Employer of Record in Portugal
Skuad's Portugal EOR (Employer of Record) solution helps your business expand into Portugal without the need of an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits etc. compliantly. We help you streamline the global expansion process with the able assistance of our international network.
Portugal At A Glance
Estimated Population: 10,304,434
Currency: Euro (€)
Languages spoken: Portuguese and Mirandese and English
GDP: 238.8 Billion USD (2019)
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Employment In Portugal
In most cases, employers and businesses in Portugal prefer to hire through referrals, and a lot depends on professional and personal recommendations and relationships here. Emphasis is given to building trust and relationships, which is why it is a big challenge for foreign companies and business entities in hiring the local workforce in Portugal. Employment in Portugal is based on a written employment contract wherein all details of the new employee's salary, benefits, compensation, additional compensation, and termination requirements need to be mentioned.
The thriving industries in Portugal are tourism, hospitality, automotive, electronics, transportation, construction, footwear, and textiles. The unemployment rate is at 5.6% (June 2020), and youth unemployment is 25.6%. In recent years, there has been an increase in the hiring of foreign workers.
Here are few details of the Portugal labour laws:
Labor Laws in Portugal
Terms of employment contracts in Portugal
An important aspect of Portuguese law is the prohibition of discrimination of gender, age, sex, marital status, family background and situation, religion, origin, genetic heritage, ideological beliefs, economic situation, parentage, trade union affiliation, reduced work capacity, and disabilities.
Book a demo today to know more about Skuad's effective EOR solutions.
Contractors vs Full-time Employees
As per the Portuguese Labor Code, an employee is committed to offering intellectual or manual activities for an employer, company, individual, or organization. The independent contractor undertakes a project or renders a certain kind of manual or intellectual work but is not under any legal subordination of the beneficiary.
In the case of employees, the employer has legal subordination in the following gamut that is determined by the employment contract law in Portugal:
- Fixing the working time
- Fixing work or job description
- Fixing the location
- Providing the required working tools
- Paying the employee regularly as per the employment contract in Portugal
- Determining the performance of the employee
- Integrating the employee in the work environment.
In the case of a contractor, the beneficiary is responsible for making timely payments to the contractual worker and integrating them within the work environment.
The difference between contractors and employees also lies in the tax treatment. Social Security contributions in the case of an employee as per the employment agreement in Portugal are done by both the employee (23.75%) and the employer (11%). In the case of a contractor, social security contributions are the sole responsibilities of the contractor. The social security contribution of the contractor is 29.6%.
The VAT (Value Added Taxes) applies to independent contractors, with most services offered to fall under the purview of VAT. There are certain cases, however, where independent contractors are exempted from VAT.
Working with an Employer of Record in Portugal for hiring local workforce and handling onboarding, payroll, taxation, compliance and legalities, and more. By choosing a strategic EOR Portugal as your partner, the route to enter Portugal becomes smooth and cost-effective. To know more, talk to Skuad’s experts today.
Hiring in Portugal
After your decision to enter Portugal has been taken and well-analyzed, you need to work fast to build your team. The entire process could be a big challenge because of the intricate nuances, including employment laws, compliance, and the entire hiring process. Looking at outsourcing HR functionalities of Skaud, the team-building process can become easy and smooth sailing.
To hire employees in Portugal, you can start either by building your international team using your relationships and being present at networking events. Alternatively, you can take the help of popular online platforms like Indeed, Adecco, Net-Empregos, BonsEmpregos, Expressoemprego, Alertaemprego, and many other hiring companies in Portugal.
The model of hiring in Portugal starts by preparing the employment contract in writing. The contract contains every last detail about the employment starting from the compensation, employee health benefits in Portugal to probation, termination, every detail mentioned in Euros rather than any other foreign currency. The Collective Bargaining Agreement or CBA also needs to be covered in the contract. Even though there is no explicit mandate about the onboarding process, the usual method is to prepare an employee code of conduct and ensure training for your employee.
Skuad's Employer of Record Portugal solution takes care of all aspects of hiring and onboarding local Portuguese employees seamlessly, completely compliant with the local Labour Code, rules and regulations. To know more about our work, speak to us today!
Probation & Termination
The termination of employment in Portugal can happen on four grounds
- Disciplinary dismissals
- Position abolition
- Collective dismissal
- Job unsuitability
Employers must inform employees in writing about the reason for dismissal. When it is on disciplinary grounds, a hearing needs to occur where the employee is asked to respond to charges.
The Ministry of Labor and the workers' representative need to be informed about the dismissal. During the final settlement, the accrued leaves and vacations not taken need to be paid to the employee.
Standard probation period Portugal
The probationary period in Portugal is known as the trial period.
When you have decided to expand your business in Portugal, the ideal way to start is to partner with a high caliber EOR like Skuad. Its versatile solution supports you through and through in hiring and onboarding the right team for business growth. Every foreign land has its sets of challenging laws. When dealing with the workforce, you need to ensure that no local law is ignored or bypassed during recruitment, payroll processing, or deducting taxes. An Employer of a Record offers an end-to-end HR functional solution so that you can focus on your business and expansion and let them handle the labor-related aspects.
Skuad is one of the most promising and experienced employers of record solutions in Portugal. It is a high-end online platform with a smart and intuitive interface and comprehensive features that can become your go-to platform for expansion not just into Portugal but any other place on the globe. With low costs and customized solutions, you have a helping hand 24x7 with Skuad.
Types of Visas In Portugal
A Portugal work visa means the opportunity to live and work in a peace-loving country with political and social stability. It also means the right to move freely within the EU, have family members join in Portugal and apply for Portuguese residency at the end of five years.
Portugal work visa requirements
Among other things, applicants must submit:
- The completed visa application
- Valid passport
- Letter of invitation from the employer
- Health insurance and accident insurance papers
- One passport-size photo
- Biometric data
- Flight tickets
- Hotel reservation or accommodation proof
For applying for a work permit, Portugal, the following papers are required:
- Valid passport
- Accommodation proof in Portugal
- Valid Portuguese residence visa
- Two passport size photos
- For Portugal work permit for foreigners, it is pertinent to submit tax documents
- Police verification certificate for background checks
- Employment contract
- Social Security registration documents
It is impossible to have a Portugal work permit without a job offer because the employer needs to apply for the work permit, which they do after offering the job.
Payroll & Taxes in Portugal
Payroll in Portugal
Portugal Payroll Taxes
The tax percentages under different sub-heads in Portugal is as follows:
Portugal payroll tax rates - Employer
Portugal payroll tax rates - Employee
Income Tax slabs for Employees
Payroll outsourcing Portugal is one of the best ways to address the complicated HR ecosystem in Portugal. Consider Skuad as your EOR and speak to us to know more about how we can become your effective partner.
When starting a business in Portugal, it is vital to understand the business climate in the company. The Portuguese Companies Code define the following business types:
- Business owned by a single individual:can be subdivided into – solo trader, Individual Limited Liability Establishment and Single-Member Limited Company.
- Businesses owned by two or more people: Private Limited Company or Sociedade por Quotas can have at least two partners with a minimum investment of €5,000.
- Public Limited Company or Sociedade Anomina – requires a minimum of five shareholders and an investment of €50,000.
- Partnership or Sociedade em Nome Colectivo – two partners with personal liabilities.
- Limited Liability Partnership or Sociedade em Comandita – two partners with unlimited liability and sleeping partners with limited liability.
There are enough business opportunities in Portugal. There are many benefits of incorporating a holding company in Portugal. With a ten percent share, the dividend income can be tax exempted while the capital gains from the company attract a low tax rate. It is ideal to speak to a specialist on this matter before venturing into Portugal.
Professional Employer Organization (PEO)
Usually, people confuse EORs and PEOs. Both operate in the HR domain but are different from one another. A professional employer organization in Portugal is more like your co-employer, and you need to set up your business identity in the country before starting to hire or start operations. That is not the case when you work with an EOR.
Skuad has expertise in both domains. As an EOR, we handle the entire hiring and HR processes independently without any need for your business to incorporate a business entity in Portugal. On the other hand, as a PEO service provider, we share your responsibilities in the HR landscape and ensure compliance with local laws to work seamlessly with your business set up in Portugal.
Setting up a remote workforce in Portugal can be daunting unless you decide to work with a specialist like Skuad as your Employer of Record in Portugal. We support you in saving your time, money, and resources. With us around, you do not have to get involved in intricate matters of interpreting local labour laws or corporate laws. Based on your exclusive business needs, you can choose to work with us as an EOR or PEO.
Take this further and speak to our experts, Contact us today!