Employee termination
in Portugal.

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Valid reasons to terminate employment in Portugal

Valid reasons for dismissal after probation period are:

Financial reasons that make it impossible to keep the employee employed
Failure of the employee to adapt to the job
Poor behavior by the employee, such as abuse, insubordination, and repeated absences.
Mutual agreement between the employee and employer (in writing)

Unfair reasons to terminate employment in Portugal

Any dismissals of employees without valid reason (as detailed above) are classed as an unfair dismissal in Portugal.

Dismissal procedure in Portugal

Employers in Portugal must follow a set procedure when dismissing employees:

1. Written notice:

Issue a termination letter (can be via email) and get confirmation of receipt
Inform the employee’s representative (if any)
Send termination letter to the Ministry of Employment

2. Certificate of employment:

Issue a certificate of employment including the start and end date of employment
Complete all other relevant documentation (such as social security documents)

3. Pay any money owed:

Pay severance if applicable
Pay for all accrued and unused annual leave
Pay termination bonus (if applicable)

Resignation procedure in Portugal

Employees in Portugal must provide written notice of their resignation in accordance with the minimum notice periods.

During probation:

<60 days → no notice
60-120 days → seven days of notice
>120 days → 14 days of notice

After probation:

<2 years employment → min. 30 days
>2 years employment → min. 60 days
Standard → Statutory minimum. There is no expectation to give additional notice than what is required by law.

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FAQs

Is it difficult to terminate employment in Portugal?

It is relatively complex to terminate employment in Portugal. In order to process a termination request (assuming a standard contract), the following steps must be taken:

Provide written notice:
- Simple Termination Letter sent by email with confirmation of receipt
- Inform the employee’s representative (if any)
Employer’s termination decision must be sent to Ministry of Employment.
Generate Certificate of Employment:
- This is mandatory. The certificate should include the start date and end date of employment.
- Collect any other necessary documents for official purpose (e.g. social security).
Make any necessary severance payments to the employee.

When considering a termination in Portugal, keep in mind the following:

Termination with reason:
- Business-related reason i.e. the company’s financial state. In these cases it must be proven to be impossible to maintain employment.
- Individual-related reason i.e. employee’s failure to adapt
Termination without reason can have consequences such as mandated reinstatement of the employee or compensation up to 45 days salary per year of time served with the company
In cases of termination, severance payment is required
It is possible provide payment in lieu of notice

What are the risks of terminating employment in Portugal, and how do I mitigate them?

The risks of terminating employment in Portugal are most present if you terminate employment without reason. In such cases, an employee may be entitled to reinstatment or compensation of 45 days of salary per year of service to the company. If you are considering employee termination in Portugal, you should work with a local employment expert to fully understand the law before making any decisions.

You can mitigate termination risks by partnering with a firm like Horizons, who has employment experts on the ground in Portugal and can advise you on best practices in cases of employment termination.

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