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Forums For Adjudicating Employment Disputes

Employment disputes fall within the jurisdiction of the Labour Courts.

There is also an employment conciliation, mediation and arbitration system, governed by the Labour Code and Decree-Law No. 259/2009 of 25 September 2009, which provides for mandatory arbitration and necessary arbitration, as well as arbitration in relation to minimum services during a strike and the means necessary to guarantee those services. Mandatory and voluntary arbitration is limited to cases involving collective bargaining disputes and to cases where the judicial courts do not have jurisdiction and the parties are free to agree terms (issues such as the termination of labour agreements, holidays, the working schedule and overtime work are not matters on which the parties are free to negotiate, and therefore such matters cannot be resolved by arbitration).

The Main Sources Of Employment Law

There are a number of different sources: the Portuguese Constitution, International Law, EC law, the Labour Code and respective Regulation, the Labour Procedure Code, Collective Bargaining Agreements, Extension Regulations, labour uses provided they do not conflict with principles of good-faith and harmonised case law.

National Law And Employees Working For Foreign Companies

The parties are free to agree which law is applicable to their employment relationship. However, in the absence of an express agreement, determining the applicable law will depend on each specific situation and on international law.

Regardless of the law applicable to the contract, the mandatory provisions of Portuguese Labour law (which include provisions relating to maximum working hours, compensatory rest days, health and safety rules, minimum periods of holiday, minimum wage, payment for overtime work, equality and non-discrimination) will apply to foreign employees living and working in Portugal, whether they are doing so on a permanent basis or simply as temporary expatriated employees.

National Law And Employees Of National Companies Working In Another Jurisdiction

Please see the above section. An employee working in another jurisdiction is entitled to request the application of the mandatory provisions of Portuguese Labour law (as set out above) without prejudice to any more favourable regime which may apply by virtue of working in that other jurisdiction, or by virtue of the parties’ choice of contractual law.

Data privacy

The implementation into Portuguese national law of the General Data Protection Regulation (EU 2016/679) occurred in 2019 (Law 58/2019 of August 8). Among other aspects, this law:

  • Designates the National Data Protection Commission (CNPD) as the national supervisory authority for the purposes of the GDPR and the law;
  • Clarifies which public and private entities are obliged to appoint a Data Protection Officer;
  • Determines the rules concerning the processing of employees’ data in the context of labour relationships, for instance regarding: consent by the employee (not lawful if the processing results in a legal or economic advantage for the employee), video-surveillance systems (remote surveillance images may only be used in disciplinary proceedings if they have been previously used in criminal proceedings) and biometric data (processing is only considered lawful for attendance control and access control to the premises).
Legal Requirements As To The Form Of Agreement

As a rule, employment agreements do not need to take any particular form and therefore they may be oral or written. However, the exceptions to this general rule are fixed term employment agreements, employment agreements under a commission of services regime, part-time employment agreements, intermittent employment agreements, tele-work and temporary work. Regardless of the form of agreement, there are a number of key terms and conditions that must be provided to the employee in writing, as follows:

  • The identity of the employer. In the case of a corporate employer, this includes details of the company’s structure (i.e. its holdings and subsidiaries and/or the existence of a group of companies) and its respective headquarters or address;
  • The place where the work must be performed, or, if there is no fixed place, a statement to that effect;
  • The job title or a brief description of its functions;
  • The date of execution and employment commencement date;
  • The duration of the contract (if it is subject to a fixed term);
  • Holiday entitlement and/or duration and the relevant method of calculation;
  • The notice period required by the parties to terminate the employment relationship (if any) and/or the method for calculating such notice;
  • The remuneration and the frequency of payment;
  • The number of hours to be worked per day and per week. Where this is merely an average figure, that fact should be stated;
  • The identification of the labour accidents insurance policy and the name of the relevant insurance company;
  • Applicable collective agreements;
  • The identification of the wage guarantee fund or equivalent mechanism.

Although as a general rule employment agreements do not have to be written, there are several advantages to having a written agreement - it allows both parties to agree upon and confirm in writing the main aspects of the employment relationship.

Mandatory Requirements
  • Trial Period
  • The trial period duration depends on the type of contract and/or of the employees’ job title/functions. In most cases the trial period is up to 90 days granted on the commencement of employment; when employees hold positions with technical complexity, perform trust-based functions, are looking for their first job or are long-term unemployed, the trial period is extended to 180 days; the trial period is up to 240 days for employees in senior management positions. In fixed term agreements, the trial period lasts 30 days in case of the duration of the contract is equal or longer than 6 months; for contracts shorter than 6 months, the trial period is 15 days.

    The trial period is reduced or even excluded where there has been a previous contract between the same employer and employee under which the employee carried out the same work. The amount of the reduction or exclusion depends on the length of the previous contract. The parties may expressly reduce the trial period by agreement or by means of applicable collective agreement.

    As a rule, during the trial period each party can terminate the employment contract without notice, cause or severance payment. However, where the trial period lasts longer than 60 and up to 120 days, the employer is obliged to give 7 days’ notice of termination; where the trial period last for more than 120 days, the relevant notice period is 15 days.

  • Hours Of Work
  • Under statute, the normal maximum permitted working period is 8 hours per day and 40 hours per week. These maximum amounts may be increased or reduced in certain situations, for example through collective bargaining agreements or agreement between both parties in the context of legal flexible forms of working time organisation. In certain economic sectors of activity or job titles/functions the maximum working period may be lesser than 40 hours per week (for instance in the insurance sector). Where an employee is engaged in unhealthy work (as defined by the Labour Ministry) the employee cannot work longer than 6 hours per day. Unhealthy work is similar to unsafe work. Employees who work night shifts between 9pm and 6am cannot work longer than 7 hours.

  • Special Rules For Part-time Work
  • Part-time employment agreements must be agreed in writing and must detail the number of working hours per week with comparative reference to full time work. Part-time employees must be paid the same rate as their full-time colleagues in the same situation, on a pro-rata basis and failure to do so will be held to be unlawful.

    Employees with children under 12 years of age or, regardless of age if with a permanent disease or disability, are entitled to work part time.

  • Earnings
  • There are minimum wage restrictions which apply in Portugal. For 2021, the minimum wage is equivalent to € 665 per month.

  • Holidays/Rest Periods
  • In general, all employees are entitled to a minimum of 22 working days paid holiday per year, though there are some exceptions to this rule. During the first year of employment, holiday entitlement accrues at the rate of 2 working days for each full month of work after a six-month period of work but is subject to a maximum of 20 days. It is mandatory for employees to take one holiday period of at least 10 consecutive working days per year.

    Generally, the parties are free to agree between themselves when holiday should be taken. However, if agreement cannot be reached, (unless otherwise prescribed in collective bargaining agreements) the employer is entitled to determine when holidays should be taken provided that it allows the employee to take holiday between 1st May and 31st October. In exceptional circumstances, employees are allowed to carry unused holiday forward to the following year, provided that such holiday days are taken prior to 30th April of the subsequent year. The circumstances previously referred to are agreement between both parties, or if the employee wishes to spend the holidays with relatives living abroad. Employees are also allowed to accumulate half of the holiday period that became due at the beginning of the previous year by agreement with the employer. In addition to the above holiday entitlements, employees will also benefit from two kinds of annual public holiday: mandatory public holidays and optional public holidays.

  • Minimum/Maximum Age
  • An employee has to be at least 16 years of age (plus completion of compulsory schooling), although in certain circumstances it is possible to employ someone younger. Different rules apply to children and young workers.

    In 2021 the retirement age is 66 years and 6 months but is not compulsory.

  • Illness/Disability
  • Inherent subsidy is granted by the Portuguese Social Security System to eligible employees. Employees maintain all rights and obligations when they are ill, except the rights concerning the remuneration and the obligation to work. The amount of the subsidy varies in accordance with the nature and the period of absence between 55% and 75% of the remuneration according with the duration of the disease or, in case of tuberculosis between 80% and 100% of the remuneration depending on the household, with a minimum limit and a maximum limit (which is the reference remuneration of the employee). The requirements to be granted the subsidy are the registry of remunerations in the 6 months prior to the beginning of the absence and 12 days of registry of remuneration for effective work in the previous 4 months preceding the month in which the disability occurs. The maximum period during which it is granted is 1095 days (in case of tuberculosis the subsidy is granted by an unlimited period time).

  • Location Of Work/Mobility
  • Employees may be temporarily or permanently transferred to a different working place, provided there is reasonable justification communicated in writing and prior notice is given. Parties are allowed to agree on the extension of the transfer conditions which expires within 2 years if it has not been applied within such period.

  • Pension Plans
  • Employers are free to implement/subscribe to Pension Plans to complement the Portuguese Social Security Pension Scheme, which his mandatory.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • There are several statutory rights granted to pregnant women, puerperal women and breast-feeding women, as well as to parents or adoptive parents or candidates to adoption.

    Employees (male or female) are entitled to take up to 120 or 150 consecutive days of initial parental leave where they are entitled to a subsidy equal to 100% or 80% of their remuneration, respectively. This leave may be increased by 30 days if both parents share the initial parental leave, i.e., both parents must enjoy 30 consecutive days or two periods of 15 consecutive days after the mandatory six-week period enjoyed by the mother. Therefore, when shared, the initial parental leave may achieve 180 days and a subsidy equal to 83% of their remuneration will be granted.

    Fathers of new-born children are entitled to take paid leave of up to 25 working days as follows: 20 mandatory working days, from which 5 working days must be taken immediately after birth and the other 15 working days during the following 6 weeks after birth. The remaining 5 working days are not mandatory and may be taken consecutively or interpolated after the above mentioned 20 days period and along with the initial parental leave taken by the mother.

    The termination of pregnant women, puerperal women or breast-feeding women on grounds of dismissal (with objective or subjective cause) benefits from a special legal regime. There is a presumption that such a termination is unfair, and it is necessary to obtain a previous favourable legal opinion issued by the Portuguese Equality Entity (CITE) prior to the dismissal decision being issued by the employer.

  • Compulsory Terms
  • Please see the answers to paragraph 2 above - Legal Requirements as to the Form of Agreement.

  • Non-Compulsory Terms
  • Without prejudice of the existence of mandatory rules that allow the parties to provide otherwise, parties are free to agree non-compulsory provisions provided such provisions are more favourable to the employee than the mandatory ones.

Types Of Agreement

Employment agreements may be open ended, and this is the rule, or for a term which is fixed either by time or by the completion of a task. Fixed term employment agreements may only be executed to satisfy temporary needs of the employer and only during the period strictly required for that purpose, otherwise they will be deemed as an open-ended employment agreement. There are also temporary agreements, part-time agreements, intermittent work agreements, telework agreements and labour agreement under a commission of services regime.


The parties may insert in the employment agreements clauses where it is established that during its execution, as well as after its termination, the employee shall not disclose any trade secrets or confidential information related to the employer.

Ownership of Inventions/Other Intellectual Property (IP) Rights

Both Portuguese Industrial Property Code and the Copyright Code contain several provisions on this regard.

An invention created during the course of employment belongs to the employer, provided that the creation of inventions is one of the intentional purposes of the employee’s employment and he is remunerated accordingly.

If separate remuneration has not been agreed, the employee will be entitled to receive reasonable compensation based on the value of the invention to the employer.

If the invention is made during the regular course of employment and within the scope of activity of the employer, and although it is not part of the employee’s specific job function, the employer shall be entitled to assume ownership of it or to reserve the right to the exclusive working of the invention. The employer shall be entitled to the acquisition of the correspondent right and title and the right to apply and acquire a foreign correspondent title.

Copyright for the work created during employment will belong to the employee unless agreed otherwise within the contract of employment or if the work is not signed by its author. Moreover, if the employer decides to sell or to exploit such copyright, the employee/author may claim compensation based on the profits made by the employer.

Pre-Employment Considerations

Both parties are to negotiate the employment contract in good faith, and otherwise may be held accountable for damages caused to the other party. If the parties desire to enter into a promise of employment contract it must be executed in writing and contain the following information: the identification, signature and address of both parties; a declaration clearly stating the will to celebrate the employment agreement; the activity to be performed and corresponding remuneration.

Hiring Non-Nationals

Citizens from countries that are not members of the European Union (nor of countries that have a similar regime, like Switzerland) must request a visa to entry, stay and a residence authorisation to work in Portugal without any special requirement or formality other than having a valid Identity Card or Passport and must have an employment contract or the promise of an employment contract. In case of EEA nationals, if their permanence in national territory lasts more than 3 months those citizens should formalise their right of residence. They may do so by obtaining a Certificate of Register but there is no need to request a visa or a residence authorisation. Due to Brexit agreement UK employees are no longer covered by the previous referred special rules with regard to the contracting of EU nationals.

Hiring Specified Categories Of Individuals

There are several restrictions regarding the performance of activities by young employees, pregnant, disabled or people with chronic disease (including cancer), namely activities involving risks to their health and safety.

Outsourcing And/Or Sub-Contracting/Temporary Agency Work

These issues are ruled by the Portuguese Civil Code and, in case of Work Agencies by Decree Law 260/2009, of 25 September of 2009, amended by Law 5/2014 of 12 February 2014, and Law 28/2016 of 23 August 2016.

Changes To The Contract

As a rule, employers may not unilaterally change the employment agreement provisions, unless they foresee terms and conditions that may not be considered as individually/specifically agreed by parties. All terms and conditions individually agreed between the parties (that is, that are not determined by one of the parties, usually the employer), may only be changed by mutual agreement, otherwise will be deemed null and void and cannot be enforced.

Change In Ownership Of The Business

Where there is a change in the person of the employer, the Portuguese Labour Code provides for an automatic transfer of the individual contracts to the transferee. All the obligations and benefits related to the individual contracts are transferred, thus remain unaltered. Several information and consultation obligations must be complied with by both the transferor and the transferee. Employees can only oppose to a transfer if the transfer causes him/her serious damage notably in case of obvious lack of solvability or difficult financial situation of the transferee or if its internal work organization is not worth of trust.

Social Security Contributions

As a rule, for the majority of employees mandatory monthly contributions are as follows: 23.75% and 11% of the reference salary to be paid by employers and by employees, respectively. In some specific economic sectors and under certain circumstances provided for by legislation that aims to promote employment, the amount of the contributions may vary. The percentages referred to above are also mandatory to the members of the executive board of the companies in the same terms as employees. The contributions of the members of the statutory bodies are as follows: executive members: 23.75% paid by the company and 11% paid the employee; non-executive members: 20.,3% paid by the company and 9.3% due by the statutory member of the board.

Accidents At Work

The employer is obliged to insure employees against accidents in the workplace with an authorised insurer. The employer is also responsible for safety in the workplace.

Discipline And Grievance

As a rule, employers cannot terminate employment agreements at will and/or by giving notice, unless there is just cause: either objective, due to economic or market reasons, or subjective. The latter generally relates to a serious misconduct for a serious incident that prevents the maintenance into force of the employment relationship. Subjective ‘just cause’ has to be evidenced through a disciplinary proceeding, which might be used not only to apply the most serious sanction – the dismissal –, but also for a series of warnings or other sanctions for minor offences or misconduct. This procedure implies a formal accusation and allows the employee to state his/her case in defence before making the ultimate decision to dismiss.

Harassment/Discrimination/Equal pay

Along with constitutional principles, the Labour Code expressly establishes the prohibition of discrimination at work, forbids any type of harassment and foresees the principle of equal work equal pay. Indeed, the Labour Code expressly establishes the prohibition of discrimination at work, complying discrimination based namely on ascendancy, age, sex, sexual orientation, marital status, family situation, genetic patrimony, reduced capacity to work, disability, incurable disease, ethnical origin, religion, political or ideological orientations and union membership.

Compulsory Training Obligations

Each employee is entitled to professional training (40 hours per year minimum) if their employment is deemed to be continuous. Despite the possibility of postponing the yearly training by up to two years it should involve at least 10% of the employees per year.

Regarding fixed-term labour agreements, the employer has to provide professional training only if the contract duration is equal or exceeds 3 months and in this case the number of hours is proportional to the duration of such contract.

Where the employment agreement is terminated, the employee is entitled to claim credits of professional training he was not offered during the last 3 years.

Offsetting Earnings

Allowed only under exceptional circumstances, namely in case of deductions in favour of the State, Social Security or ordered by law or court, amortisation of capital or interests on loans granted to the employee, expenses with meals or related with the use of telephones at the workplace, among others. As a rule (exceptions exist in case of deductions in favour of the State, Social Security or ordered by law or court) the maximum amount of the deduction is 1/6 of the remuneration of the employee.

Payments For Maternity And Disability Leave

These payments are granted by means of a subsidy by the Portuguese Social Security. Please see point 2 above on Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption) and note that often those subsidies are complemented by the employer up to the amount of the remuneration of the employee or such a complement is mandatory through collective bargaining agreements.

Compulsory Insurance

An Employer’s liability for accidents at work (latu sensu) must be transferred to an insurance company. Failure to do so - apart from constituting a very serious offence, which may imply the payment of a fine - will constitute the employer liable for any damages suffered by the employee as a consequence of the labour accident.

Absence For Military Or Public Service Duties

Although military service is nowadays voluntary, it is an example of the circumstances under which an employment agreement will be suspended for the period of its duration. Candidates to public offices are also entitled to absence according to the electoral law and in general candidates are entitled to absence during (and often before) the electoral campaign.

Works Councils or Trade Unions

There are several rules concerning the election, powers and the protection of Trade Unions and Works Council’s representative bodies.

Employees in Portugal have the constitutional right to be represented by works councils. Works councils have certain rights which are recognised constitutionally and statutorily, namely:

  • to receive from the employer all and any information relevant to its function and activities;
  • to exercise some control over the management of the company;
  • to be involved in any proposals to reorganise the structure of the business;
  • to organise or be involved in the company’s social activities;
  • to meet regularly with management to discuss issues of interest (such meetings to take place at least on a monthly basis);
  • to be provided with a place at the employer’s premises to meet and carry out its activities generally; and
  • to express an opinion on issues prior to the management of the company making a formal decision (that opinion should be given genuine consideration but need not be followed).

In addition to representation by works councils, the Portuguese Constitution recognises the right for employees to organise themselves into trade unions and other similar organizations.

Employees’ Right To Strike

This is a Constitutional right. Trade unions are principally responsible for organising official strike action. Employees may also organise a strike provided that majority of the employees are not trade union members, the meeting is convened by 20% or 200 workers and the majority participate in the voting and the strike is approved also by the majority following a secret ballot. If the majority of employees are trade union members, then it is the union that should organise the strike and any strike organised by employees would be held to be unlawful.

Prior to taking strike action the entity that decided it must give the employer or employers’ association at least 5 working days’ notice and such notice must also be given to the Labour Ministry or published through the media. Where strike action may impact on public services, at least 10 working days’ notice must be given.

Employees On Strike

During strike action the contracts of employment of participating employees are suspended and employers are prohibited from employing temporary or permanent labour to replace those on strike (but the notice referred above must contain a proposal for a definition of services necessary for the safety and maintenance of equipment and facilities). Employers are also prohibited from offering incentive to prevent employees from going on strike.

Employers’ Responsibility For Actions Of Their Employees

As a rule, employers are responsible for the actions of their employees while working, except where the latter are acting against their labour duties.

Procedures For Terminating the Agreement

Please refer to Discipline and Grievance above.

Instant Dismissal

This is unlawful. Doing so will determine the “dismissal” as illegal and will entitle the employee to file a claim before a Labour Court and claim his/her reinstatement or compensation for unlawful dismissal (which varies between 15 and 45 days of basic remuneration and seniority allowance per each year of seniority or fraction of seniority), as well as to receive the salaries vested since the dismissal occurred until the final judgement and other damages (e.g., moral damages).

Employee's Resignation

Depending on the length of service and on the type of agreement in force, prior notice is due by the employee. Prior notice is of 15 days for fixed term contracts which duration is less than 6 months, 30 days for longer fixed term contracts or indefinite term contracts which have lasted up to 2 years, increasing to 60 days where the latter has lasted for 2 years or longer. If the required notice period is not provided, the employee should indemnify the employer in the amount equal to the basic remuneration (and seniority allowance) corresponding to the notice not given plus, if applicable, the amount correspondent to the damages/losses caused to the employer due to such employee’s behaviour.

Termination On Notice

This is not possible for the employer in open-ended employment agreements. Only fixed term employment agreements can be terminated by the employer on notice.

Termination By Reason Of The Employee's Age

Retirement age is currently of 66 years and 6 months; however, it is up to the employee to retire at that age or from that age on. Notwithstanding, by reaching the age of 70 without having retired, the employment agreement is conveyed into a 6 month fixed term agreement, which means that the employer can terminate it unilaterally, by notice, for its term.

Automatic Termination In Cases Of Force Majeure

This is feasible where it is impossible for the employee to carry out his/her duties or for the employer to receive them, in which case the agreement terminates/ expires. In certain situations, the termination under this context (for instance the closing of the company) entitles the employee to a compensation of 12 days* basic remuneration and seniority allowance for each year of seniority (the fraction of seniority is calculated in proportion).

*This is the general rule for agreements concluded after 1 October 2013. Therefore, specific rules are applicable to agreements concluded previously to 1 October 2013.

Collective Dismissals

The minimum number of employees dismissed under collective dismissal depends on the size of the employer, varying between 2 and 5 employees. Collective dismissal must be grounded in either market, structural or technological reasons. The employer must follow a demanding, formal and mandatory procedure. Employees affected are entitled to a compensation which corresponds to 12 days’ pay and seniority allowance (if applicable) for each full year of service. The fraction of year is considered on a pro rata basis.

Termination By Parties’ Agreement

Termination can be mutually agreed between employer and employee at will and under the correct conditions.

Directors Or Other Senior Officers

A Commission of Service Agreement is a specific modality of open ended employment agreement, usually used in management positions or functions that imply a special relation of trust with the employer. Its particularity is that the commission of service may be terminated by any of the parties at all time by giving a minimum of 30 or 60 days written prior notice to the other party, depending if the agreement lasted less or more than 2 years. Upon termination of the agreement, the employee might be entitled to compensation, except if termination is caused by fault or initiative of the employee.

Special Rules For Categories Of Employee

Employees with parental rights (pregnant employees, employees who have recently given birth and employees who are breastfeeding, employees in parental leave); members of trade unions and corporate bodies and trade union representatives; works councils representative; health and safety officers. Special regime is applicable in what concerns termination of agreement by just cause of, i.e., those employees benefit, in general, from the presumption that the dismissal is unlawful and in case they are successful in a judicial claim the amount of the compensation will be increased.

Whistleblower Laws

The EU directive on the protection of persons who report breaches of Union law (Directive 2019/1937 of October 23) shall be transposed to national law until 17 December 2021.

Specific Rules For Companies in Financial Difficulties

Lay off, collective dismissals and redundancies’ provisions are set out by the Portuguese Labour Code along with other rules foreseen in the Portuguese Insolvency Code. The law distinguishes between collective dismissals, that is, where several people are dismissed by reason of redundancy and individual redundancy. The first condition to be met is that an objective reason must exist, which may be either market, structural or technological reasons. The employer must comply with a demanding, formal and mandatory procedure. Employees affected are entitled to a compensation which corresponds to 12 days* pay and seniority allowance (if applicable) for each full year of service. The lay-off (suspension or reduction of the company’s activity for up to a 6 month or 1 year period, depending on its grounds, which may be renewed for equal period) often presents as an important measure to employers. The special procedure for corporate recovery or the insolvency of the company does not determine the automatic termination of the employment agreement, only the closing of the premises does or a decision of the insolvency director prior to the mentioned closing.

*This is the general rule for agreements concluded after 1 October 2013. Therefore, specific rules are applicable to agreements concluded previously to 1 October 2013.

Special Rules For Garden Leave

Employees have the right/duty to effective occupation and may not be paid to be absent of work. In other words, garden leaves are not admitted. Alternatively, in the context of a termination subject to prior notice, employees may be instructed to use the accrued holidays immediately before the termination date.

Restricting Future Activities

Non-compete clauses may be applicable for a maximum of 2 years (which can be increased to 3 years for top management employees), either when the parties enter into the employment agreement or on its termination. Compensation should be paid to the employee during the inactivity period. There is no statutory amount which means that the parties have to enter into an agreement on this, by foreseeing a fair amount. Such clauses are enforceable as long as the competition and the respective damages are evidenced and the compensation agreed is adequate.

Severance Payments

Severance payments are calculated according to the seniority of the employee, the ground for dismissal and, if more favourable, the terms of the agreement. It should be noted that termination with just cause does not entitle the employee to a severance payment.

Special Tax Provisions And Severance Payments

Compensations paid to employees (directors are excluded from this regime) are only subject to taxation in the amount exceeding the average amount of regular remuneration considered as salary subject to taxation, earned in the last 12 months prior to termination, multiplied by the number of years or fraction of seniority or performance of functions.

However, if in the following 24 months, a new professional or business relationship is executed, directly or indirectly, between the same parties or related parties (for instance with family of the employee or with a parent company of the employer), tax will apply to the total amount received. Severance payments are subject to social security contributions in the same terms as provided in the tax provisions referred to herein.

Allowances Payable To Employees After Termination

Unemployed people are entitled to receive unemployment subsidy, whenever specific requirements are met, during a period of time that may vary between 150 and 900 days, depending on the particular contributory situation of the unemployed, namely, the years with registry of contributions and the age. The subsidy is paid by the Portuguese Social Security Services and its amount may not be:

  • Greater than two and half times the Indexation Mechanism for Social Supports (IAS, €1.097.03 for 2021), nor lower than one IAS (€438.81 for 2021);
  • Greater than 75% of the net value of the remuneration used as reference, without prejudice of a minimum guaranteed subsidy equal to one IAS or the net value of the remuneration used as reference if the remuneration is lower than one IAS;
  • Greater that the disability pension in case of a disability ex-pensioner.

Time Limits For Claims Following Termination

The time limit for filing a claim following termination is 60 days, in cases of formal dismissal, except for collective dismissal which is 6 months. The time limit for claiming other credits is 1 year. The said time limits are counted from the date of the termination of the agreement.

Specific Matters Which Are Important Or Unique To This Jurisdiction

Not applicable.

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Contact a Contributing Author:
Carmo Sousa Machado
Abreu Advogados
Lisbon, Portugal

Ana Manuela Barbosa
Abreu Advogados
Lisbon, Portugal


© 2021, Abreu Advogados. All rights reserved by Abreu Advogados as author and the owner of the copyright in this chapter. Abreu Advogados has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021