Employer of Record (EOR) in Portugal
Employer of Record (EOR) in Portugal allows companies to hire skilled professionals without setting up a local entity. Portugal has a workforce of around 5 million people, with strong expertise in technology, finance, tourism, and renewable energy. Employers benefit from a multilingual talent pool, cost-effective hiring, and a business environment supported by European Union standards. However, labor laws, taxation, and compliance can be complex. By using EOR services, organizations can manage payroll, social security, and employment contracts smoothly while reducing risk. This makes Portugal an attractive destination for global companies seeking to expand operations and hire local talent efficiently.
About Portugal
Portugal is located in Southwestern Europe, sharing its only land border with Spain and with a long Atlantic coastline. Over the past two decades, it has become a growing hub for technology, finance, renewable energy, and tourism. The Portuguese workforce is highly skilled, multilingual, and known for adaptability and collaboration. Lisbon and Porto are the major business centers, attracting startups, multinational corporations, and Global Capability Centers.
Portugal’s economy emphasizes innovation and technology, making it attractive for software development, fintech, and data-driven roles. The country has a strong legal framework protecting workers’ rights, which includes mandatory contracts, social security contributions, and statutory benefits. Businesses hiring locally must comply with complex labor laws, including contracts, minimum wages, leave entitlements, and termination procedures. EOR providers simplify these processes, allowing companies to focus on business growth while handling payroll, compliance, HR, and taxation efficiently.
Employment Terms and Regulations
Types of Contracts
- Permanent Contracts: Standard full-time employment
- Fixed-Term Contracts: Project-based or temporary work
- Part-Time Contracts: Limited weekly hours, proportional benefits
Working Hours
- Standard 40 hours per week, Monday to Friday
- Overtime is compensated per labor regulations
Minimum Wage
- €900 per month (2025)
Probation Period
Typically 90 days for permanent roles, can be extended for managerial positions
Taxation and Contributions
- Income tax is progressive, ranging from 14.5% to 48%
- Social security contributions: 11% by employee, 23.75% by employer
- Corporate contributions for payroll processing and statutory filings handled by EOR
Types of Leave
- Paid annual leave: 22 days
- Sick leave: Paid after 3 days, up to 100% by social security for extended illness
- Maternity leave: 120–150 days
- Paternity leave: 20 working days
Employee Benefits
- Mandatory health insurance coverage via social security
- Retirement and pension contributions
- Paid holidays and statutory leave
- Optional benefits: private health insurance, meal allowances, transportation subsidies
Termination Process
- Termination requires valid justification and adherence to notice periods
- Severance pay depends on length of service
- Termination procedures must comply with Portuguese labor law to avoid penalties
Employer Taxes
- Employer contributions to social security: 23.75% of gross salary
- Additional contributions for training funds and workplace accident insurance
- EOR providers ensure accurate filing and payments
EMPLOYER TAXES
23.75 (Estimated)
FAQ's
How STM Manages Employment in India
Establishing an entity in every hiring location can be cost-prohibitive. STM simplifies the process by employing and paying your Indian talent on your behalf. We handle the intricate HR procedures and employment contracts in compliance with local laws. You can conveniently approve invoices through our platform. By partnering with an Employer of Record (EOR), you can efficiently and compliantly hire top talent globally.
Payment Processes for Indian Employees
We streamline payroll management for your Indian workforce. Employee hours, leaves, holidays, bonuses, and commissions are meticulously calculated. STM invoices you around the 15th of each month in your preferred currency, including US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD). This ensures your Indian employees receive their salaries promptly in Indian Rupees (INR). Simplify further by consolidating your global team’s salaries into a single payment.
Full-time Employees vs. Global Contractors
Contractors engage with multiple companies and are self-employed, while full-time employees focus solely on their employer and receive additional benefits like health insurance, equity, and time off. While hiring international contractors can be cost-effective, it comes with misclassification risks. Partnering with an EOR for contractor onboarding and payments ensures compliant and timely compensation.
Reliable Employee Support
Our platform offers accessible support for employees and employers with inquiries about benefits, visas, and global employment in India. Utilize the chat function to connect with our expert team. Additionally, every STM client is assigned a dedicated account manager, serving as the primary contact for global HR assistance.
