Navigating Employee Benefits in Portugal: [2024 Guide]

Employee benefits in Portugal include:

• Govt-sponsored social benefits 

• Mandatory benefits provided by the employer

• Optional but ‘good-to-have’ perks

As an employer, you’re legally bound to provide certain benefits, like parental leave, to your team. 

But optional perks, like private health insurance and flexible work hours, can help you attract and retain top talent.

Let’s discuss these employee benefits in depth. 

Further Reading 

• Did you know that UK employees are entitled to mandatory benefits like pension? Find out all about it in our Employee Benefits in the UK guide. 

• Explore the top Employee Benefits in Ireland and how to manage them as an employer. 

• Check out the 20 popular Employee Benefits in Netherlands. 

Who’s Eligible for Benefits in Portugal?

Portuguese law broadly categorises workers into two distinct groups — employees and independent contractors:

A. Employees

Employees are full or part-time workers who directly report to an employer, typically work from a fixed location, and earn a recurring salary in return for their services. 

Based on their employment contract, they could be:

• Full-time employees (under a permanent contract or temporary contract, such as a fixed-term contract), OR

• Part-time employees (under a part-time contract)

Employees are eligible for all employee benefits available in Portugal.

B. Independent Contractors

Contractors offer their services to a client(s) for a mutually agreed upon fee (think freelancers).

They work under a service contract and have more autonomy over working times and location than employees.

Contractors aren’t eligible for the same level of benefits as permanent employees. They need to negotiate benefits with their clients, and the benefits they're entitled to can change based on their project.

Contractors are also responsible for their social security contributions.

Further Reading

• Want a comfortable life post-retirement in Ireland? Check out if you qualify for the Non-Contributory State Pension. 

• Hiring in Spain? Check out these Spanish Employee Benefits your team would expect.

• Reach out to the right people in Ireland through the Illness Benefit Contact Number and get the required support to manage your illness.

2 Types of Mandatory Employee Benefits in Portugal

The statutory (mandatory) benefits in Portugal include:

1. State-Sponsored Social Benefits

The Portugal social security system (Segurança Social) provides employees and their families access to basic necessities like healthcare, incapacity insurance, unemployment benefits, etc.

What about eligibility?

It depends on the benefit. 

Generally, an employee must have made compulsory social security contributions (shared between employee and employer) to the government. However, some people can avail of health insurance and unemployment benefits even if they don't have the required contributions. 

The contribution rates are as follows:

• Employees: 11% of gross salary

• Employers: 

  • 23.75% of gross monthly salary (for-profit organisations) 

  • 22.3% of gross monthly salary (non-profit organisations)

Let’s take a quick look at the mandatory social benefits for Portuguese employees:

A. Annual Leave Entitlement

In addition to 13 public holidays, Portuguese employees get a minimum of 22 fully paid leave (working days) per calendar year.

B. Sick Leave Entitlement

Employees can avail of paid sick leave for up to 1,095 days (365 days for self-employed workers and scientific research fellows).

Sick Pay 

The employer covers the first three days of sick leave at 89% of the employee’s salary.

From the fourth day onwards, Portugal's social security pays for the leave — at rates varying between 55% and 75% depending on the illness period. The employee must provide a medical certificate for sick pay for more than three days of leave.

C. Initial Parental Leave & Allowance

Working parents are entitled to 120-150 days of Initial Parental Leave, which they should take within one year of the birth or adoption of the child. 

This leave includes:

1. Initial Maternity Leave

Employed mothers in Portugal are eligible for 72 days of leave, with six compulsory weeks (42 days) immediately after the child’s birth.

They can also take 30 days off before birth, followed by the mandatory 42 days.

Pregnant employees are also eligible for other family benefits, like a Prenatal Family Allowance from the 13th week of pregnancy until the child’s birth.

2. Initial Paternity Leave

Employed fathers get 25 days of Paternity Leave:

This includes:

• Five consecutive business days off — to be taken immediately after childbirth.

• Additional 15 days that can be taken at once or intermittently.

Fathers also get five optional working days off to take along with the mother’s maternity leave. 

What if it’s twins or multiple births? 

The Initial Parental Leave of 120 days (including both maternity & paternity leave) is extended by another 30 days for each living baby after the first child.

Pay Rates for Initial Parental Leave

• 100% of reference remuneration for 120 days of leave. 

• If parents take 150 days of leave, the benefit is paid at a reduced rate for the additional 30 days.

3. Shared Initial Parental Leave

Parents can also choose to share their total Initial Parental Leave.

When sharing leave, an additional 30 days of leave is added to the Initial Parental Leave of 120 or 150 days.

Eligibility

To avail of Initial Parental Leave, the claimant(s) must have worked and made at least six months of social security contributions at the time of the claim.

How is the leave shared?

After the mandatory six weeks of Maternity Leave:

• One parent takes 30 consecutive days off while the other works, and then they switch.

• Both parents can take 15 days off together, and then each parent can take turns taking the last 15 days off one at a time.

Pay Rate

• For up to 150 days of leave, the beneficiaries are eligible for 100% of their regular pay.

• If 180 (150+30) days are taken, the additional 30 days are paid for at a reduced rate.

D. Extended Parental Leave

Parents can extend their Initial Parental Leave by up to three months immediately after it ends.

Pay Rate 

During this extended leave, social security will pay an allowance of 25% of the parent's usual pay. Employers can supplement this reduced payment through benefits provided via private health insurance packages.

E. Health Benefits

In Portugal, citizens enjoy free or low-cost healthcare benefits under the National Health Service (Serviço Nacional de Saúde, SNS) program.

But employers typically offer their employees private health insurance (in addition to social health coverage) for more comprehensive support. In fact, 24% of Portuguese employees take up private health insurance for more coverage.

Want to offer private health insurance for your team in Portugal?

Try Kota!

It simplifies employee health insurance management — no complex paperwork or administrative overheads involved. 

With high-quality health coverage provided by Allianz, you can keep your team happy and boost employee satisfaction. Plus, you won't have to worry about broker fees or scaling costs as your team grows. 

F. Retirement & Incapacity Benefits

The Portuguese social security scheme provides:

• Old-age pension: A monthly payment for people who have reached the state pension age (66 years and 4 months in 2024).

• Invalidity pension: A monthly payment for those who can’t work due to an illness or injury. The beneficiary must have at least a 60% degree of invalidity to be eligible.

• Survivor's pension: A monthly payment paid to the spouse, children, or parents of a deceased person who was receiving a pension.

G. Other Social Benefits

The Portuguese government also provides other employee benefits like:

• Housing: Subsidies for housing to low-income families

• Childcare: Subsidies for childcare to low-income families.

• Unemployment Benefit: A cash payment to people who lost their job involuntarily.

2. Benefits Provided By the Employer

Employers in Portugal have a legal obligation to extend these mandatory benefits to their teams:

A. Workers Compensation Insurance

Employers must provide workers' compensation insurance to their employees.

The insurance covers employees who are injured or become ill on the job, including accidents that happen on the way to or from work (“in-itinere”).

The benefits have no waiting period, and the rates depend on the severity of the injury/illness.

For temporary or partial disability, employees may receive up to 70% of their lost wages.

For temporary absolute disability, employees are entitled to 70% of their gross pensionable salary up to 12 months and 75% after that.

For permanent disabilities, employees may receive a pension equaling 80% of their pre-injury wages.

In the event of death, the employee's dependents are eligible for a pension (survivor’s pension) ranging between 30% to 80% of the gross pensionable salary.

B. Wage Guarantee

The national minimum wage in Portugal is €820 in 2023.

Portugal's labour laws protect employee wages if their employer/company goes bankrupt, resulting in the termination of the employment contract.

The scheme covers up to six months of unpaid salaries, severance pay, and other benefits.

To provide wage guarantee and insurance benefits, employers must contribute to two Wage Guarantee Funds:

• Work  Compensation Fund (Fundo de Compensação do Trabalho - FCT)

• Guarantee Fund for Work Compensation (Fundo de Garantia de Compensação do Trabalho - FGCT)

C. Other Benefits

In addition to the benefits we've mentioned above — employers must also offer:

1. Meal Allowance

Capped at €5.20 per day for Public Administration employees. 

While there’s no amount specified for private sector employees, their meal allowances are tax-free — up to €5.20 daily when paid in cash and €8.32 through lunch tickets or meal vouchers.

2. Holiday Pay & Christmas Bonus

Holiday pay is an extra full month’s salary (13th salary) that companies must pay in June every calendar year.

Similarly, the Christmas bonus (14th salary) is a financial supplement proportional to the employment duration in the year. It must be paid by December 15th of each year.

3. Overtime Compensation

Employees under a formal employment contract are eligible (with a few exceptions) for overtime pay for working beyond eight hours daily or 40 hours weekly. 

A worker must be paid their hourly rate plus 25% for the first hour and 37.5% for each additional hour on working days. On rest days, the hourly rate is increased by 50%.

Exceptions include:

• Employees exempt from the standard working schedule — pregnant women, disabled workers, employees in managerial positions, etc.

• Employees who voluntarily opt out of overtime pay in writing

4. Night-Time Work Compensation

As per Portuguese employment laws, all employees (permanent or temporary) who work for at least three hours between 10 pm - 7 am are considered night-time workers. These include nurses, firefighters, security guards, etc. 

Night employees are eligible for 25% higher remuneration (than day-time pay).

5. Mandatory Professional Training

Full-time workers are entitled to 40 hours of professional training each year.

Optional But Good-to-Have Benefits and Perks in Portugal

In addition to the statutory benefits, you may choose to extend other additional perks to Portuguese workers, including:

• Private health insurance (via platforms like Kota)

• Public transportation allowance or a company car facility

• Private life insurance

• Supplementary pension and retirement benefits

• Flexible working hours and remote work options

• Gym membership