Employment contract in Portugal

An employment contract is a type of contract in which one person undertakes to do work for another in return for remuneration. Depending on the legal system, the notion of contract does not cover exactly the same things.

In Portugal, there are different types of employment contracts. As in France, each employment contract has its own specific characteristics, and in this article we’ll explain the differences between them. We’ll also explain Working Conditions in Portugal.

Contrato a termo incerto

This is a permanent employment contract. No end date is specified; generally, employment becomes permanent after a probationary period of three to six months. For senior executives and management personnel, the probationary period may last up to 240 days. During this period, either party may terminate the employment contract in Portugal without notice. Once the probationary period has ended, the employment becomes permanent.

Fixed-term contract

This is the French equivalent of a fixed-term contract (CDD). The contract’s end date is specified in writing; employees on fixed-term contracts have the same rights and obligations as employees on permanent contracts (CDI) in a similar situation. The term of a CDD ranges from 3 to 4 years. This contract may not be renewed more than three consecutive times; after this period, the employer must offer the employee a CDI.

Temporary Employment Contract 

A temporary employment contract must be in writing and signed by the company, the employer, and the employee. This contract differs from a fixed-term contract (CDD) in that the rules the employee must follow are different and the contract lasts for a shorter period than a fixed-term contract.

Part-time contract 

A "contrato a tempo parcial" is, as you might have guessed, a part-time employment contract. For this type of contract, it is essential to sign a written agreement. It must correspond to a maximum of 75 % of the legal duration of an employment contract, which is 40 hours per week. The exact number of working hours must be specified in the contract.

Recibos Verdes

"Recibos Verdes" isn't really a contract in and of itself, but rather a status that can be compared to that of a "self-employed entrepreneur" in France. On this subject, we invite you to Read our book dedicated to the Freelancer and Entrepreneur in Portugal.

A person hired under a “recibos verdes” arrangement issues a receipt at the end of each month in exchange for their compensation. Since this is not a formal employment contract, there are no reciprocal obligations between the employer and the employee. Either party may terminate the working relationship without having to give any notice or provide a reason. The employee working under a “recibos verdes” arrangement is responsible for paying their own social security contributions.

As you can see, employment contracts in Portugal are very different from what you may be familiar with in your own country. Even if the title of the contract sounds familiar to you, the terms and conditions are completely different.

Working conditions in Portugal

Now that you know about employment contracts in Portugal, it's time to talk about working conditions in Portugal.

Overtime

An employee may work overtime. Overtime may not exceed two hours on regular workdays and eight hours on days off or during vacations. The number of overtime hours may not exceed 175 hours per year for small and medium-sized enterprises (SMEs) and 150 hours per year for large companies. The first hour of overtime is paid at a rate of 25 %; subsequent hours are paid at a rate of 37.5 % on weekdays and 50 % on weekends and holidays.

Vacation Time

Any employee who has signed an employment contract in Portugal is entitled to 22 days of vacation per year, which may be taken all at once or in separate periods. However, the law requires employees to take at least 10 consecutive days of vacation. For a fixed-term contract (CDD), vacation entitlement depends on the duration of the contract:

• If the fixed-term contract is for less than one year: the number of days of leave is two days for each month worked;
• If the fixed-term contract lasts longer than one year, the vacation entitlement is the same as for a permanent contract, namely 22 days of vacation per year.

Holidays

Portugal has 9 public holidays.

• April 25: Freedom Day
• June 10: Portugal Day
• December 25: Christmas
• March 25: Good Friday
• March 27: Easter
• August 15: Assumption,
• December 8: Immaculate Conception
• January 1: New Year's Day
• May 1, Labor Day

Social Security Coverage

There are two possible coverage scenarios. A French employee may be covered either by the French social security system under certain conditions or by the Portuguese social security system.

For more information on this topic, please see this link.  

Secondment: Maintaining French Social Security Coverage

French law allows a French employee to be seconded to Portugal for a period of 12 months, renewable once. The employee continues to be covered by the French social security system and to pay contributions in France.

Registration with the Portuguese Social Security System

It is the employer’s responsibility to complete this process if the hired candidate is working in Portugal for the first time. Each insured person has a unique registration number that remains the same for life.