Employee Benefits in Portugal: A Step by Step Guide to Offer the Best Perks to your Team

From mandatory social security contributions to meal allowance and other optional benefits, here is what happens in Portugal.

For those candidates who are testing the market and looking for a new job, salary is not everything. In fact, employee benefits can go a long way to convince someone to take a job offer over another. Each country has its own set of mandatory and optional employee benefits and, for companies, having a clear benefits strategy is the key to hiring the best available talent, especially in a remote work world. 

Beyond Salary: What are the Right Benefits and Perks to Attract and Retain Talent in Portugal

Portuguese companies have always been providing extra-salary benefits to help hire, or retain, the best talent. Most of the time such benefits are not strictly financial, but they can help workers reduce their fixed expenses, such as those related to health and well-being, education and food shopping.

In an increasingly competitive and remote labour market, employee benefits are important to recruit and motivate the best employees. In Portugal, some of the employee benefits most valued by workers, are also convenient for companies: private life and health insurance, for example, are exempt from the single social tax in certain circumstances and are considered a cost for the company, therefore reducing taxable income.

Employing a team in Portugal means being familiar with the local regulations, avoiding employee misclassification and ensuring full compliance when onboarding new employees. From social security to employee benefits, dealing with this level of local knowledge and bureaucracy is often a burden for foreign companies. A local Employer of Record can ease the pain of setting up your pod team in Portugal.

In fact, BRIDGE IN is different from all the global EoR providers, which often outsource local operations to partners and lack in-depth knowledge of specific regulations. We are a Portuguese company, with fully-owned operations and an in-house team of consultants and lawyers that are experts in local labour law, employee benefits, payroll and HR management. BRIDGE IN is your Employer of Record in Portugal. 

If you have already identified your ideal candidates and now want to make sure you offer them the best possible working conditions, here is a guide on Employee benefits in Portugal: from the mandatory subsidies and insurance to nice-to-have perks, read further to know how to make your local team happy. 

Mandatory Employee Benefits in Portugal

CHRISTMAS AND HOLIDAY SUBSIDIES

All employees in Portugal are entitled by law to the Christmas and holiday subsidies: an additional financial compensation to the monthly salary, aimed at helping employees with extra costs at certain times of the year. 

Generally speaking, Portugal has a monthly payroll cycle, with one peculiarity: in Portugal, the annual salary is divided by 14 monthly instalments instead of the standard 12, being the extra 2 instalments the Christmas and holiday subsidy. 

SOCIAL SECURITY

Any employee in Portugal contributing to social security is covered for basic insurance by the government. This includes public healthcare, pension fund, unemployment aid and paid parental leave.

WORKERS COMPENSATION INSURANCE

Worker's Compensation Insurance is mandatory for any company, without exception. Bonuses vary depending on the risks implicit in the activity carried out by the worker. On average, the labour insurance premium is 1% of the income to be insured. This covers temporary, permanent or partial disability for the employees and their families in case of death, including a funeral grant, spouse or orphan's pension.

Nice-to-have Employee Benefits in Portugal

In addition to the costs listed above, there are other mandatory costs related to the occupational health and safety audit, the employee's yearly medical exam, and professional training (the employer must provide 40 hours of accredited training per year to each employee, or pay them the corresponding amount instead). 

There are also other, non-statutory allowances and perks that employers can offer their employees such as:

• Meal Allowance

• Transport allowance;

• School voucher;

• Childcare voucher;

• Health insurance;

• Life insurance;

• Work from Home allowance;

• Technical equipment;

• Gym pass;

• Company car;

• Bonuses;

• Commissions

Let’s have a look at the most common, non-mandatory benefits in Portugal.

MEAL ALLOWANCE AND VOUCHERS

The values for the meal allowance in Portugal have been updated and announced in "Portaria 107-A/2023" which was released on April 18th. The revision has increased the daily meal allowance amount to 6,00€. Although these updates are primarily intended for public sector employees, they will also impact those working in the private sector. In the case of meal card payments, the daily allowance amount will increase by 60%, resulting in a tax-free daily amount of 9,60€. Before this revision, the exemption threshold was either 5,20€ or 8,32€, depending on the circumstances, as of November 2022. The amendment applies retroactively to January 1, 2023.

The meal allowance is considered a social benefit and is paid for by the vast majority of companies. It is not mandatory by law, depending on the collective labour agreement applicable, but it is usually paid as it is not subject to taxation, accordingly to the following rules.

• If the meal allowance is paid in cash or bank transfer and does not exceed €6.00 per day, it is exempt from Social Security and IRS contributions

• If the meal allowance is paid by a prepaid meal card, the maximum amount exempt from taxation is €9.60 per day. Any amount exceeding the above-mentioned is subject to Social Security contributions and Personal Income Tax.

PRIVATE HEALTH INSURANCE

One of the most valued perks by employees is private health insurance. Although the public health system in Portugal is considered among the best in the world, waiting times can be long. 

There are several private health insurance providers that companies can choose from, with varying degrees of coverage. In fiscal terms, costs with private health insurance are exempt from the single social tax if the following criteria are met: 

• Expenses with private health insurance do not exceed the limit of 15% of the expenses accounted for as salaries 

• They must be the same for all permanent employees

COMMISSIONS AND BONUSES

Depending on the nature of the job, some employees receive a cash bonus when fulfilling goals, quotas or targets. Most of the time this happens with business development teams, but can easily be applied to any role depending on certain productivity criteria.

WORK FROM ANYWHERE AND FLEXIBLE WORKING HOURS

With the increased adoption of remote work, most tech companies offer flexible working hours to employees to accommodate their productivity. They also give employees the possibility to work from anywhere, either permanently or for a certain period of time. 

As an additional benefit, some companies also offer an allowance for a remote work set-up at home. 

HARDWARE AND PHONE BILLS 

When onboarding new employees, the majority of companies offer a company laptop and some additional branded swag. Some companies also offer smartphones to employees and cover the cost of their monthly phone plan. 

In conclusion, if you are planning to hire a top team in Portugal, you need to get creative with employees' benefits and perks, in addition to offering an adequate salary. Flexible working time, gym passes, generous maternity and paternity leave can easily convince an employee to accept your job offer. Adding unique perks to your benefits package can help you stand out from other employers.

Get in touch with our team today for a tailored employee benefits plan in Portugal!