In recent years, employers across the world have realized that remote employment works remarkably well, opening up exciting opportunities for talent acquisition and expansion. In Portugal, for instance, 7.7% of employed persons usually worked from home in 2023, a figure just below the EU27 average.
A part of the European Union, Portugal provides access to much of Europe while also allowing employers access to a diverse, well-educated, and growing workforce. In 2023, this diversity was reflected in the labor market, where 2.7% of the active workforce came from other EU Member States and 11.6% from third countries.
That said, hiring in Portugal isn't without its challenges, especially if your organization isn't yet equipped to handle the myriad complexities of international hires, including documentation, onboarding, compliance, and payroll.
To mitigate these difficulties, some businesses may turn to a Portugal-based professional employer organization (PEO). Let's take a look at how a PEO can help you engage talent in Portugal and what you should know about employment practices there.
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Pros and cons of working with a PEO in Portugal
A professional employer organization in Portugal offers benefits like faster market entry and compliance support, but comes with shared liability and requires establishing a legal entity. Essentially, a PEO acts as a co-employer, handling HR admin and logistics on your behalf.
Here's what you need to know about the trade-offs:
Advantages:
- Faster setup: Manage HR functions and payroll without building in-house expertise
- Cost savings: Reduce overhead compared to establishing full operations
- Local compliance: Navigate Portuguese regulations with expert guidance
Key limitations:
- Shared liability: You remain legally responsible as the co-employer
- Entity requirement: Must establish a costly legal entity in Portugal first
- Complex pricing: Often percentage-based with fluctuating costs
How does a PEO differ from an EOR?
People often confuse PEO and EOR services, but they work very differently:
- PEO (Professional Employer Organization): Co-employment model requiring your own legal entity
- EOR (Employer of Record): Full legal responsibility without entity requirements
Using an EOR in Portugal means you can employ talent immediately without establishing a legal presence there.
At Oyster, we provide comprehensive global employment services to ensure that your company can grow easily and quickly, where the market demands. We have entities across the world and work with EORs in numerous countries to provide the widest possible reach.
PEO Costs and Pricing in Portugal
So, what will a PEO actually cost you in Portugal? The pricing structure can be tricky to navigate:
- Percentage model: Typically 5-15% of total payroll
- Per-employee fees: Administrative costs that vary by provider
- Hidden costs: Entity setup, legal fees, and fluctuating expenses
Here's the thing: you shouldn't have to guess what your employment costs will be. Oyster's EOR model offers transparent, flat-fee pricing—no percentage games, no surprise invoices.
Things to know about hiring in Portugal
The first step to successfully hiring abroad is to familiarize yourself with local hiring customs, laws, and expectations. Doing this allows you to make your position look attractive to the type of talent you want to pull in. Since each country has different types of worker protections and employment practices, you can't assume that the norms in your own country will apply in another.
Portugal's demographics
Portugal is a country of over 10 million people, and its workforce is diverse and well-educated. The number of college students graduating with degrees in science, technology, engineering, and mathematics (STEM) has been steadily increasing, leading to a pool of workers well-suited to many industries. However, youth unemployment remains a significant issue—with rates near 20% in 2024—meaning there is a large available talent pool, particularly in fields like information technology.
The national language of Portugal is Portuguese, but the country has a robust foreign language education system and a healthy tourism industry, meaning that many people are multilingual. The national currency of Portugal is the Euro, the international standard currency used by the EU.
Payment requirements and expectations
Perhaps the most important aspect of employment practices in Portugal for a business new to the country to note is the mandate for 13th and 14th month payments. These are two additional payments equal to an employee's monthly salary that each employee is entitled to, regardless of their position or experience. These are generally paid in the fall and winter, and are legally required.
For a detailed breakdown of the cost of hiring Portuguese talent, check out our employment cost calculator for Portugal.
Working hours
Portugal's working hour regulations are straightforward:
- Standard week: 40 hours, Monday to Friday, a standard established by a 1996 law that mandated a reduction in normal working hours.
- Break requirements: One-hour minimum after five hours of work
- Overtime limits: Maximum eight additional hours per week at premium rates, with a statutory premium of 50% for the first hour and 75% for subsequent hours.
Regular bonuses are not required, but they do make an offer more attractive to the top talent.
Leave
Employees in Portugal are generally entitled to 22 working days of paid time off per calendar year, which is considered a non-waivable right. This is in addition to nine national holidays and a number of regional holidays that will vary by locality.
In the first year of employment, an employee is entitled to two days of annual paid leave per month, up to a maximum of 20 days, which may only be used upon completion of six months of work.
Employees can take up to 1,095 days of sick leave, which means that up to three years of sick leave are protected and subsidized by Social Security. However, this benefit begins on the fourth day of absence due to sickness. For the initial three days of illness, neither the employer nor the social security authority provides sick leave compensation to employees. Although it isn't mandatory for employers to pay salaries during these first three days, many companies choose to do so.
Other requirements and considerations
For remote workers, employers are required to provide all equipment and software necessary for the job. Many employers offer a monthly work-from-home stipend to help cover maintenance costs of equipment. Employees may also be given a monthly lunch stipend.
Non-compete agreements are legal in Portugal, provided they pertain to activities that could potentially harm the employer, and the employee must be compensated for adhering to the terms of the agreement. Such clauses are typically valid for up to two years but can be extended to three years if the employee has engaged in activities for the employer that involve a high level of trust or access to highly sensitive data.
Finally, it should be noted that Portugal does not have at-will employment, and any terminations must come with a justification. An employee terminated due to redundancy is entitled to a severance package dependent on their length of service.
To learn more about Portuguese employment laws and best practices, check out our complete guide to hiring employees in Portugal.
How Oyster can help you hire in Portugal
Oyster is a global employment platform that operates worldwide to help businesses hire the best person for the job, no matter what the role, where the company is based, or where the employee is applying from. We help you engage talent in over 180 countries and pay them in over 140 currencies, as well as offering benefits, equity, and more. We function as the legal employer for our clients' international hires, and where we haven't already established an entity, we work with trusted EORs to ensure an easy and reliable hiring process.
With Oyster's automated platform, consultative approach, and global reach, you can confidently onboard talent in Portugal—and around the world. Learn more about how Oyster can help you scale your global team compliantly and competitively.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.
