Companies operating in Portugal must comply with the accounting rules imposed in this country. Payroll in Portugal is part of them and involves several aspects, including the payment of taxes by the employee and employer, payment of salaries, etc. We invite you to discuss with our lawyers in Portugal if you want to benefit from a payroll provider in Portugal.
| Quick Facts | |
|---|---|
| Payroll definition | Payroll refers to a list of people employed by a company and their salaries paid every month. |
|
Frequency of payroll in Portugal |
Monthly |
|
Employer social security contributions |
23.75% |
| Employee social security contributions | 11% |
| Minimum wage |
760 euros/ month |
| Working hours |
Standard 40 hours per week, 8 hours per day |
| Overtime regulations |
If you work extra hours in Portugal, here's how you get paid for the first 100 hours: – On weekdays (Monday to Friday), the first extra hour earns you 125% of your usual pay; – Any additional hours on weekdays give you 137.5% of your regular salary; – On weekends and public holidays, all extra hours are paid at 150% of your usual salary. |
| Benefits |
– Meal vouchers;
– Transportation allowance;
– Private health insurance;
– Bonus;
– Additional leave
|
| Mandatory leaves/ days off |
Annual leave, public holidays, sick leave entitlements |
| Paid leaves | In Portugal, your employment contract guarantees a minimum of 22 paid vacation days per year after completing one year of service, in addition to public holidays. |
| Regulations |
Payroll in Portugal is regulated by the Labour and Employment Law. |
| Termination notice period |
Typically, in Portugal, notice periods are defined in the employment contract. They depend on how long the employee has been working:
– For instance, 7 days' notice if employed for less than 6 months or during the probation period;
– If you've been working in Portugal for 6 to 48 months, the notice period is one month;
– If you've been employed for more than 2 years, the notice period is two months.
|
| Compensation |
For the termination of fixed-term contracts through dismissal, compensation is equivalent to 24 days of base salary for each year of service. |
| Compliance with labor laws |
Adherence to labor laws and regulations is mandatory. |
| Language of documents | Payroll documents are often written in Portuguese. If you need services in English regarding payroll in Portugal, we can assist you. |
Table of Contents
Information about payroll in Portugal
Payroll in Portugal is necessary for any company with economic activities in this country. It all starts with the registration of employees in the company and ends with the effective payment of their salaries. Let’s review some important aspects of payroll in Portugal. We also remind you that, if you need Portugal payroll service, you can contact our specialists:
- Payroll in Portugal involves calculating the salaries of employees in a company. Special programs are used to calculate the taxes paid to the state, by the employee and the employer.
- Before the payment of salaries, payslips go directly to the management for approval.
- Salaries will be paid according to the regulations imposed by the employer, weekly, monthly, or bimonthly.
- A payroll provider in Portugal has access to employees’ accounts in order to be able to pay their salaries.
- According to employment regulations, payroll processing in Portugal takes into account working hours, holidays, sick or maternity leave, compensation, etc.
If you need a payroll provider in Portugal, you can contact our team. We have experienced accountants who can take care of payroll for your company in Portugal. You can also explore the following infographic:
Taxes paid by employers and employees in Portugal
Both employees and employers must pay certain taxes to the financial authorities of the country. Among these, we mention:
- Social security contributions are paid by the employer (23.75%) and the employee (11%). These taxes go to the pension, disability, and unemployment funds.
- Employers are also required to purchase an insurance premium to cover occupational accidents, which costs vary on the employee’s type of work;
- Labor accident insurance is 1.75% and is paid by the employee.
- 1% represents the wage guarantee fund and is also a tax withheld from the employee’s salary.
- Income tax of 25% is paid by non-residents in Portugal. However, this tax varies for Portuguese residents and can reach up to 48% for earnings over EUR 81,199.
- There is also a solidarity charge paid by those who exceed earnings of EUR 80,882. This is between 2.5% and 5%. The latter is imposed for earnings exceeding EUR 250,000.
Considering these taxes, payroll in Portugal is made once the social contributions are paid. We remind you that if you are interested in the Portugal payroll service, you can get in touch with our team of specialists.
Leaves in Portugal
Our payroll services in Portugal manage and record all aspects of employee leave entitlements.
In Portugal, employees are entitled to a minimum of 22 working days of annual leave. This leave must be taken by April 30 of the following year. However, for employees in their first employment year, the annual leave consists of 20 working days. Additionally, they can only start using the days off after they have completed six months of work with the company. A payroll provider in Portugal is useful in processing leave requests for your employees.
Portuguese law prohibits employers from offering additional compensation (such as extra pay) to employees who choose not to take their leave. The Portuguese law also offers some incentives designed to encourage employees to plan their leave in ways that benefit both themselves and their employers. For example, if an employee decides to take their entire 22 days of annual leave between January 1 and April 30, they might be rewarded with an extra three days of leave. Our lawyers in Portugal can assist employees with issues related to Portuguese labor law.
Aside from the annual leave, employers must also grant employees paid leave on public holidays. There are 14 public holidays in Portugal. If employees work on public holidays, the work is considered overtime and is subject to additional pay. Our payroll services in Portugal take into account the public holidays as well when managing employee leave entitlements.
Sick leaves are granted for a maximum of 1,095 days. Employers cover the first three days of sickness with 89% of the employee’s wage. Employees must provide medical certification and must have worked for at least 6 months within the company.
In addition, the employer can offer employees the following entitlements, which can be managed by a payroll provider in Portugal:
- Parental leave;
- Bereavement leave;
- Prenatal leave;
- Adoption leave;
- Childcare leave;
- Leave for disabled or ill children;
- Grandchild leave.
Our law firm in Portugal recommends employees follow proper procedures when requesting their leave.
Working hours and overtime in Portugal
Our payroll service in Portugal accurately tracks and calculates the employee’s working hours.
The standard workweek in Portugal is 40 hours, generally consisting of eight hours per day. Daily working hours can be extended to 12 hours and weekly hours to 60 hours for a short period and in exceptional cases. Despite these extensions, the average working time cannot exceed 48 hours per week, including overtime.
A payroll provider in Portugal must calculate the overtime compensation as follows:
- First hour – Hourly rate plus 25% of hourly wage;
- Additional hours – Hourly rate plus 37.5% of hourly wage;
- Rest days or public holidays – Hourly rate plus 50% of hourly wage.
Additionally, night work remuneration is 25% higher than daytime work.
Special considerations are given to pregnant women and employees with family responsibilities. Our Portuguese attorneys can explain more about these situations if you are interested.
Human resources services in Portugal
In addition to the services mentioned above, payroll in Portugal also involves human resources services. This involves recruiting and hiring staff, personnel administration, and drafting employment contracts, and documents for employees who leave the company. Also, a payroll provider in Portugal can offer you specialized consultancy in the employment field, to be able to align with the requirements of the legislation.
Why choose payroll outsourcing in Portugal
You can choose a payroll provider in Portugal in exchange for an entire department to deal with these aspects. You will benefit from such professionalism and security that payroll in Portugal respects the requirements imposed by the authorities. In addition, Portugal payroll service can have much more advantageous costs, compared to a department involved in such activities.
Statistics about the workforce in Portugal
Our Portuguese lawyers have prepared some interesting statistics about the workforce level in the country in 2023:
- The activity rate was 60.8%;
- Portugal had a rate of 74.4% for females participating in the labor market;
- 19% of the total employed population was working remotely;
- 7.3% of the total employed population was working part-time.
If you want more information about payroll in Portugal, we invite you to contact our law firm in Portugal. We are here to offer you all the necessary support for the company you own.