Country Guides

Hiring Employees in Portugal with an EOR

A comprehensive guide for hiring employees in Portugal through an Employer of Record (EOR) vs. setting up an entity.

Lisbon Tram

How to Hire Employees In Portugal

Last updated: February 04, 2025

You've got three options when it comes to hiring employees in Portugal:

  1. Set Up a Legal Entity

    This gives you maximum control but comes at a significant cost (€30,000-50,000) and 2-3 months setup time. Plus, a lot of Zoom calls with accountants, bankers and lawyers. Best for large corporates who like that kind of thing.

  2. Use an Employer of Record

    An employer of record (EOR) hires employees on your behalf, allowing you to hire employees quickly (1-2 business days) and relatively inexpensively (€499-699/month per employee). Ideal for globally-distributed teams and business owners looking to make the risk and faff of managing foreign entities someone else's problem.

  3. Hire Freelancers

    Flexible and low-cost, but comes with misclassification risks if the relationship resembles employment.

Assuming you are looking to hire employees in Portugal rather than freelancers, let's compare your two options head-to-head in more detail.

Using an EOR vs an Entity in Portugal

Aspect EOR Services Setting up an Entity
Setup Time 1-2 business days 2-3 months
Initial Cost €0 €30,000-50,000
Ongoing Costs €499-699/month per employee Legal, accounting, compliance fees
Legal Responsibility Managed by EOR Internal responsibility
Employment Compliance Managed by EOR Internal responsibility
Benefits Management Managed by EOR Internal responsibility
Tax Filing and Contributions Managed by EOR Internal responsibility
Penalties for Non-compliance Managed by EOR Up to €120,000 per violation
Scalability Highly flexible Requires additional investment
Exit Process Simple contract termination Complex entity dissolution

What are the best EOR Services in Portugal?

Not all EOR services have an entity established in Portugal, and some rely on third parties. These providers operate Portuguese entities, as well as having 24/7 (human) support and a comprehensive offering.

These services handle all aspects of employment including payroll, benefits, and compliance, acting as the legal employer while you maintain day-to-day management of your team.

OysterHR Logo

From USD 499/month

  • Global Payroll
  • Benefits Management
  • Compliance
  • Employee Management
  • Time Off Tracking
Go to Website
Recommended
Deel Logo

From USD 599/month

  • Payroll Management
  • Benefits Administration
  • Compliance
  • Contract Management
  • Time Tracking
Go to Website
Rippling Logo

From USD 599/month

  • Global Payroll
  • Benefits Administration
  • Time and Attendance
  • Device Management
  • Identity Management
Go to Website
Some links above may be affiliate links. We may receive a commission for purchases made through these links at no additional cost to you.

Taxes in Portugal

Corporate Taxes

  • Corporate Income Tax (IRC): 21%
  • VAT (Standard Rate): 23%
  • Social Security Contribution: 23.75%

Individual Taxes

  • Personal Income Tax (IRS): Progressive 14.5-48%
  • Social Security: 11%
Note: Tax rates and regulations are subject to change. This information is for general guidance only. Please consult with a qualified tax professional for specific advice.

Mandatory Benefits

Vacation Leave

  • 22 working days/year

Health Coverage

  • National health service access, Work accident insurance

Parental Leave

  • 120-180 days paid leave

Employee Rights in Portugal

Basic Rights

  • Right to Written Contract: All employees must receive a written contract
  • Compensation: 14 monthly payments per year (can be spread monthly or paid as holiday and Christmas bonuses)
  • Safe Working Environment: Guaranteed health and safety measures
  • Union Representation: Right to join labor unions

Additional Protections

  • Non-discrimination: Protected against all forms of discrimination
  • Privacy: Data protection and personal privacy rights
  • Work-Life Balance: Right to disconnect after working hours
  • Remote Work: Right to request remote work arrangements

Hours of Work

Standard Working Hours

  • Weekly Hours: 40 hours/week
  • Daily Hours: 8 hours standard
  • Break Periods: Minimum 1-hour lunch break
  • Rest Periods: 11 consecutive hours between workdays

Overtime Regulations

  • Additional pay required for overtime work: First hour: +25%, Second hour: +37.5%, Additional hours: +50%. Weekend/holiday work: +50-100%

End of Employment

Notice Periods

15-75 days depending on tenure

Severance Pay

12-30 days per year of service

Labor Laws in Portugal

Key Labor Laws

  • Working Hours: 40-hour week, 8 hours per day
  • Employment Contracts: Written contracts required for all employees
  • Notice Periods: 15-75 days based on length of service
  • Probation Period: 90 days for most positions
  • Minimum Wage: €870 per month (2025)

Recent Changes (2024-2025)

Stricter policies and increased penalties for workplace harassment

Stricter overtime tracking and rest period enforcement

Guaranteed right for parents with children under 8, requiring employers to provide written justification for rejections

Increased to €760 per month from €705 for all full-time workers

Mandate 40 hours of annual training with enhanced funding
For the most up-to-date labor law changes, please consult:

Frequently Asked Questions

The typical timeline for hiring through an EOR in Portugal is 1-2 business days, compared to 2-3 months for setting up your own entity.

Portuguese employees are entitled to 22 days of paid vacation, national health service access, and work accident insurance as mandatory benefits.

While Portuguese labor laws still apply, an EOR handles the complete termination process including notice periods and final settlements in compliance with local regulations.