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After some recent testing times economically, Portugal today is recognized for having one of the most promising economies in the European Union. If you want to explore this market, with policies towards a green future, and acquire the best talent, do it through an employer of record in Portugal.
When a company contracts the global services of an EOR, it avoids setting up local entities, which helps it save resources, such as time and money, that can be spent on the international expansion of its business. In addition, an employer of record in Portugal will manage human resources, from payroll to benefits and the eventual departure of employees.
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Thanks to its established recruitment networks and extensive knowledge of the local market, the Portuguese EOR will acquire the best talent on behalf of its clients, a process that will not take more than a couple of weeks. While this employer will legally recruit the professionals, building a distributed workforce will depend directly on the client-company.
The legal employer of record in Portugal may also call itself a professional employer organization (PEO), as it offers co-employment services. However, these providers often do not distinguish between EOR and PEO and the names are often interchangeable.
If you are interested in recruiting staff quickly and in compliance with the law through an employer of record in Portugal, please get in touch with us.
Employer of record in Portugal: country overview
Once one of the world’s most important empires, Portugal is a transcontinental country located in southeastern Europe along the Atlantic coast of the Iberian Peninsula. The 92 square kilometers, including the Azores and Madeira islands, are home to over 10.3 million people, with deep-rooted religious traditions, picturesque villages, and a world-renowned gastronomic culture.
Over the last three decades, Portugal’s economy has experienced notable transformations, with growth throughout the 1990s, a slowdown between 2001 and 2008, a contraction in 2009, and a recession between 2011-2013. However, despite this turbulence, today it is one of the most promising member states of the European Union and attracting foreign investment via an employer of record in Portugal.
This growth is partly due to the end of privatization of state-run enterprises, higher pensions, an improved employment rate, increased exports and foreign investment, and boosted access to education, digitalization, and tourism.
With the service sector at the heart of the country’s economy, more than half of the workforce is in this industry. The rest, highly skilled and professionally educated, are mainly in agriculture, mining, manufacturing, construction, and public services.
Overview of the Portuguese market
According to the European Commission, despite the impact of the COVID-19 pandemic and global problems, the GDP in Portugal in 2022 was around 250 billion US dollars, up 6.7% from 2021. Meanwhile, GDP per capita was 24,337 dollars, placing this country 49th in the world.
To move towards a modern and competitive market, Portugal has invested in education, which is compulsory until 18. As a result, the national literacy rate is 95%. Universities focus on scientific studies and research and have a particular emphasis on medicine, engineering, and architecture. An employer of record in Portugal can help you recruit these skilled professionals.
The Commission also indicates that, since 2020, the sectors that have seen the biggest increases in the Portuguese economy are wholesale and retail trade, hotels, and restaurants, with 20.8%. Public administration, defense, education, health, and social services, with 20.7%, and industry, with 17.4%, also stand out.
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Portuguese agriculture is not far behind either, as it is highly developed thanks to the climate, geography and soil, which make the country renowned for its olive groves, vineyards —especially those of Porto and Madeira—, and fruit, such as oranges from The Algarve and cherries from Gardunha.
The fishing industry faces significant international competition but is still vital in this country. Thanks to its long coastline, Portugal is rich in sardine, hake, tuna, and cod. Also, with two-fifths of its territory covered by forest, the pulp and paper industry are significant. Nevertheless, the most valuable product is cork, which is widely exported.
In terms of exports, the countries to which the Iberian nation sends most of its products are Spain (25%), France (14%), and Germany (12%), territories that also head the list of intra-EU imports. Imports from outside the EU come from China and the United Kingdom, with 5 and 3 per cent, respectively.
As President of the Council of the European Union, the country has set digitalization and care for the environment at the heart of its future economy, and that of the rest of the EU member states. Thus, through the European Green Deal, a package of political initiatives toward the ecological transition, these nations seek to make Europe the first carbon-neutral continent by 2050.
Although the official language is Portuguese, English is widely spoken in Portugal. According to the EF English Proficiency Index (EF EPI), this country is ranked 9th out of 111 in the world, with the inhabitants of cities such as Porto and Aveiro standing out. This means your employer of record in Portugal can easily find someone who speaks your language.
Hire qualified professionals via an employer of record in Portugal
Any company’s international growth involves numerous challenges, investments, and paperwork. For this reason, many organizations acquire the services of a third party, such as an employer of record in Portugal, to help them minimize the risks of expansion, understand local regulations and hire the best talent.
The advantages of working with a Portuguese EOR are several, as this legal employer has registered entities. As a result, companies will not have to open a subsidiary in the expanding territory, which can be time-consuming and costly, resources that can be used to grow the business.
An employer of record in Portugal will help its clients to find and hire the most competent personnel through its established recruitment networks. It will also assume all the legal responsibilities of employing professionals in another country, such as payroll, tax withholdings, benefits, and offloading workers.
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Sometimes, companies hesitate to grow internationally due to unfamiliarity with complicated foreign laws, as a misunderstanding could lead to non-compliance and fines. For this reason, partnering with a local regulatory expert, such as a Portuguese EOR, minimizes the risk of unexpected legal problems or potential financial penalties.
While an employer of record in Portugal will manage human resources in this territory, their clients are the ones who have control over their employees and are responsible for the onboarding process, establishing activities and workloads, and everything related to starting an employment relationship.
A legal employer of record in Portugal will charge a monthly fee for its services; the percentage will depend on the agreement established with its client. In addition, they will provide reports to the companies that rely on their services, whether they are accounting information or regarding the administration of their human resources.
An employer of record in Portugal will handle labour regulations
In Portugal, the Labor Code sets out the employment regulations that your employer of record in Portugal will be responsible for complying with:
Employment contracts. Contracts may be indefinite, temporary and fixed-term, temporary and indefinite-term, part-time, and teleworking. In addition, there are probationary periods, usually 90 days, but they can be extended up to eight months in managerial positions.
Salary. Portugal has three official minimum wages, one for the mainland and one each for the Azores and Madeira. The federal salary is €822.50 per month or €10,640 per year. However, the average monthly wage in cities such as Lisbon is around €3,755. In addition, employees are entitled to two bonuses each year: one in summer and one at Christmas.
Working hours. The working week is 40 hours, distributed over five days, usually from Monday to Friday. In the case of overtime, the personnel must receive a remuneration previously agreed in their contract. Your employer of record in Portugal will manage this to ensure compliance.
Vacation and national holidays. The right to annual vacation is acquired with the execution of the employment contract and is a minimum of 22 working days per year. There are 13 national holidays. Note that there are also holidays by region and city.
Sick leave. There is no mandatory minimum number of paid sick days. Still, after four days of absence, employees with a medical certificate are entitled to a payment of 55 to 75% of their salary up to 1095 days.
Maternity and paternity leave. Maternity leave starts 30 days before the baby’s birth and ends six weeks later. For fathers, the paternity license is 20 days, starting from the baby’s birth.
Employee severance and terminations. An employment relationship in Portugal may be terminated because the company can no longer pay for the services of its workforce, the employee has been unable to adapt to their job, or because the worker has been consistently misbehaving or absent, but also by mutual agreement between the employer and the employee. Furthermore, when it is a probationary period, personnel are not entitled to indemnification, usually between 12 days and one month’s salary for each year of service, up to a maximum of 12 months’ salary.
Tax laws. The corporate income tax rate is 21%. Employees also pay progessive taxes proportional to their salary, starting at 14.5%. For non-residents, the flat rate is 25%. Additionally, employers must contribute 23.75% of their workers’ wage to the social security system, while employees contribute 11% of their gross income.
Health insurance. This country has a national health care system, with most of its services free of charge at point of delivery. Portugal’s social security system also covers pensions, disability benefits, and unemployment insurance. However, several companies offer private insurance as an additional employee benefit.
7 steps to hiring with an employer of record in Portugal
Hiring people in Portugal through an EOR is easier than you think, especially when you follow these seven steps:
1) Find an employer of record in Portugal who understands your needs
To run a business smoothly in Portugal, companies must first acquire the services of a trusted employer of record (EOR). This third party should be matched to the firm’s expansion needs and the budget they allocate for this purpose.
The reputation, experience, and track record of an EOR will be crucial to be chosen. Thus, once the businesses find their perfect legal employer, they will sign an agreement establishing the terms and conditions of the service, the number of employees to be hired, the monthly or payroll fee, as well as the responsibilities to be assumed by the employer of record in Portugal and the duration of the contracts.
2) With the help of your EOR, define the profile of the employees
Portugal has highly qualified personnel in various sectors, so finding the best talent will not be complicated. However, defining their profile would help incorporate the best professionals into your international team.
Depending on your business objectives, your employer of record in Portugal will also assist you in describing the vacancy or vacancies, highlighting the candidate’s knowledge, desired experience, and soft skills.
3) Pre-select the best-qualified profiles
When a vacancy is well written and mentions the salary range and benefits the employee will receive according to local regulations, job applications and letters of motivation will not take long to arrive.
By then, the employer of record in Portugal will be ready to evaluate and discard the applications that do not meet the established requirements and select the complete ones. Later, with the strongest profiles in sight, the EOR will schedule the first round of interviews.
4) Schedule initial interviews
After the most complete profiles have been pre-selected and you have made some comments on the applications that best meet the requirements of the position, the Portuguese EOR will schedule the first round of interviews.
Interviews are usually quick and may be conducted in one or more languages to test the candidate’s level of proficiency in a specific foreign tongue. These interviews serve to probe applicants and verify that they meet the experience and skills listed on their resumes.
5) Conduct in-depth interviews
In-depth interviews help to evaluate finalists better. These can be conducted through a video call, which will also serve to know how much knowledge the candidates have about the digital tools that facilitate remote work.
You or one of your company’s internal recruiters can conduct these interviews. While the employer of record in Portugal will assist you throughout the selection process, the final decision on who to add to your talent pool is entirely yours.
6) Draft job offers and sign contracts
Once you have selected your new team members, your employer of record in Portugal will continue the talent acquisition process and assume all the legal responsibility of hiring in another country.
The contract will specify the terms of employment, such as salaries, benefits, and working hours. Once both parties agree to these terms, they will sign the contract. Finally, the legal employer of record in Portugal will notify unsuccessful candidates.
7) Onboard new team members
Your employer of record in Portugal will take care of the administrative tasks of the recruitment, such as payroll management. At the same time, you can onboard your employees, share your institutional values with them and start working as soon as possible.
In addition to onboarding your employees, you must manage your relationship with them, including assigning and reviewing tasks, monitoring progress, and coordinating the provision of any equipment they need to perform their duties.
Serviap Global can be your employer of record in Portugal
At Serviap Global, we help to expand companies with our international PEO / EOR services in over 100 territories, such as our employer of record in Portugal. We also offer our clients global talent acquisition, making it easier to enter a new market without establishing an entity.
We are a family-owned company with roots in Mexico, where we started working more than 12 years ago and later expanded to Latin America and the rest of the world.
Thanks to our regional experience, the excellence in our service, and the personalized treatment we give our clients, we are a leader in the global outsourcing market today.
Contact us to learn how we can help you with recruitment and talent acquisition in Portugal through our EOR services.
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