Portugal Employment Contracts

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Portuguese Contracts

Foreign companies hiring employees in Portugal must operate within a framework of legislation, collective agreements, and European Union (EU) directives that combine to provide safeguards and entitlements for the workforce.

These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.

General points apply to all contracts. These include:

  • Formal written contracts are the norm for indefinite, open ended employment but not mandatory
  • In the absence of a formal contract the employer must provide a written statement of the essential working conditions within 60 days of employees starting work. The agreement must include names, addresses and signatures of all parties; the work involved and remuneration. These conditions are usually part of a written contract
  • Written contracts are required for fixed-term, agency, and teleworking employment
  • There is no mandatory requirement regarding the language used in contracts and English is often used. However, contracts are best bi-lingual including a version in Portuguese as this would be used in litigation
  • Contracts and agreements cannot include clauses that reduce employee benefits from those that are either mandatory or subject to Collective Bargaining Agreements (CBAs)
  • Probation periods are allowed but cannot exceed 240 days for senior managers; 180 days for other managers and the highly qualified; 90 days for others. Trial periods of 30 days are allowed for fixed-term contracts of six months or longer and 15 days in other cases
  • Employers must comply with workplace policy requirements under the Labor Code. Companies employing more than seven must institute a code of good conduct prohibiting harassment. Companies employing more than 50 must institute reporting procedures among their workforces. Any internal policies (regulamento interno) must be posted in the workplace after mandatory consultation with employees’ representatives

Other issues must be dealt with during the contract phase, including:

  • Obtaining employees’ Social Security Identification Number (NISS) from the Social Security Institute (Instituto de Segurança Social) within 24 hours of starting work
  • Registering with the Portugal Tax and Customs Authority (Autoridade Tributária e Aduaneira, AT) to obtain their Tax ID Number (Número de Identificaçăo Fiscal, NIF) and tax card
  • Providing photocopy of Citizen’s Card, ID Card, or passport for local employees

If companies employ foreign workers on their payroll, additional requirements apply, including:

  • Providing a valid passport
  • Providing Residency Card (Cartão de Residencia) from the Immigration and Borders Service (Serviço de Estrangeiros e Fronteiras, SEF)
  • Photocopy of residence permit
  • Employment contact verified by employer and identifying the employer’s legal representative
  • Photocopy of individual’s social security document from home country, with registration number for European Union citizens
  • In the case of non-European Union citizens, a photocopy of their work visa
  • Completed foreign workers’ identification form

Employment Contracts in Portugal

Providing written contracts for open-ended employment is not mandatory, but they must be drawn up in the case of fixed-term, agency, and teleworking employment. If not providing a formal written contract for indefinite employment, the employer must give the employee a written statement detailing essential elements of the working conditions within 60 days of starting work. There is no mandatory requirement regarding the contract’s language and English is often used. However, contracts are best bi-lingual including a version in Portuguese, as this would be used in litigation.

Open-ended, Permanent, Indefinite Employment Contracts: If no other contract type is specified, the employment is considered open-ended and permanent.

Fixed-term Employment Contracts: These must be in written form. The contract is expected to cover a specific role to fill a temporary need for the employer. If the contract for this temporary role is not written, it is considered open-ended. The contract cannot be for less than six months and may be renewed twice, but each extension cannot exceed one year.

Employment Contract of Unspecified Duration: A temporary contract dependent on completion of a particular project or event, of an unknown timescale. The maximum term is four years after which the employer is entitled to compensation.

Probation Periods: These cannot exceed 240 days for senior managers; 180 days for other managers and the highly qualified; 90 days for others. Trial periods of 30 days are allowed for fixed-term contracts of six months or longer and 15 days in other cases.

Collective Bargaining Agreements (CBAs): Known in Portugal as Convençōes colectivo de trabalho. Legislation allows for CBAs in three areas: industry agreements that can be signed at national, regional, or local level (CCs); agreements covering several companies (ACs); single company or workplace agreements (AEs). CBAs can improve mandatory benefits for employees but cannot undercut them. Where different agreements operate simultaneously, single-company agreements override multi-company agreements, and multi-company CBAs replace industry-wide agreements.