 60 days for 5 to 10 years, and 75 days for 10 or more years.
Severance on objective dismissal is 14 days of base salary per year of service, with a cap of 12 months of salary. There is no minimum qualifying period. Unfair dismissal compensation ranges from 15 to 45 days of base salary per year of service, with a floor of 3 months. Collective redundancy triggers consultation when 2 or more employees are dismissed within a 90 days-day window in smaller companies. The termination guide runs the full process.
What should you know before hiring in Portugal?
Two things catch US buyers out. The first is the mandatory 13th and 14th salary.
The second is that Portugal has no qualifying service period before severance or unfair dismissal protection applies.
The 13th and 14th salary are not bonuses. The Christmas subsidy and holiday subsidy are statutory rights under the Labour Code. Every employee earns them from the first year. Budget for 14 months of base salary per employee per year, not 12. A hire at EUR 3,000 per month costs an extra EUR 6,000 in subsidies alone before you add TSU.
Probation ends at 3 months for standard roles, or 8 months for senior management. After probation, both notice and severance obligations apply in full. During probation the employer can end employment without notice for the first 60 days. After 60 days, 7 days notice is required. The hiring guide and the EOR vs entity guide cover how Teamed navigates onboarding and the probation window.
Frequently asked questions
How much does it cost to hire an employee in Portugal?
Plan on roughly 123 to 124 percent of gross monthly salary. Employer TSU is 23.75% of gross salary. The two mandatory annual subsidies (Christmas and holiday, each one month of base salary) add the equivalent of another 16 to 17 percent of monthly cost spread across the year. Teamed's Portugal fee is one flat number per employee per month, with zero FX mark-up in any currency pairing. The cost breakdown guide has worked examples.
Can a US company hire in Portugal without an entity?
Yes. An Employer of Record like Teamed runs Portuguese payroll, contracts, and compliance through its own registered entity. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Forming your own Portuguese Lda takes several weeks and requires notarisation and Conservatoria registration.
What is the Portuguese minimum wage in 2026?
The national minimum wage (Salario Minimo Nacional) for mainland Portugal is €920/month from 1 January 2026. Portugal sets a monthly minimum, not an hourly one. The rate applies to all employees on permanent and fixed-term contracts. The Christmas and holiday subsidies are calculated on top of this base.
What are Portuguese statutory notice periods in 2026?
Notice scales with tenure under the Codigo do Trabalho. It is 15 days for less than one year of service, 30 days for 1 to 5 years, 60 days for 5 to 10 years, and 75 days for 10 or more years. During probation, the employer can dismiss without notice in the first 60 days. After 60 days of probation, 7 days notice applies.
What is the severance formula in Portugal?
On an objective dismissal (redundancy), severance is 14 days of base salary per year of service, with no qualifying service minimum. The total is capped at 12 months of base salary. For unfair dismissal, a labour court can award between 15 and 45 days of base salary per year of service, with a floor of 3 months. There is no fixed monetary cap on unfair dismissal awards.
What is the minimum annual leave for a Portuguese employee?
Statutory minimum paid annual leave is 22 days of working days per year under Codigo do Trabalho art. 238. Portugal counts annual leave and public holidays separately. There are 13 national public holidays, and some municipalities observe additional local holidays. Employers can grant more leave by contract.
Portugal reads as a straightforward civil-law market until you land the first payroll run. The mandatory Christmas and holiday subsidies, the day-one severance entitlement, and the constitutional protection against arbitrary dismissal are all in the Labour Code. They are not edge cases. Buyers who budget for 12 months of salary and one statutory rate find out at year-end what the other two months cost.
Portugal has clear rules. TSU at 23.75%. Two mandatory bonus months every year. Severance from day one.
Most of the cost surprises in Portugal come from not reading the Labour Code before the first hire.
Read the right Portugal guide before that hire, not after the first year-end payroll run.
