Employee Benefits in Portugal: What Global Employers Need to Know in 2025

Expanding your workforce into Portugal can be an exciting opportunity, but it also brings new responsibilities and challenges, especially related to managing employee benefits effectively. 

Portugal is known for its balanced approach to employee benefits, reflecting the country's emphasis on work-life balance and well-being, much like other nations celebrated for generous benefits. 

In this guide, we'll cover the basics of managing employee benefits in Portugal, including eligibility, legal requirements, and extra perks that can truly make your company stand out.

We’ll also explore how partnering with an Employer of Record (EOR) in Portugal can help you simplify benefits management and stay compliant, giving you more time for other business priorities.

Who Qualifies for Statutory Benefits in Portugal?

In Portugal, statutory employee benefits apply to individuals engaged in paid professional activities under a formal employment contract, in accordance with the provisions of the Labour Code. This includes full-time, part-time, and fixed-term employees. 

These workers are mandatorily covered under the general Portugal’s social security system, which provides access to benefits such as healthcare, pensions, unemployment support, and parental leave.

Employers are responsible for registering their employees with the social security system before the commencement of employment. Once registered, employees are entitled to social security benefits from the start of their employment.

Who Is Excluded?

• Freelancers and Contractors: Self-employed individuals are required to register with the social security system and make contributions based on their income. They are generally not entitled to the same statutory benefits as employees but may access certain benefits, such as healthcare and pensions, through their contributions.
• Interns and Agency Temps: Eligibility for statutory benefits depends on the nature of their contracts. If they have formal employment contracts, they are typically covered under the general social security scheme. However, specific agreements may vary.

For more detailed information on statutory benefit eligibility, you can visit Portugal's official Social Security Institute or the Ministry of Labor, Solidarity, and Social Security.

Statutory Employee Benefits and Leave Entitlements in Portugal

Portugal provides a comprehensive range of mandatory benefits and leave entitlements that are protected by law, ensuring employees have the necessary time off for personal, family, and health-related needs. 

In the following sections, I’ve explained the different types of benefits and leave entitlements that are offered in Portugal.

Social Security Contributions (Contribuições para a Segurança Social)

Employers contribute 23.75% of employees' gross salaries to the national social security system, covering pensions, healthcare, unemployment benefits, and other social protections. Employees contribute an additional 11% of their gross salary.

Worker's Compensation Insurance (Seguro de Acidentes de Trabalho)

Employers are required to provide workers' compensation insurance, covering medical care and compensation for occupational injuries or illnesses. This employer-provided insurance is mandatory and must cover all employees, regardless of contract type.

Minimum Wage (Salário Mínimo)

As of January 1, 2025, the national minimum wage in Portugal is set at €870 per month. This wage applies to all employees, including part-time workers. 

To ensure all workers in Portugal are able to achieve a basic standard of living, the minimum wage rate is subject to annual reviews, with ongoing compliance monitored by labor authorities.

Paid Annual Leave (Férias Pagas)

Employees are entitled to a minimum of 22 working days of paid annual leave per calendar year. In the first year of employment, leave accrues at a rate of two working days per month, up to 20 days of paid time off, and can be taken after six months of employment.

Employers are responsible for managing and scheduling this leave, typically between May 1 and October 31, unless otherwise agreed upon.

Stay Proactive to Maintain Staff Coverage

“To handle the operational side during peak vacation periods, I work with businesses to create staggered leave schedules and keep cross-training part of the onboarding process. This way, teams stay covered even when key people are out.” ~Robbin Schuchmann, Co-founder, EOR Overview

Public Holidays (Feriados Públicos)

Portugal observes 13 national public holidays annually. Employees are entitled to these days off with pay. Additionally, there are municipal holidays specific to certain regions.

13th Month Salary / Christmas Bonus (Subsídio de Natal) 

In Portugal, employees are entitled to a Christmas bonus (also known as a 13th month salary payment), which equals one month's base salary and is mandatory under Portuguese labor law (Article 263 of the Código do Trabalho). 

The additional 13th month's salary is paid in December (typically by December 15), and is designed to boost employee morale, while maintaining compliance with labor laws.

Author's Tip

“While some countries distinguish between a 13th month salary and a Christmas bonus, in Portugal, the terms are used interchangeably to refer to the legally required year-end bonus.”

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14th Month Salary / Vacation Bonus (Subsídio de Férias)

Portugal divides annual salaries into 14 installments rather than the usual 12, with the two additional payments being the Christmas and holiday subsidies.

The vacation or holiday bonus provides extra funds for employees to enjoy their annual leave. It’s typically paid before the employee's main holiday period and equals one month's base salary (also known as the 14th month salary payment).

Transparency is Key

“Managing vacation time and statutory bonuses in Portugal requires planning ahead and creating clear internal policies that reflect both compliance and business continuity. I make sure that employment contracts explicitly outline how vacation time, subsidio de ferias, and subsidio de Natal are administered. We coordinate closely with our EOR partners to ensure that these obligations are paid in line with Portuguese law while spacing out payments in a way that supports payroll stability. Transparency is key here—we always clarify when these payments are due and how they’re calculated so both the employee and employer are on the same page.” ~Robbin Schuchmann, Co-founder, EOR Overview

Maternity Leave (Licença de Maternidade)

Mothers are entitled to 120 consecutive days of maternity leave at 100% pay, or they can choose 150 days of leave, reimbursed at 80% of their regular pay. Up to 30 days can be taken before childbirth, and a minimum of six weeks (42 days) is mandatory post-birth.

This leave supports new mothers, with benefits administered through social security after the employer's initial payment period.

Paternity Leave (Licença de Paternidade)

Fathers are granted 28 consecutive days of mandatory paternity leave, paid at 100% of their salary. This leave must be taken within the first six weeks following the child's birth, during the same time period as the mother’s maternity leave.

Parental Leave (Licença Parental)

In Portugal, new parents can request an additional 30 days of paid leave to care for children, supporting family cohesion, with conditions and compensation varying based on social security provisions.

Under certain conditions, new mothers and fathers can also request to share paternity leave. For more details, refer to the Portuguese government’s public services portal for the most up-to-date information.

Sick Leave (Baixa Médica)

Employees are entitled to sick leave benefits after the third day of illness, provided they present a medical certificate. Social Security compensates between 55% and 75% of the employee's standard earnings, depending on the length of the illness, for up to 1,095 days.

This benefit ensures income continuity during health-related absences, reducing financial stress during times of illness.

In general, Portugal's leave policies are considered generous compared to many countries, particularly in maternity and paternity leave, though its sick leave provisions are more conservative. 

Providing these leaves not only complies with legal standards but also fosters a more productive and engaged workforce. 

Compliance with these statutory benefits is governed by the Ministério do Trabalho, Solidariedade e Segurança Social, ensuring that employers adhere to national labor laws.

Common and Additional Employee Benefits in Portugal

While not mandatory, several benefits are commonly offered in Portugal to enhance employee satisfaction and retention. These benefits can significantly improve the work environment and help attract top talent. 

Localize Your Benefits by Listening To Your Staff

“For global teams especially, localizing benefits to reflect what’s culturally relevant or genuinely useful in that market creates stronger engagement. In Portugal, that might mean private health insurance or meal allowances through platforms like Sodexo or Coverflex. The key is to listen to what employees value most and use that feedback to shape a benefits package that adds value without inflating overhead.” ~Robbin Schuchmann, Co-founder, EOR Overview

In this section, we’ll explore some of the most popular additional benefits that are now commonly offered to Portuguese employees.

Private Pension Plans

Offered as a supplement to the national pension, these plans enhance retirement security. Employers may contribute to private pension schemes to provide additional financial support for employees upon retirement.

Supplemental Health Insurance

Supplemental health insurance refers to extended coverage beyond what the public health system provides, lending quicker access to private healthcare services. 

Employer-sponsored private health insurance is a cornerstone of competitive benefits packages in Portugal, and is highly valued by employees.

Company Cars

Company cars are commonly provided to executives and sales staff, to simplify business travel and ease transportation burdens. They are a common supplementary employee benefit offered in Portugal.

Performance Bonus

Designed to incentivize high performance, many companies in Portugal offer performance bonuses that are linked to achieving specific targets. Performance bonuses are a form of variable pay that can motivate employees to meet specific goals or performance standards.

Computer Allowances

Some employers offer computer or technology allowances to simplify remote work by covering equipment costs. This practice has become more common in recent years, especially during the COVID-19 global pandemic.

Meal Allowances

While not mandatory by law, meal vouchers or allowances are a strongly embedded cultural practice and are included in most employment contracts and collective bargaining agreements. Employers typically provide a meal allowance for each working day, which can be paid in cash or offered as a meal card.

Meal allowances are considered a tax-free benefit for employees, with a cap of up to €6.00/day if paid in cash, or €9.60/day if paid through meal vouchers. 

These additional benefits have gained popularity in Portugal, making them essential to compete for talent in this region. By offering these benefits, companies can foster a more satisfied and committed workforce with improved employee satisfaction levels.

Benefits That Attract Top Talent in Portugal

In Portugal, leading organizations offer innovative benefits to attract and retain talent, focusing on flexibility, well-being, and personal development. While not legally required, these perks are increasingly expected by employees and can enhance competitiveness in the job market.

Offer Extra Benefits to Help Your Company Stand Out

“When it comes to offering benefits that go beyond what’s required, I usually recommend looking at flexibility, wellness support, and learning budgets. In my experience, these often matter more than cash incentives.” ~Robbin Schuchmann, Co-founder, EOR Overview

Flexible Working Hours and Arrangements

Employees in Portugal are increasingly seeking flexible work options, including remote work, flexible hours, and hybrid models that support work-life balance and increase job satisfaction. By allowing employees to have flexible start and finish times, companies can easily improve their employee’s work-life balance by accommodating personal commitments.

In fact, a 2025 Randstad Workmonitor survey found that 31% of workers have left a job due to a lack of flexible working conditions offered.

Author's Tip

Note: the Randstad Workmonitor survey explores the views of working people across Europe, North America, and the Asia Pacific. Data was collected from numerous countries, including Portugal.

Offering flexible working conditions also supports Portugal’s “right to disconnect” law, which came into effect in 2022 during the COVID-19 pandemic. This law essentially prevents employers from contacting employees outside of their standard working hours, further protecting the boundary between work and personal time for employees who work remotely from home.

Mental Health Support

Providing access to counseling and mental health resources promotes employee well-being and reduces stress-related issues. Mental health benefits rank highly in importance across all generations.

Wellness Programs

Offered in tandem with mental health support programs, many employers offer wellness programs, including mental health benefits, gym memberships, and other wellness initiatives that encourage a healthy lifestyle and improve overall employee morale.

Gym memberships or discounts are increasingly becoming popular with younger demographics, and especially within companies in the tech sector.

Professional Development Opportunities

Offers training and career growth programs, fostering skill enhancement and employee loyalty.

Offering training and career growth programs can also foster skill enhancement and employee loyalty. In particular, Gen Z and millennials prioritize career progression, with learning and development being among the top reasons for choosing their current employer, as found by Deloitte.

Younger Generations View Benefits Differently

“As Gen Z’s and millennials navigate a rapidly changing world of work, they are reevaluating the capabilities they need to succeed and the support they want from their employers.” ~Elizabeth Faber, Deloitte Global Chief People & Purpose Officer

Home Office Stipends

Covering expenses for remote work setups ensures employees have the necessary tools to work efficiently from home. To accommodate this preference, some employers provide technical equipment allowances to facilitate remote work arrangements, making it easier for them to hire employees who want or need to work from home for numerous reasons.

Financial Wellness Programs

Employers are increasingly offering benefits that support financial well-being, such as financial coaching and assistance programs. Providing financial coaching and student loan assistance addresses financial anxieties and improves financial health. 

Family Benefits

Flexible family benefits, which may include fertility treatments or childcare support, cater to diverse family needs and enhance employee satisfaction. 

Childcare vouchers offer financial support for families with young children, while also providing tax benefits to both the company and the employee.

Collectively, these competitive benefits align with the preferences of Millennials and Gen Z, who value work-life balance, flexibility, and personal growth. According to Deloitte's 2025 Global Gen Z and Millennial Survey, these generations focus on growth and learning as they pursue money, meaning, and well-being, making it imperative to offer these benefits in order to attract top-notch global talent.

How to Set Up and Manage Employee Benefits in Portugal

Establishing and managing employee benefits in Portugal requires a strategic approach to ensure compliance with local laws and to maximize employee satisfaction. 

Here's a step-by-step guide to help you navigate this process efficiently:

1. Partner with Local Benefits Providers

Collaborate with local providers to offer competitive benefits such as health insurance and pension plans. By leaning on their expertise, you’ll ensure your benefit offerings are tailored to your employee’s needs while also remaining compliant with Portuguese regulations.

2. Ensure Compliance with Regulations

Align your benefits programs with the regulations set by the Ministério do Trabalho, Solidariedade e Segurança Social (Ministry of Labour, Solidarity, and Social Security) to avoid legal issues and ensure all statutory requirements are met.

Remember, employers are required to register with Social Security and notify them when hiring workers. This includes making mandatory contributions of 23.75% of the employee's salary, with an additional 11% contributed by the employee, managed through payroll.

3. Communicate Benefits to Employees

Clearly communicate the range of benefits available to your employees and highlight any special offerings that may make your company stand out from other employers in your sector.

To ensure effective communication, use multiple channels to promote understanding and engagement, and provide detailed information about each benefit, including eligibility and how employees can access them.

4. Monitor and Update Benefits Offerings

Regularly review and update benefits to align with market trends and employee preferences. This process will ensure your benefits remain competitive and relevant, further aiding your employee retention and satisfaction levels.

Alternate Option: Outsource to an EOR Service in Portugal

If you want to avoid all the hassles mentioned above, or for companies who want to hire talent in Portugal without a legal entity, consider partnering with a Portuguese Employer of Record (EOR) service to simplify the benefits management process completely. 

A Portuguese EOR service offers a simplified process for managing numerous complex HR processes, including:

• Hiring and onboarding new employees
• Employment contracts
• Benefits administration
• Payroll and tax compliance
• Labor law adherence
• Visas and work permit assistance

EORs handle compliance, payroll, and benefits administration, simplifying the process and allowing companies to focus on other strategic goals.

By outsourcing these HR functions to an EOR partner, you’ll gain peace of mind that your operations are fully compliant, while gaining time back in your week to focus on other strategic goals. That’s why EOR services are increasing in popularity among companies hiring global talent.

By following these steps, or outsourcing to an EOR partner, you can establish a strong employee benefits program in Portugal that both complies with labor code regulations and attracts and retains top talent in a competitive job market.

Stay Compliant with Local Employment Laws

Ignoring local employment laws in Portugal can have serious consequences for your company. Non-compliance may lead to financial penalties, legal issues, and long-term reputational damage. 

Here are several risks to be aware of if you don't follow the rules:

• Employee Misclassification: Misclassifying employees as independent contractors can result in significant fines, back payments of wages, and mandatory retroactive social security contributions.
• Underfunding Social Security Contributions: Failing to accurately calculate and remit the required employer and employee social security contributions can lead to audits, backdated payments, and severe legal penalties.
• Corporate Fines and Legal Penalties: Violations of Portuguese labor code regulations—such as failing to provide mandatory benefits or failing to register employees with Social Security—can result in substantial fines, administrative sanctions, and potential court action.
• Damage to Company Reputation: A record of non-compliance can severely damage your company's reputation in the Portuguese labor market, undermining your employer brand and making it harder to attract and retain top talent.

Ensuring compliance with local laws not only helps you avoid these risks but also contributes to a stable, transparent, and positive working environment for your employees.

Get Support Setting Up Benefits in Portugal

Managing employee benefits in Portugal requires a thoughtful balance between legal compliance and meeting employee expectations. 

Moreover, enhancing your benefits package with additional employee perks like flexible work arrangements, wellness programs, and professional development opportunities can help differentiate your company in a competitive talent market. 

As we’ve discussed, these voluntary benefits are especially attractive to top talent in younger generations who prioritize work-life balance and values-driven employment.

Staying up to date with local labor laws is essential to avoid compliance pitfalls, financial penalties, and reputational harm. However, managing ongoing compliance is a full-time job, which is even more challenging if you don’t already have a local presence in Portugal.

That’s why many global employers choose to partner with an Employer of Record service, to simplify the process of hiring employees significantly. 

If that sounds like a good fit for your needs, here’s my thoroughly researched list of trusted EOR providers in Portugal who can help you take the next steps:

1. 1. Deel — Best for offering local health benefits to Portuguese EOR employees
2. 2. Borderless AI — Best AI-driven EOR platform
3. 3. RemoFirst — Best for budget-conscious remote team expansion
4. 4. G-P — Best for flexible global payment options
5. 5. Skuad — Best for hiring and paying talent in Portugal
6. 6. TopSource Worldwide — Best for combined global HR and EOR services
7. 7. Atlas HXM — Best EOR partner for enterprise organizations
8. 8. Native Teams — Best for end-to-end employee support
9. 9. Omnipresent — Best for labor law compliance
10. 10. Mercans — Best for an advanced EOR management platform

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