Dependent Work in Portugal

Dependent work in Portugal is characterized by the existence of an employment contract between two parties: the worker and the employer (which may be a company registered in Portugal or not).

In most cases, a dependent worker works exclusively for their employer.

This is the main difference that distinguishes a dependent worker from a self-employed worker (also known as a liberal professional or freelancer) who, as a general rule, provides services to one or more entities, without an employment contract or fixed professional relationship.

What are the rules governing dependent work in Portugal

In Portugal, dependent workers enjoy various rights and have various duties, in accordance with the rules of the Portuguese Labor Code.

Working hours for a dependent worker in Portugal

The normal working hours for a dependent worker should not, as a rule, exceed 40 hours a week and 8 hours a day, although specific adaptations can be made according to collective bargaining agreements or the particular needs of certain activities or sectors.

Workers with a dependent employment contract in Portugal are entitled to the following rest periods:

• Daily
  A minimum of one and a maximum of two hours of uninterrupted rest. Workers must not work for more than five consecutive hours without a break;
   
• Weekly
  One mandatory rest day per week (normally Sunday) and an uninterrupted daily rest period of 11 hours

Flexibility can be an option, either through a collective bargaining agreement or employment contract, which may establish additional weekly rest periods.

Salary of dependent workers in Portugal

A worker with a dependent employment contract in Portugal is entitled to receive 14 months' salary per year, corresponding to 12 months of work, a holiday allowance, and a Christmas/year-end allowance.

Each of these allowances is equivalent in value to one month's salary.

Portugal has a national minimum wage that is established annually through specific legislation, and which corresponds to the minimum remuneration that must be guaranteed to anyone who is working in Portugal.

Holidays and Public Holidays

Dependent workers in Portugal have the right to a minimum period of 22 working days of holiday leave per year when hired under a non-fixed-term employment contract.

This corresponds to two working days of holiday leave for each working month and can begin to be used six months after the start of the contract. The amount of holiday leave may increase depending on the employee's attendance record in the year to which the leave relates, with a bonus system for few or no absences.

Dependent workers in Portugal hired under a fixed-term contract for less than six months are entitled to two working days of paid leave for each full month of service. These must be taken immediately before the termination of the employment contract unless the company and the employee have come to a different mutual agreement.

Dependent workers in Portugal with a fixed-term contract that is equal to or greater than six months in duration have the same holiday entitlement as those hired for an indefinite or non-fixed-term period.

The salary payable during holiday leave must be equal to the amount that the employee would be entitled to receive if they were in effective service for their regular working hours.

There are various mandatory public holidays over the course of the year

• New Year's Day (1 January);
• Good Friday (date varies);
• Easter Sunday (date varies);
• Freedom Day (25 April);
• Labor Day (1 May);
• Corpus Christi (date varies);
• Portugal Day (10 June);
• Assumption Day (15 August);
• Republic Day (5 October);
• All Saints' Day (1 November);
• Restoration of Independence (1 December);
• Feast of the Immaculate Conception (8 December);
• Christmas Day (25 December).

Similarly, there are various optional public holidays, which can be observed if stipulated in collective bargaining agreements or in individual employment contracts.

Workplace Safety

Dependent workers in Portugal have the right to a safe and healthy work environment.

Companies in Portugal are required to provide occupational accident insurance that covers medical costs and compensation for accidents that occur during working hours.

Additionally, companies are responsible for ensuring safe working conditions, so they must take the necessary risk prevention measures, including the mobilization of resources in the fields of technical prevention, training, and information, as well as consulting with the workers and appropriate occupational health and safety services.

What taxes will I pay as a dependent worker in Portugal?

If you are a dependent worker in Portugal, you must pay income tax (IRS).

IRS is paid by means of a monthly withholding of part of your gross salary, calculated on the basis of the progressive rates set out in the IRS withholding tables (or a fixed rate, if you meet the requirements as a non-habitual resident - NHR).

These progressive rates are based on factors such as your salary, your family circumstances, and your location (Mainland Portugal, Madeira or the Azores).

Thus, unlike self-employed workers (freelancers), dependent workers do not have to worry about paying their income tax every month, since their employer is responsible for withholding the relevant amount and paying it to the Portuguese State.

Additionally, dependent workers only have to submit their annual income statement (Model 3), as part of their tax obligations in Portugal.

Social security contributions

Dependent workers in Portugal are required to contribute to Social Security, thus guaranteeing the right to benefits such as old age pensions, invalidity pensions and sickness benefits, among others.

Social security contributions are paid monthly through the Taxa Social Única (TSU), which corresponds to 34.75% of your gross salary. This contribution is divided into two parts:

• 23.75% is paid by the employer;
• 11% is paid by the worker.

Here, too, both parts of the TSU are deducted from your gross salary by your employer and paid to the Portuguese State on your behalf. In other words, if you are a dependent worker in Portugal, social security contributions must be made by your employer, in similar fashion to IRS.

What if I sign a dependent employment contract with a company that does not have a registered office or stable establishment in Portugal?

If you are a remote worker, resident in Portugal, who works under a dependent employment contract in Portugal, it is the foreign company’s responsibility to create a payroll, in order to ensure the payment of your social security contributions and income tax withholding.