Portugal's employment legislation underwent significant revision in late 2024, with the amended rules entering into force in early 2025. Foreign employers operating in Portugal – whether through a local subsidiary, a branch, or by posting workers under EU freedom-of-services rules – must reassess existing arrangements before the compliance window closes.
Portugal's updated employment regulations introduce revised rules on employment contracts, collective agreement application, dismissal notice periods, and social security obligations for foreign entities with staff in Portugal. The changes affect companies employing local workers directly, those posting employees from abroad, and businesses engaging workers through third-party arrangements. Compliance is required from the effective date in early 2025, and no transitional grace period applies to core contractual requirements.
This alert sets out what changed, which business categories are affected, and the immediate actions international companies must take to avoid liability under Portuguese employment legislation.
What changed and when it took effect
Portugal's revised employment rules amend several provisions within the country's labour law regime. The principal changes concern three areas: the content and language requirements for employment contracts, the expanded scope of collective agreement application, and updated termination procedures including revised dismissal notice periods.
On employment contracts, the revised rules require that all written contracts with workers habitually performing duties in Portugal include specific minimum clauses in Portuguese. Contracts drafted solely in a foreign language no longer satisfy this requirement, even where the employee is a foreign national. Employers who previously relied on English-language contracts with Portuguese workers must now either replace those documents or attach certified Portuguese translations carrying equivalent legal effect.
On collective agreements, the scope of mandatory application has been broadened. Foreign employers – including those without a registered entity in Portugal – are now expressly subject to the sectoral collective agreement applicable to the activity their workers perform. This matters in particular for companies that post workers into Portugal for projects lasting more than a few weeks. Under Portuguese employment legislation, posted workers must receive at least the terms provided by the relevant collective agreement, including sector-specific pay scales, working time rules, and rest entitlements.
On termination procedures, the revised rules tighten the formal requirements for individual dismissal. Notice periods have been adjusted upward for certain seniority bands, and the written justification required for a lawful dismissal must now address a more detailed set of statutory criteria. Courts in Portugal – including the Tribunal da Relação (Court of Appeal) and, on further appeal, the Supremo Tribunal de Justiça (Supreme Court of Portugal) – have historically applied these rules strictly. The updated requirements give employees additional grounds on which to challenge a dismissal as procedurally defective, which can result in reinstatement orders or compensation awards significantly exceeding the basic severance calculation.
The changes also affect social security registration obligations. Foreign employers sending workers to Portugal must now complete a separate employer registration with the Portuguese social security authority within a shorter window than previously applied. Failure to register on time results in automatic liability for contributions calculated from the first day of the worker's activity, plus interest and potential administrative fines.
For detailed guidance on structuring employment relationships in Portugal, see our employment law services in Portugal.
To receive an expert assessment of how these changes affect your workforce in Portugal, contact us at info@ferrazwhitmore.com.
Who is affected and the compliance threshold
The updated rules apply to a wide range of foreign business structures. The threshold criteria are based on activity, not on corporate form.
The following categories are directly affected:
- Foreign companies employing one or more workers habitually performing duties in Portugal, regardless of where the employment contract was signed.
- Businesses posting workers to Portugal from another EU or non-EU country for assignments lasting beyond the minimum posted-worker threshold.
- Multinational groups that have recently restructured and now rely on a Portuguese branch or representative office rather than a subsidiary with separate legal personality.
- Companies engaged in construction, logistics, cleaning, catering, or other sectors covered by a sectoral collective agreement with extended applicability.
- Foreign employers using a professional employer organisation or secondment arrangement to place workers in Portugal without a direct employment contract under Portuguese law.
Companies with no physical presence in Portugal but with remote workers habitually working from a Portuguese address are also within scope. Under Portuguese employment legislation and the relevant EU rules on applicable law, the place where the worker habitually performs duties is the primary connecting factor. The location of the employer's registered office is not determinative.
The changes also intersect with Portuguese corporate legislation – specifically the rules on branch registration and disclosure obligations governed by Portuguese corporate legislation (CSC, the Código das Sociedades Comerciais, or Portuguese commercial companies legislation). Foreign employers whose presence in Portugal now triggers branch registration thresholds should review both their employment and corporate compliance position simultaneously. Our analysis of corporate law matters in Portugal covers the registration and disclosure obligations that frequently arise alongside employment compliance reviews.
For a tailored strategy on employment compliance in Portugal for your specific business structure, reach out to info@ferrazwhitmore.com.
Immediate action items for international companies
The compliance deadline is the effective date of the revised rules in early 2025. There is no extended transitional period. International companies should treat the following as priority actions:
Review and update employment contracts. Audit all contracts with workers habitually performing duties in Portugal. Identify any contracts drafted solely in a foreign language. Replace or supplement those contracts with Portuguese-language versions meeting the updated minimum content requirements. Note that retroactive amendment of a contract requires the employee's written consent – early engagement reduces the risk of refusal or dispute.
Identify the applicable collective agreement. Map your Portuguese workforce by sector of activity. Check which collective agreement applies to each category of worker. Verify that current pay scales, working time arrangements, and benefit entitlements meet or exceed the collective agreement minimums. Where shortfalls exist, adjustments take effect from the compliance date – not from the date of discovery.
Audit termination procedures and template documents. Update internal HR templates for individual dismissal to reflect the revised notice periods and justification requirements. Ensure that disciplinary procedures used in Portugal align with the updated statutory criteria. A dismissal that fails to meet the new procedural standards can be declared unlawful by a Portuguese employment court, triggering reinstatement or compensatory damages. The Supremo Tribunal de Justiça has consistently held that procedural defects in dismissal cannot be cured after the fact.
Register with Portuguese social security on time. If your company sends workers to Portugal and has not yet registered as an employer with the social security authority, initiate registration immediately. Check whether a detachment certificate from the home country's social security authority covers the workers in question. Where it does not, Portuguese contributions apply from the first day of activity.
Review posted worker notifications. Confirm that any worker posted to Portugal for a project or assignment has been properly notified through the relevant online platform within the required period before the posting begins. Late or absent notifications attract administrative fines under Portuguese employment legislation, even where the underlying employment terms are otherwise compliant.
Companies with operations across the Iberian Peninsula should also consider how these Portuguese changes interact with recent developments in the neighbouring jurisdiction. Our alert on updated employment regulations in Spain provides a comparative overview of parallel obligations for foreign employers operating in both markets.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our employment law practice supports international companies managing workforces in Portugal – covering employment contracts, collective agreement compliance, termination procedures, social security obligations, and cross-border posted worker matters. We combine Portuguese civil law expertise with English common law tradition to advise multinational employers, in-house legal teams, and institutional investors on workforce compliance and restructuring across both civil and common law systems. As a law firm in Portugal with direct access to EU regulatory developments, we provide practical, results-oriented counsel for foreign employers facing rapidly changing labour law requirements. Engaging a lawyer in Portugal with cross-border employment experience is particularly valuable when regulatory changes affect multiple jurisdictions simultaneously. To discuss how the updated employment regulations affect your operations in Portugal, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.