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Compensation & Benefits in PtPortugal.

Population

10,467,366

Languages

1.

Portuguese

Country Capital

Lisbon

Currency

Euro (€) (EUR)

As your company grows in a new country, you’ll have to learn about local employee expectations and how to build an attractive benefits package to attract and retain talent. As you develop a benefits plan in Portugal, you’ll want to start by researching economic conditions and best practices in the region.

Portugal compensation laws

As of 2023, Portugal’s national minimum wage was set at EUR 760 per month. All employees receive the annual salary divided into 14 installments, with 2 installments known as the 13th- and 14th-month salary or Holidays and Christmas allowance, which is normally paid in June and November.

Creating a competitive benefits package can make your company stand out in the labor market and encourage more jobseekers to apply. A well-developed plan can also improve employee morale and promote higher retention rates.

You can give your company a competitive edge with supplemental or fringe benefits. Possible offerings include:

  • Private insurance schemes
  • Productivity bonuses
  • Housing allowances
  • Meal allowances
  • Commuting stipends
  • Flexible work opportunities

Required benefits

While fringe benefits will make your open positions more appealing, you’ll also need to consider the country’s required provisions. Employers in Portugal must provide:

  • Paid annual leave
  • Training hours
  • Social security contributions
  • Public holidays off
  • Parental leave
  • 13th-month and 14th-month salary

Designing Portugal employee benefits plans

The goal for benefits planning is to remain within your company’s budget while recognizing employees’ needs. You can achieve this balance by following a few basic steps.

1. Examine company resources and goals.

Before you decide what benefits to provide, you need to determine what your company can afford. Take time to assess your revenue along with your existing expenses to create a benefits budget.

It’s also helpful to clarify your goals during this step. You might be able to use your benefits to meet them. For example, if you want to improve retention rates, you can build out a more robust benefits package and slow recruitment to focus on current employees.

2. Learn about the market and your employees.

Your benefits plan will only be competitive if it reflects market standards and meets employees’ needs. To understand the local labor market, you should research businesses in the area that are similar to yours. Consider aspects such as industry and size when you explore other companies.

Employees are more likely to stay long-term if your benefits package fulfills their needs. You can perform interviews and distribute surveys to workers in your target region to understand what provisions they expect and which ones they appreciate the most.

3. Create a benefits plan.

With the information you’ve gathered about the market and the employees in your target area, you can design a plan. Start by allocating funds to required provisions, such as meal allowances and 13th-month bonuses. Use your remaining funds to cover some of the top benefits you learned about in your research.

Average cost of benefits

Every company’s benefits plan looks different based on several factors, from size and location to industry. As a result, the average price of benefits packages might not be a useful metric. Instead, you can create a budget based on your available resources and scale it as your company grows.

How to calculate benefits

Benefits calculations will vary based on the provisions you offer, but you will find guidance for required benefits in the labor laws. In the case of social security contributions, the employer and employee both contribute a set percentage. Employers must contribute 23.75%, and employees contribute 11%.

How are employee benefits taxed in Portugal?

Generally, benefits in kind are considered taxable income on the employee’s end. Some benefit types, such as housing and share plans, come with additional taxation policies.

Employee health benefits

Portugal’s healthcare system has 3 levels — publicly funded care, specialized care for specific industries, and private care. Social security contributions will cover some types of healthcare for employees, but private insurance options are still available.

Employers in Portugal are not obligated to provide supplemental health insurance for employees. That said, many industries choose to offer a private scheme.

Partner with G-P to build your everywhere workforce.

As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.

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Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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