Labor and Hiring Costs in Portugal: What a Foreign Company Should Know

Portugal has become an attractive destination for the establishment of international companies thanks to its stable labor framework, competitive costs and availability of qualified talent. However, before hiring personnel in the country, it is key to understand How the Portuguese labor system works and what are the labor and hiring costs in Portugal.

1. Social contributions and labor costs

In Portugal, the Social Security contribution is distributed as follows:

• Company: 23.75%
• Worker: 11%

This supposes a total cost of 34.75% of the gross salary. The contribution covers benefits such as unemployment and illness, but does not include work accidents, so the company is obliged to take out work accident insurance, the cost of which varies depending on the sector of activity.

2. Minimum salary and salary structure for hiring in Portugal

He Minimum wage in Portugal is €820 per month (2024). The labor system includes 14 annual payments, which include:

• Holiday allowance (usually in June/July)
• Christmas Allowance (December)

However, employer and employee can agree on payment in 12 prorated monthly payments.

3. Usual benefits and social benefits

Among the most important benefits within the Portuguese country are the following:

• Food subsidy:
  • Until €6 per day is exempt from contributions
  • The excess is taxed as salary
• Extraordinary payments (holidays and Christmas)
• Mandatory training: 40 hours in the first two years
• Compliance in Safety and Hygiene at Work
  

Correct planning allows optimize workload through adapted remuneration packages, always within the legal framework.

4. Practical example of salary cost

For an approximate net salary of €2,000 per month, the total annual cost for the company can be located around:

• €44,900 annually
• €3,740 monthly, including:
  • Social contributions
  • You pay extra
  • accident insurance
  • Food subsidy

This point is key to correctly budget for hiring in Portugal.

5. Dismissals and compensation

The severance pay in Portugal is:

• 12 days of salary for each year worked, to which is added the proportional part of pending vacations and extraordinary payments.

Conclusion

Now that you know the labor and hiring costs in Portugal, you are ready to take advantage of the benefits of creating a company in Portugal. Remember that, Correct work planning from the beginning avoids cost overruns and future contingencies, and at UR Global we help you with everything that has to do with international consulting.