Mandatory employee benefits in Portugal: what businesses need to provide

Portugal is a popular destination for international companies hiring remote talent. Its skilled workforce, welcoming business environment, and strong digital infrastructure make it especially attractive for startups and scale-ups expanding into Europe. However, hiring in Portugal comes with specific legal obligations, particularly regarding employee benefits.

Whether you’re onboarding full-time team members or hiring remote workers, it’s essential to understand mandatory benefits under Portuguese labour law. Employers must provide healthcare access, contribute to state pensions, offer paid leave, and comply with other statutory entitlements. Failing to meet these obligations can result in fines, employee disputes, and reputational damage.

This guide outlines what businesses must offer when hiring in Portugal. It explains how a Portuguese Employer of Record can help ensure HR compliance, especially for companies without a local entity.

Why understanding employee benefits is essential when hiring in Portugal

Employee benefits in Portugal are tightly regulated. Labour law, collective bargaining agreements, and Social Security contributions create a framework that protects workers and standardises employer obligations.

For foreign companies unfamiliar with Portuguese employment law, compliance can be challenging. What may be considered a “perk” in one country, like meal vouchers or a 13th-month salary, is often a legal requirement in Portugal.

Learning these obligations is critical for staying compliant and satisfying employees if you’re managing a remote workforce or hiring without a local HR team.

Healthcare benefits in Portugal

Portugal’s national healthcare system, known as the Serviço Nacional de Saúde (SNS), offers public health coverage to all residents. Funded through Social Security contributions, the system ensures access to general practitioners, emergency care, and hospital services.

Employers are not required to provide private health insurance. However, they are legally responsible for registering employees with Segurança Social and correctly paying contributions. These contributions support healthcare access as part of the broader social protection system.

While not mandatory, offering private health insurance is becoming increasingly common, especially among international employers who want to attract top-tier talent. Providing private plans is seen as a valuable perk, particularly for roles in tech, finance, and management.

Pension contributions

Portugal’s state pension system is also managed through Segurança Social. Both employers and employees contribute to it monthly, with the aim of providing financial security in retirement.

As of 2024:

• Employers contribute 23.75% of the employee’s gross salary
• Employees contribute 11%, withheld directly from their paycheck

These rates cover not just pensions, but also other social protections like unemployment, disability, and healthcare. Retirement benefits are calculated based on years of contribution and average income.

While private pension schemes are optional, some employers, especially larger organisations or those in competitive industries, offer them as a supplemental benefit. Portugal provides limited tax incentives for employer contributions to private retirement funds.

Paid leave entitlements

Below, we’ll explain everything you need to know about holiday leave, public holidays, sick leave, and maternity leave in Portugal.

Holiday leave

Portuguese employees are entitled to at least 22 working days of paid annual leave each year. This leave accrues during the first 12 months of employment, with two working days earned per month. After the first year, employees receive their full entitlement annually.

Employees must take at least 10 consecutive days between May and October. Employers must also respect the rules in collective agreements if they apply.

Public holidays

Portugal has 13 national public holidays, plus additional regional holidays depending on the employee’s location. If a public holiday falls on a weekend, there is no obligation to offer a replacement day unless otherwise stated in a contract or collective agreement.

Sick leave

Sick leave is covered under the national Social Security system but requires proper documentation. Employees must provide a medical certificate within 5 days. Segurança Social, not the employer, handles payment during sick leave, although employers are responsible for ensuring the employee is registered and contributions are up to date.

Sick pay begins on the fourth day of absence and is calculated as a percentage of the employee’s salary, depending on the length of the absence.

Maternity, paternity, and parental leave

• Maternity leave: 120 to 150 days, partially paid by Social Security (between 80% and 100% of salary depending on duration).
• Paternity leave: 20 mandatory working days, plus optional leave, fully paid by Segurança Social.
• Parental leave: After maternity/paternity leave, both parents can share additional unpaid or partially paid leave, depending on their situation.

Employers must allow eligible employees to take these leaves and cannot penalise them.

Other statutory entitlements

In addition to healthcare, pensions, and paid leave, employers in Portugal must also provide a range of other statutory entitlements that contribute to employee wellbeing and financial security.

Meal allowance

Employers must provide a meal allowance (subsídio de refeição) for each working day. This is typically around €5 to €9 per day, either paid in cash or as a meal card. While the allowance isn’t mandated by law, it is strongly embedded in practice and expected under most employment contracts and CBAs.

Christmas and holiday bonuses

Employees in Portugal are entitled to two extra payments annually:

• A Christmas bonus (13th salary) paid by 15 December
• A holiday bonus (14th salary) paid before the employee’s main holiday period

Each bonus equals one month’s base salary and is mandatory under Portuguese labour law.

Workplace accident insurance

Employers must arrange and pay for workplace accident insurance, which covers injuries or accidents that happen during work hours. This is separate from SNS and is mandatory for all employees.

In cases of termination, employees may be entitled to unemployment benefits through Segurança Social and severance pay based on the duration of their employment. Employers must follow formal dismissal procedures and ensure all entitlements are paid in full.

How an Employer of Record supports benefit compliance in Portugal

A Portuguese Employer of Record is a third-party provider that acts as the legal employer for your workers in Portugal. You manage the day-to-day work and performance, while the EOR takes care of contracts, payroll, taxes, and compliance.

An EOR is particularly valuable for companies without a local presence. It handles:

• Drafting fully compliant employment contracts aligned with Portuguese labour law
• Administering Social Security and tax contributions correctly and on time
• Tracking paid leave, holidays, and bonuses to avoid errors
• Managing healthcare, workplace insurance, and maternity/paternity claims
• Providing access to benefits that remote employees are legally entitled to

For example, a UK-based software company wanted to hire two remote developers based in Porto to support their European clients. Without a local entity in Portugal, they weren’t sure how to handle employment contracts, social security registration, or statutory benefits like paid holidays, 13th-month salary, and meal allowances.

They partnered with a Portuguese Employer of Record to avoid compliance risks. The EOR became the legal employer, drafted locally compliant contracts, managed payroll, and handled all mandatory benefit contributions. The employees were registered with Segurança Social, received paid holidays and bonuses, and had access to private healthcare, giving them a secure and competitive employment package. For the company, this meant fast, compliant hiring in Portugal without the burden of setting up a subsidiary or learning local labour law.

By partnering with an EOR, you avoid the complexity of local labour regulations while ensuring your employees receive everything they’re entitled to.

For companies hiring in Portugal remotely or testing the market, an EOR is a fast and efficient way to onboard employees without the cost and effort of setting up a subsidiary. It’s the safest option for expanding internationally while staying fully compliant.

Mandatory employee benefits

Hiring in Portugal means offering more than just a competitive salary—you’re legally required to provide a robust benefits package that includes healthcare, pensions, paid leave, and more. From Christmas bonuses to meal allowances, the system is designed to support workers comprehensively.

Understanding these rules is key to building a compliant and sustainable team. A Portuguese Employer of Record can take the pressure off if you’re hiring in Portugal without a local entity. They’ll manage your HR obligations, ensure employees receive the right benefits, and help you focus on growing your business.

Looking to hire in Portugal without setting up a legal entity? Contact us to learn how an Employer of Record can help you manage employee benefits and stay compliant.