Hire Remote Team in Portugal: 2026 Hiring Guide

Introduction

Foreign companies that hire in Portugal without a local entity must work through a locally incorporated structure or an employer of record (EOR) that holds the legal employment relationship, registering each worker with Segurança Social and the Autoridade Tributária.

Portugal's labor framework is protective, with fixed rules on annual leave, termination notice, and worker classification.

Setting up a Sociedade por Quotas means registering with the Conservatória do Registo Comercial, the Autoridade Tributária, and Segurança Social, which can take four to eight weeks before anyone is legally on payroll.

Engaging contractors looks faster, but a worker who keeps fixed hours you set, uses your equipment, and is paid a fixed amount at regular intervals can be presumed an employee and reclassified by a labour court, which exposes you to retroactive Social Security contributions and penalties.

In this guide, we cover the three ways to hire in Portugal, what each option costs, the employment laws behind every hire, and how an EOR lets you hire without a local entity.

How to hire in Portugal?

Now, the most important question is how you can successfully hire employees in Portugal despite all these challenges.

Well, there are three most effective ways of hiring in Portugal. They include the following.

• Setting up a local entity
• Hiring employees via EOR (Employer of Record)
• Hiring contractors via AOR (Agent of Record)

By understanding the main differences between these three methods, you can select the one that best suits your organization's interests and needs.

How to hire employees by setting up a local entity

In the simplest of terms, setting up a local entity means establishing a formal business presence in Portugal. Although it remains one of the most traditional methods of hiring, it has several difficulties in the long term. For example, this process usually involves extensive administrative intricacies and responsibilities while being resource-intensive.

How to hire employees via EOR

An EOR legally employs individuals and handles all HR and employment compliance tasks on your behalf.

Setting up a Sociedade por Quotas in Portugal means registering with the Conservatória do Registo Comercial, the Autoridade Tributária, and Segurança Social, a process that can take four to eight weeks before your first hire is legally on payroll.

Skuad helps remove that dependency. Skuad acts as the legal employer in Portugal, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house Portuguese payroll infrastructure.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social security and pension obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Statutory benefit administration, including paid leave and parental entitlements in line with local requirements
• Termination and offboarding support aligned with local labor requirements across supported markets
• Background verification covering identity, employment history, and criminal records before onboarding

For a full breakdown of local rules before you hire, see Skuad's Portugal hiring guide.

How to hire contractors via AOR

Companies that wish to hire contractors in Portugal often seek the services of an AOR.

They help manage and ensure the legality of contracts with partners and vendors in the new market, which is particularly beneficial for international contractors.

Hiring contractors in Portugal carries classification risk. Under Article 12 of the Código do Trabalho, a contractor who works fixed hours you set, uses your equipment, and is paid a fixed amount at regular intervals can be presumed an employee and reclassified by a Portuguese labour court, which exposes you to back-dated Social Security contributions and fines.

An Agent of Record helps reduce that exposure. Through Skuad's AOR and contractor management solution, you can engage contractors in Portugal on compliant terms without taking on the classification risk yourself.

Here is what Skuad helps with:

• Locally compliant contractor agreements that reduce misclassification exposure across supported markets
• Worker classification checks that flag risk before a contract is signed
• Invoice generation, approval workflows, and payment processing in local currency
• Multi-currency contractor payouts across 70+ currencies with no manual reconciliation
• Contractor records, contracts, and payment history in a single dashboard alongside full-time employees
• Support for converting a contractor to full-time employment through Skuad's EOR when the relationship changes

If your Portugal hires start as contractors but may convert later, running both models through one platform keeps that transition streamlined.

Compare AOR and contractor pricing for your Portugal hires

What is the cost of hiring in Portugal?

Understanding the costs of hiring employees in Portugal ensures a seamless process. Let’s examine this in detail.

In addition to this, there are two other types of costs involved. They include,

• Direct costs: Talent discovery and acquisition, onboarding, and training, as well as salary and wages.
• Indirect costs: Administrative costs, legal and compliance, and workplace safety.

Between direct costs like talent acquisition, onboarding, and salary, and indirect costs like administration, legal and compliance, and workplace safety, the true cost of a Portugal hire is hard to pin down. That is before you add the employer's Segurança Social contribution, mandatory 13th and 14th month pay, and work accident insurance.

Skuad's employee cost calculator helps you estimate the full cost of employing someone in Portugal up front, so you can budget against total cost of employment rather than base salary alone.

Estimate the total cost of your Portugal hire

What are the employment laws in Portugal?

The primary employment law in Portugal is the Código do Trabalho, commonly called the Labor Code. It governs various aspects of the employee-employer relationship, such as:

• The Portuguese Constitution and Labor Code regulate workers' fundamental rights, covering wages, working hours, health and safety, vacation allowance, work-life balance, and equal opportunity access.
• Maternity leave benefit: Pregnant employees get 120-150 days of maternity leave.
• Paternity leave benefit: New fathers can opt for paternity leave, which is a minimum of 28 days.
• Social Security in Portugal: Employers must provide social security benefits to employees, such as pensions, unemployment insurance, and family allowances.

What are the challenges of hiring in Portugal?

Managing remote employees can be challenging for several enterprises if not done correctly. The same applies when you decide to hire in Portugal.

Let’s take a look at a few examples of this.

• Employment laws: Portugal has stringent labor laws. Navigating these while simultaneously ensuring compliance is often difficult for companies. This is especially true when they lack the necessary legal expertise and guidance. Portugal's employment laws include some standard provisions.
  
  • In the event of termination of employment, the notice period varies from 15-75 days.
  • Overtime work is permitted in Portugal but cannot exceed 11 hours in a row.
  • Employers are mandatorily required to provide 13th and 14th-month pay to their employees.
  • Individuals are entitled to at least 22 working days of annual paid leave.
• Payroll: Portugal also has a complicated payroll system that can often confuse employers. Some of the many provisions include,
  
  • Both employers and employees are required to contribute to the social security system in Portugal. The general rate is 11% for employees and 23.75% for employers.
  • Employers are also required to buy insurance to cover any accidents in the workplace. The cost of the insurance differs based on the work and risk classification.

             Handling these payroll complications is not an easy task. You need to install a powerful payroll solution for this purpose. The only downside is that it can incur a lot of monetary resources and energy for companies to invest in such a service.

• Competitive talent landscape: When we analyze the talent landscape in Portugal, we see a consistent lack of skilled professionals, especially in the tech sector.
  
  • With the increased demand for skilled workers in Portugal, companies often struggle to find the most suitable candidates to fulfill their needs.
  • When this is coupled with the rise in competition from big enterprises worldwide, the complication is enhanced further, and there is no direct or easy solution.
• Bureaucratic complexities: Enforcing contracts in Portugal is slow, meaning it might take a while before you see any potential resolution. Several companies have often faced difficulties obtaining a business registration certificate in Portugal. One potential reason behind this phenomenon is Portugal's complicated legal system, which often takes months to conduct legislative procedures.

So, using an employer of record platform to hire employees in Portugal makes your job easier.

OpenSolar, a solar energy technology company, needed to build a distributed team across Italy, Portugal, and the Philippines without opening a local entity in each market. Skuad supported cross-border onboarding, localized employment contracts, and compliant payroll across all three countries from a single platform, so the team could keep its focus on product and growth rather than local HR setup.

"Skuad has been a key partner in our international expansion. Their seamless onboarding process and compliance expertise have allowed us to focus on our core mission, which is to accelerate the world's transition from fossil fuels to solar energy."

- Lavinia Davison, Global Head of Talent & Operations, OpenSolar

Read the full case study

Hiring a remote team in Portugal with EOR

Hiring in Portugal involves a lot of compliance-related challenges. The Código do Trabalho sets firm rules on contracts, working time, and termination. Segurança Social contributions run to 23.75% on the employer side, mandatory 13th and 14th month pay adds to the salary bill, and misclassifying a contractor can trigger back-dated contributions and fines.

An employer of record gives you a way into the market without setting up a Sociedade por Quotas or building local payroll and HR from scratch. Skuad acts as the legal employer in Portugal, so you can hire, onboard, and pay your team while staying aligned with local labor rules as they change.

Companies across SaaS, technology, marketing, and professional services use Skuad to enter Portugal and scale their teams there. Whether you are making your first hire or growing an existing team, Skuad supports the compliance, payroll, and contract work behind every Portugal hire.

Book a demo to see how Skuad can onboard your first Portugal hire in weeks

FAQs

1. What is an employer of record in Portugal?

An employer of record in Portugal is a third party that becomes the legal employer for your workers, registering them with Segurança Social and the Autoridade Tributária and running payroll under the Código do Trabalho, so you can hire without setting up a local entity.

2. How much does an employer of record in Portugal cost?

EOR service fees in Portugal generally run between €175 and €700 per employee each month, depending on the provider. This does not include gross salary and the employer's Segurança Social contribution of around 23.75%, which has no upper limitation.

3. Can a foreign company hire in Portugal without a local entity?

Foreign companies can typically hire in Portugal through an EOR without opening a Sociedade por Quotas, since the EOR holds the legal employment relationship and registers workers with Segurança Social. Setting up your own entity usually takes four to eight weeks by comparison.

4. What are the misclassification risks when hiring in Portugal?

Misclassification risk rose after Portugal's 2023 Agenda do Trabalho Digno reforms tightened contractor rules. If a worker uses your equipment, keeps fixed hours, and depends on your company for income, a court may generally presume employment exists under the Código do Trabalho, regardless of the contract.

5. Is an EOR or setting up an entity better for hiring in Portugal?

It usually depends on scale. An EOR generally suits smaller or short-term teams, since it avoids the four- to eight-week Sociedade por Quotas setup. A local entity tends to make more sense once headcount is high enough to justify running Portuguese payroll and compliance in-house.

6. How long does it take to onboard an employee in Portugal through an EOR?

Onboarding through an EOR in Portugal generally takes one to two weeks, once identity documents, the employment contract, and Segurança Social registration are in order. That compares with roughly four to eight weeks to incorporate a local entity and register it yourself before your first hire.