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20 January 2025

Work legislation changes in Portugal in 2025: what expats and employers need to know

Written by

Written by: João

Tax and Fiscal Consultant

As we step into 2025, work legislation changes in Portugal will reshape employment conditions for local workers and foreign professionals. These reforms matter greatly to expats eyeing career opportunities in Portugal and international companies looking to recruit talent in this country.

Below, we highlight the most significant Portugal employment law updates 2025, focusing on potential revisions to the minimum wage, tax regulations, leave policies, worker classifications, and remote work. We’ll also discuss the role of an Employer of Record (EOR)—a solution that makes adaptation smoother for both businesses and individuals.

Key legislative changes in 2025

The following updates are based on announcements from Portuguese authorities and draft legislation. While certain regulations may remain stable, the changes outlined here could significantly affect hiring strategies, payroll, and daily working life.

Minimum wage outlook

Portugal’s Salário Mínimo Nacional (SMN) has regularly increased in recent years to match cost-of-living adjustments and wage growth targets. By 2025, the government is considering another boost to the national minimum wage, aiming to align it more closely with average salaries.

One important detail is that SMI is always stated as a gross salary, not net take-home pay. The commonly cited €1,134 per month (across 14 payments per year) reflects the total pre-tax amount on the payslip. If an employer opts to prorate extra payments, the monthly figure increases to approximately €1,323 (in 12 payments), but again, those sums are before any withholdings for taxes or social security.

Officials suggest that the monthly SMN could surpass €900, reflecting both inflation rates and the country’s drive to narrow income gaps.

Although the SMN is unified nationwide, living expenses in urban hubs like Lisbon or Porto can influence discussions on whether additional pay or housing incentives are necessary.

Tax regulations and updates

Portugal’s progressive tax framework involves Imposto sobre o Rendimento das Pessoas Singulares (IRS) rates that may shift slightly each year. For 2025, the Ministry of Finance is looking into fine-tuning tax brackets to support mid-level earners, and possibly expanding certain reliefs connected to family dependents or housing.

Portugal’s personal income tax (IRS) brackets for 2025 might shift slightly, starting at 14.5% for earnings up to €7,000 and potentially reaching 45% for incomes above €25,000. Certain mid-level brackets could drop by half a percentage point—for instance, from 28.5% to 28.0%—aimed at easing the burden on middle-income earners.

The Non-Habitual Residency (NHR) scheme may see its duration reduced from 10 years to 8, and some discussions float a 10% flat rate for foreign-sourced income under NHR. Proposals also mention raising the tax deduction for dependent children from roughly €600 to €800 per child.

As for corporate tax, there’s speculation it might dip slightly from 21% to around 20% or 20.5%. These possible revisions align with Portugal’s focus on attracting foreign professionals while addressing economic pressures on local families.

Minor recalibrations of taxable income thresholds could alter how much employees owe, especially for those near mid-level brackets.

Portugal’s NHR scheme grants tax benefits to qualifying foreign professionals, and rumors of potential refinements may require close monitoring by newcomers who rely on this program for reduced tax rates.

Tax surcharges or incentives in Madeira and the Azores might also change, reflecting unique regional policies.

Leave policies

Portugal has recently boosted parental leave, offering both parents opportunities to split care responsibilities. By 2025, additional tweaks may extend paternal leave or link allowances more tightly to salary levels, continuing the trend of fostering work-life balance.

In Portugal, licença parental applies to both mothers and fathers, spanning a window of 120 to 150 days that either parent can use individually or split between them. While on leave, most employees receive close to 100% of their usual pay, offering a level of financial security as they care for their newborn.

Officials have hinted at increasing the portion of parental leave that can be shared or transferred between parents, making it more flexible for diverse family needs.

The Abono de Família might be updated to track average wages more closely, providing extra support to households with modest incomes.

Worker misclassification

As platform-based roles become more common, Portuguese legislation is stepping up its definitions of employee vs. independent contractor. If new laws pass, 2025 could see tighter criteria for self-employment, along with added penalties for companies mislabelling workers to avoid paying social contributions.

  • Refined definitions: Companies relying on delivery, rideshare, or other gig setups may need to reassess contracts.
  • Social security compliance: Noncompliance could lead to forced back-pay for Segurança Social and substantial fines.

Remote and hybrid work provisions

Portugal’s teletrabalho regulations—initially introduced as temporary emergency measures—are becoming a permanent fixture in the national labor landscape, especially after the widespread shift to remote setups during the pandemic.

By 2025, lawmakers are expected to unveil new guidelines clarifying how much employers must contribute to remote workers’ utility bills or internet fees, as well as how frequently these reimbursements must be issued.

At the same time, the concept of a “right to disconnect” is gaining traction, with draft proposals calling for stricter penalties if companies repeatedly contact employees outside official working hours.

These proposed reforms aim to safeguard personal well-being, ensure fair compensation for work-related expenses, and reinforce the principle that being off the clock truly means time away from job obligations. Depending on how the final rules are shaped, businesses may need to adjust their policies for home office allowances, specify clearer communication boundaries in telework contracts, and develop internal oversight mechanisms to maintain compliance.

Implications for employees and expats relocating to Portugal

Newcomers to Portugal could benefit from a rising national minimum wage and improved parental leave, especially if it levels the playing field for lower-income or young families.

However, any reshuffling of IRS brackets might affect take-home pay, making it vital for expats to review how changes impact their net salary. If you freelance or plan to rely on independent contracts, pay close attention to definitions around gig work—local authorities might require more robust contracts, as well as timely social security contributions.

Implications for companies

Companies abroad aiming to hire Portuguese staff need to stay on top of shifting wage baselines, reevaluating salary structures for compliance.

Adjustments in tax brackets or remote-work reimbursements can affect payroll budgets, while misclassification laws could force rethinking freelance arrangements.

Keeping pace with local rules on parental leave and telework reimbursements is also crucial to maintaining staff morale and avoiding legal pitfalls.

Employer of record (EOR) services as a solution

Keeping track of work legislation changes in Portugal in 2025—from potential wage raises to updated telework reimbursements—can be challenging, especially for international companies or first-time expats.

For companies

Employer of Record (EOR) services are an invaluable asset for businesses handling the complexities of Portugal’s employment regulations. By managing payroll, tax compliance, and HR responsibilities, an EOR ensures your operations align with evolving legal requirements. For instance, with the latest updates to tax thresholds or minimum wage increases, an EOR adjusts payroll calculations seamlessly, eliminating the risk of non-compliance.

  • Payroll management: An EOR integrates new wage rates and tax thresholds into each pay cycle, ensuring up-to-date compliance.
  • Legal compliance: By monitoring changing rules around parental leave, gig work classification, and tax reliefs, an EOR lowers the risk of penalties.
  • Onboarding: From drafting Portuguese-labour-compliant contracts to handling remote work policies, an EOR streamlines your approach.

This allows businesses to focus on strategic growth rather than administrative burdens, especially when entering the Portuguese market for the first time or expanding an existing workforce.

For employees and expats

For individuals moving to Portugal, EOR services simplify the often overwhelming administrative tasks associated with relocation. They assist with creating compliant employment contracts, managing tax contributions, and ensuring employees receive the correct benefits, such as pensions and healthcare enrolments.

  • Simplified relocation: An EOR manages work permits, contract details, and any relevant NHR or tax incentives, reducing bureaucratic confusion.
  • Accurate taxes and benefits: By taking care of IRS contributions and social security obligations, the EOR helps newcomers avoid errors or late payments.
  • Focus on adaptation: With administrative details covered, you can spend more time settling into Portugal’s culture and professional scene.

Looking ahead: preparing for 2025

Portugal’s employment law updates 2025 point to a forward-looking focus on equitable wages, flexible working conditions, and clear guidelines for gig roles. By adapting early—whether by adjusting payroll methods or revising freelance contracts—both employees and companies stand to gain from these changes.

For a simpler, fully compliant approach, consider partnering with an Employer of Record in Portugal, ensuring you stay current on tax shifts, leave expansions, and remote work regulations as they come into force. Get in touch to explore how EOR services can benefit your business or your personal relocation plans.

 

This article offers general guidance and should not replace professional legal advice. For specifics on Portuguese labor laws, consult official government resources such as the Ministério do Trabalho, Solidariedade e Segurança Social or seek counsel from a qualified advisor.

Written by

Written by:

João | Tax and Fiscal Consultant

A skilled tax and fiscal consultant who has lived in several European cities, he currently calls Porto home. He specialises in guiding foreign businesses through Portugal's tax landscape as they expand into the country. With his extensive knowledge of Portuguese fiscal regulations and international business practices, he helps companies navigate complex tax issues with ease. An avid surfer, he loves exploring Portugal's coastline and often jokes that he's as adept at riding waves as he is at managing tax waves for his clients.

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