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Notice periods in Portugal

Employment termination in Portugal

Post-termination restraints in Portugal

Waivers in Portugal

Transfer of undertakings in Portugal

Avoid risk and missed opportunities with our end-to-end employment solutions

End of employment in Portugal

As in all countries, there are specific rules that govern the end of an employment relationship in Portugal. And employers should be aware of the relevant laws and regulations before hiring Portuguese talent so that they can ensure compliance and protect their business interests.

In this section, we’ll discuss the required notice periods for employers and employees, what counts as reasonable grounds for dismissing an employee, and the post-termination restraints you can impose on employees in Portugal to safeguard your business. We’ll also explore what happens to employees after a transfer of undertaking and the situations when employees can waive their statutory rights.

Notice periods in Portugal

Both employers and employees must give a certain amount of notice to terminate an employment relationship in Portugal. In both cases, the specific notice period depends on how long the worker has been employed. It should be stated in the employment contract or the relevant collective bargaining agreement.

Notice periods in Portugal for employers

Notice periods for employers in Portugal depend on how long the employee has been employed at the company. Employers must give their employees at least the following notice in order to terminate their employment:

Less than six months of employment: 15 days
1–5 years of employment: 30 days
5–10 years of employment: 60 days
10+ years of employment: 75 days

An individual employment contract or a collective bargaining agreement may stipulate a longer notice period, but it can’t be shorter than the above.

Notice periods in Portugal for employees

Employees in Portugal also have to give notice if they want to resign from their post. The standard notice period for an employee in Portugal is:

30 days if they have been employed for less than two years
60 days if they have been employed for more than two years

The notice period for ending a fixed-term contract is 15 days if the contractual period is less than six months, and 30 days if it is more than six months.

Severance pay in Portugal

Employees who are dismissed due to objective grounds (i.e. made redundant) or for unsuitability for the role have the right to severance pay. This pay is partially covered by a fund administered by social security, to which employers have to make regular contributions for each of their employees.

The total amount an employee is due corresponds to 12 days of base salary, plus seniority pay for each year the employee has worked at the company. The total salary used to calculate severance pay can’t be more than 20x minimum wage, and the total pay the employee receives can’t exceed 12x their monthly salary

Employment termination in Portugal

Under Portuguese labour laws, there’s a specific procedure that employers must follow to terminate an employee’s contract. Employee termination in Portugal is usually only possible with just cause, and the employer almost always has to give notice to the employee according to how long they have been employed.

Valid reasons for employment termination in Portugal

In some cases, an employer and an employee may mutually agree to terminate an employment contract. In this case, they must sign a termination agreement, and the employee has seven days to revoke their decision.

If there is no mutual agreement, the employer must have a good reason for terminating the employee’s contract. Valid reasons for employment termination in Portugal include the employee’s behaviour or performance. This is sometimes referred to as ‘termination for just cause’. For example, an employer may terminate an employee’s contract if they:

Disobey orders given by superiors
Fail to observe health and safety rules
Lie to justify their poor performance
Cause serious harm to the company’s finances
Repeatedly cause conflicts with other employees

Other justifiable reasons for employment termination in Portugal include:

Redundancy
Expiration
Revocation
Collective dismissals
Dismissal for inability to adapt
Dismissal for disciplinary grounds

Process for disciplinary dismissals in Portugal

In the case of disciplinary dismissals, an employee doesn’t have to pay severance pay or give the employee notice. However, they must follow a specific procedure. Dismissal is the last step in this process, and it is in effect as soon as the employer informs the employee of their formal decision to end their employment.

The process for disciplinary dismissals in Portugal is made up of three stages:

Accusation: The employer gives the employer a written warning, clearly stating their intention to dismiss the employee and the reason why they are being dismissed.
Defence: The employee has the opportunity to respond to the accusation in writing. They may involve employee representatives, who can issue a non-binding opinion on the dismissal that employers must take into consideration.
Decision: After considering the employee’s defence, the employer gives a detailed written response stating their formal decision to dismiss the employee.

After receiving a dismissal notice, employees in Portugal have five days to seek an injunction to suspend the dismissal and 60 days (two months) to challenge it in court. Employers must initiate dismissal proceedings within 60 days of becoming aware of the wrongdoing and within one year of the event taking place.

Unfair dismissal in Portugal

Employees in Portugal who feel they have been unfairly dismissed can file a claim with the labour court to challenge the dismissal. If the employer is found not to have followed the correct procedures or doesn’t have a valid reason for dismissal, the employee is entitled to the salary they would have received since being dismissed. They can also claim compensation for damages amounting to between 15 and 45 days’ salary, plus a seniority bonus for each year worked. Employees can also choose to be reinstated to their former position.

Collective redundancies in Portugal

There are specific rules that apply to collective dismissals in Portugal. Collective dismissal is defined as five or more employees being dismissed within three months (or two employees for companies with less than 50 employees). An employer must have a valid reason for proceeding with a collective dismissal, such as:

One of more sections of the company closing down
The need to reduce the number of employees for market, structural, or technological reasons

Post-termination restraints in Portugal

Post-termination restraints are restrictions that employers can impose on employees after the end of their employment. They are generally only allowed if they are intended to protect the employer’s legitimate interests. In Portugal, post-termination restraints are generally enforceable as long as the activity in question would cause a potential loss to the employer.

Types of post-termination restraints in Portugal

Generally speaking, there are three types of post-termination restrictions that employers can impose on their employees in Portugal:

Non-compete agreements: These prevent former employees from setting up or working for competing organisations for a set period after their employment.
Customer non-solicit agreements: These prevent former employees from soliciting or poaching customers from their former employer.
Employee non-solicit agreements: These prevent former employees from soliciting or poaching staff members from their former employer.

Requirements for post-termination restraints in Portugal

In Portugal, a post-termination restraint can be included as part of an employee’s employment contract. Or, it can be a separate agreement signed by the employer and the employee. In either case, the agreement must contain:

The scope of the obligation: Restrictions are typically limited in terms of the geographic area they cover, and only apply to certain activities.
The period the restriction applies for: The maximum period is generally two years, or three years for jobs of trust or jobs with access to information of particular relevance.
The amount to be paid to the employee during the restriction period: There is no legal minimum or maximum, but payment typically varies between 50% and 80% of the employee’s former salary.

Employees are only bound by the agreement if these elements are included.

Waivers in Portugal

In some countries, employees can choose to waive their statutory employment rights. This is typically done as part of a settlement agreement, in exchange for a sum of money paid by the employer on termination of the employee’s contract.

In Portugal, statutory rights cannot generally be waived, and any waiver of these rights is considered null and void. There are some exceptions: for example, employees can waive their rights to paid holiday in some circumstances.

Transfer of undertakings in Portugal

A transfer of undertaking is when one business is wholly or partially acquired by another. There are specific rules that govern the rights of employees when their company is part of a transfer of undertaking in Portugal.

Employee rights after a transfer of undertaking in Portugal

In a transfer of undertaking, the employees of the transferred entity are automatically transferred to the acquiring entity. Additionally, all of the employees’ existing rights and employment conditions must be transferred with them. A transfer of undertaking is not a reasonable ground for terminating an employee’s contract.

Employers in Portugal also have a duty to inform employee representatives when a transfer of undertaking is planned. In some circumstances, they must consult with employee representatives before the transfer can take place. Employees can object to the transfer or choose to resign after the transfer. In this case, they are entitled to legal compensation as in the case of constructive dismissal.

Avoid risk and missed opportunities with our end-to-end employment solutions

There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Portugal — or you could end up facing legal issues.

Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible .

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FAQ's

What is a collective dismissal in Portugal?

A collective dismissal in Portugal occurs when an employer terminates at least two employees in a company with fewer than 50 employees, or at least five employees in a company with 50 or more employees, within a three-month period.

The dismissals must result from the closure of one or more departments or from a reduction in the workforce for market, structural or technological reasons. The company’s size for these thresholds is based on its average number of employees during the previous calendar year.

Collective dismissals must follow the procedure set out in the Portuguese Labour Code. This includes communicating the proposed dismissals to the affected employees and employee representatives, providing the required information and following the applicable consultation, notice and payment requirements. Employers should therefore confirm that both the reason for the dismissals and the number of affected employees meet the collective dismissal rules before starting the process.

Is there a notice period for ending employment in Portugal?

Yes. Notice periods apply to several types of employment termination in Portugal, with the required period varying according to how the employment ends and, in some cases, the employee’s length of service. For collective dismissals, elimination of a position or dismissal for unsuitability, employers generally need to provide 15 days’ notice for employees with less than one year of service, 30 days for one to five years, 60 days for five to ten years and 75 days for ten years or more.

Employees who resign from an open-ended contract generally provide 30 days’ notice if they have up to two years of service and 60 days if they have worked for longer.

For fixed-term contracts, the employee generally provides 15 days’ notice where the contract is shorter than six months and 30 days for contracts of six months or longer.

Notice should be provided in writing, and different rules may apply under an applicable collective bargaining agreement or in specific circumstances.

Can the notice period in Portugal be waived?

Yes. A notice period in Portugal can be shortened or avoided in certain circumstances, including where the employer and employee agree on an earlier termination date, during certain stages of probation or where employment is terminated for just cause.

An employer and employee can agree to end the employment relationship on a particular date through mutual agreement. An employee can also leave without working the full required notice period, although they may have to compensate the employer for the notice not worked and, in some circumstances, additional proven losses.

Different rules apply during probation. Either party can generally terminate employment more easily during this period, although employers may still need to provide notice once the probation period has lasted beyond certain statutory thresholds. An employer must generally provide seven days ‘notice once the probationary period has lasted more than 60 days and 30 days’ notice once it has lasted more than 120 days.

A dismissal for proven just cause can also take effect without the standard notice period, provided the employer has a lawful reason and follows the required disciplinary procedure.

How do fixed-term contracts end in Portugal?

A fixed-term employment contract in Portugal generally ends when its agreed term expires and the required written notice is given, with employers normally providing at least 15 days’ notice and employees at least eight days’ notice. Different notice period apply to a contract for an uncertain term. In that case, the employer must generally give 7, 30 or 60 days´notoce depending on whether the contract has lasted up to 6 months. Between 6 months or 2 years, or more than 2 years.

If the employer does not give the required notice, the contract may renew where renewal is legally permitted and consistent with the terms of the agreement. When a qualifying fixed-term contract ends at the employer’s initiative, the employee may also be entitled to statutory compensation based on their salary and length of service. Under the current rules, compensation for expiry of a qualifying fixed-term or uncertain-term contract at the employer’s initiative is generally calculated at 24 days of base salary and seniority allowances for each full year of service, with partial years calculated proportionally.

Employers cannot rely on the agreed end date where a fixed-term contract has already become open-ended under Portuguese law. This can happen where statutory duration or renewal limits are exceeded or where the contract does not meet the legal requirements for fixed-term employment, including the requirement for a valid temporary reason.

Employers should therefore check the contract’s duration, renewal history and reason for using a fixed term before treating the employment as ending automatically.

What must employers pay at the end of employment in Portugal?

Employers in Portugal generally need to pay outstanding salary, unused annual leave, the applicable holiday allowance, the proportional Christmas allowance and any severance or other compensation due for the type of termination.

The final amount varies according to when the employment ends, how much leave the employee has already taken and the reason for termination. Severance is not payable in every case and should therefore be calculated separately according to the termination route.

Unused annual leave can include outstanding entitlement from the previous year as well as the amount accrued in the year employment ends. Holiday and Christmas allowances may also need to be calculated proportionally.

The employee should receive documentation showing how the final payment has been calculated, including the salary, allowances, leave payments, deductions and any applicable compensation.

When is severance pay required in Portugal?

Severance pay in Portugal is generally required when an employer terminates employment through a collective dismissal, elimination of a position or dismissal for unsuitability, subject to the rules that apply to each termination route.

For qualifying service under the current rules, statutory compensation is generally calculated using 14 days of base salary and seniority allowances for each full year of service, with partial years calculated proportionally.

Different calculations can apply to employees with longer service because Portugal’s statutory severance rules have changed over time. Employment periods accrued under earlier rules may therefore attract different rates, which means the entire severance payment should not automatically be calculated using the current 14-day rate.

Statutory limits can also apply to the salary used in the calculation and the total compensation payable. Employers should therefore calculate severance using the employee’s service dates, applicable salary and the rules in force during each relevant period of employment.

What is the full and final settlement process in Portugal?

The full and final settlement in Portugal, commonly referred to as acerto de contas, calculates and pays all outstanding amounts owed to an employee when their employment ends.

The settlement generally includes salary due up to the termination date, outstanding annual leave and related holiday allowance, the proportional Christmas allowance and any severance or other compensation required for the particular type of termination.

The employer also needs to complete the documents associated with the end of employment. This can include providing an employment certificate showing the employee’s start and end dates and the positions or functions performed and completing the documentation needed for an eligible employee to apply for unemployment benefits.

Because the amount due varies according to the termination date, unused leave and reason for termination, employers should calculate the final settlement before the employee’s last day and check that all outstanding employment payments have been included.

What is the wrongful dismissal remedy in Portugal?

If a dismissal is found to be unlawful in Portugal, the employee may be reinstated or receive compensation instead, and the employer may also have to pay salary lost between the dismissal and the court’s final decision, subject to the deductions required by law.

Where compensation is awarded instead of reinstatement, it is generally calculated at between 15 and 45 days of base salary and seniority allowances for each year of service, subject to the applicable statutory minimum. The compensation must generally equal at least three months of base salary and seniority allowances. The amount within that range is determined by the court based on the circumstances of the case, including the employee’s remuneration and the degree of unlawfulness of the employer’s conduct.

A dismissal can be found unlawful because the employer did not have sufficient legal grounds or because the required termination procedure was not followed correctly. This makes the process used to reach and communicate the dismissal an important part of compliance, not only the employer’s reason for ending the employment.

Employers should therefore confirm both the legal basis and required procedure before proceeding with a dismissal.

What is the disciplinary procedure for just cause dismissal in Portugal?

To dismiss an employee for just cause in Portugal, an employer must set out the allegations in writing, give the employee an opportunity to respond and consider the employee’s defence before issuing a final written decision.

The process generally begins with a written statement of charges, known as a nota de culpa, which should describe the alleged misconduct in enough detail for the employee to understand and respond to it. The employee must also be informed that dismissal is being considered.

The employee generally has ten working days to review the disciplinary file, provide a written response, submit documents and request relevant evidence. Where applicable, employee or trade union representatives must also receive the documentation required under the Labour Code.

After considering the response and evidence, the employer must issue its decision within the applicable statutory timeframe. Where employee representatives are involved, they generally have five working days to provide their opinion, and the employer must issue the dismissal decision within 30 days after receiving that opinion or after the period for providing it expires. Where no employee representative is involved, the employer must generally issue its decision within 30 days after completing the final requested or necessary evidentiary step. Failure to follow required steps can make the dismissal unlawful even where misconduct has occurred.

How does CXC simplify employee termination for companies operating in Portugal?

CXC helps companies manage employee termination in Portugal by checking the appropriate termination process, managing the required documentation and notice, calculating final payments and supporting the employee through offboarding.

Portuguese employment cannot generally be ended at will, and the process varies according to the reason for termination. CXC helps determine the requirements that apply to the situation and supports the necessary steps, including notice periods, disciplinary procedures where relevant, leave balances, severance and final payroll calculations.

For employees hired through CXC’s Employer of Record service, we manage the local employment administration and work with the client throughout the termination process. This helps the client’s HR team handle the employee’s departure in line with Portuguese requirements without having to manage every local step themselves.

CXC brings more than 30 years of workforce management experience and supports companies across 100+ countries.

Speak to our team to learn more about managing employee termination in Portugal with CXC.

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