Expanding Overseas: 3-Step Guide to Hiring and Employing in Portugal
There’s no denying it: expanding a business is exciting, and when you look to employ someone overseas, that must mean you’re doing something right.
(Right?)
Trust us: we know the feeling – it’s as if you’re doing it all over again, from scratch. Studying new markets, opportunities, and growth potential. And just when everything seems to be going smoothly, one of the most critical aspects of international expansion peaks: the complexities of hiring and managing employees in a foreign country.
The good news is: if you’re looking to expand into Portugal, you’re in the right place. We’ll cover everything in this practical 3-step guide – from labor laws to taxes (not to mention the cultural aspects). So, if you wish to build a successful workforce abroad, grab a pen and a notebook (your laptop works too), and let’s dive into it.
First things first.
Step 1 on How to Employ Someone in Portugal: Cultural Considerations
It’s not a walk in the park. It’s like when you’re traveling and trying to decode the locals' way of acting, thinking, and speaking…
Integrating foreign employees into a new work environment requires cultural sensitivity and support. Portugal has a distinct culture, and creating a welcoming atmosphere for your new hires is essential for success and cohesion. Consider these points:
Language: while many Portuguese professionals are proficient in English, having a basic understanding of Portuguese or relying on a local partner can help bridge communication gaps and foster relationships.
Work-Life Balance: Portuguese work culture values work-life balance. Show you support this by encouraging employees to do more of what makes them happy. That’s how you maintain their well-being and job satisfaction.
Extra-salary benefits: fair compensation isn’t the only factor in a recruitment process. To attract and retain top talent in Portugal, it’s advisable to offer employment benefits and some perks. Among the most common are meal allowances, health insurance, transportation allowance, childcare vouchers, and bonuses.
Networking: building professional relationships is vital in Portuguese business culture. Encourage your employees to participate in local networking events to establish connections within the industry.
We suggest you rely on a local partner when sourcing talent. Doing so guarantees that these essential cultural aspects are at the top of the recruitment’s priorities – something we also do at BRIDGE IN, as we can help you source and hire compliantly top talent in Portugal.
Step 2: Navigating the Recruitment Process
We’re not saying that finding the best talent is easy – especially when employing someone in a foreign country. But, once you team up with local partners to speed up the process – while maintaining its quality – it’s time to go straight to the point. It’s time to recruit.
Consider these steps when hiring in Portugal.
Define your needs
What is your budget? Who are you looking for? What key skills do you value most? Before going out in the field, you must understand these (and other) needs.
This is the time to define roles and tasks. Choose the qualifications, skills, and experience required for each position.
Publish job openings
This part is up to you, but here’s our 2 cents: don’t just stick to the regular job boards.
There’s no harm in using those, but walk the extra mile. Publish on local job boards and reach out to partners like us, who can handle the whole process for you.
But most and for all, use holy LinkedIn. Target the people that shine the most – the creators.
The most active people on the network. The ones who show what they know, share their experiences (good and bad) and have (at first glance) what you’re looking for. Networks like LinkedIn are gold mines to find the top talent in each area.
Spoiler alert: you’ll receive applications in Portuguese.
Interview process
It’s time to meet them. Time to assess candidates' skills, cultural fit, and language proficiency.
Prepare questions that gauge their knowledge. If you’re unsure about how to screen candidates and how to assess their skills and motivation, a local recruitment agency will save you loads of time and disappointments.
Offer and negotiation
Once you've identified the right candidate to employ in Portugal, propose a job offer that considers compensation, benefits, and other relevant details – and remember to be open to negotiating.
(P.S.: it’s impossible to identify a norm, but generally, Portuguese workers value compensation, flexible working hours, and career progression. So give particular focus to those and other employee benefits.)
Step 3: Understanding Portuguese Labor Laws, Regulations, and Taxes
It would be easier to use the same laws in every country. But we don’t work miracles.
So, before making any hiring decisions, you must master the Portuguese labor laws and regulations. The country protects employees' rights while ensuring fair treatment and appropriate working conditions.
That’s why you should consider these key points when employing someone overseas:
Employment Contracts: these are a legal requirement in Portugal. It’s mandatory to include specific terms like working hours, compensation, holidays, benefits, personal and fiscal data (from the employer and the employee), and notice periods. The most common employment contracts are: fixed-term, uncertain-term, and open-ended.
Working Hours and Overtime: the standard workweek in Portugal is 40 hours, with a maximum of 8 hours per day. Companies must pay extra for overtime or reach a time-off agreement with the employee.
Holidays and Leave: Portuguese employees receive paid annual leave, public holidays, and other types of leave – including sick and parental leave.
Termination Procedures: terminating an employment contract in Portugal follows specific procedures. Notice periods vary and can go from 15 to more than 60 days, depending on the type of contract.
Portuguese labor law can get super complex if you’re unfamiliar with the procedures, leaving you open to pitfalls. To ensure you are 100% compliant with local regulations (we’ll see more on that below), the best option is to employ your recent hires via a local Employer of Record.
As your EOR in Portugal, BRIDGE IN takes all the risk off your shoulders by dealing with employment contracts, benefits, payroll, and day-to-day HR management. As your team grows locally, we can keep supporting you by employing your workers in Portugal and helping you set up your operations to insource your team.
Compliance and Tax Considerations
We imagine you want to avoid legal issues.
(Right?)
Then, you need to master local tax regulations. You must work with legal and financial experts to ensure your company complies with Portuguese tax laws. Consider these once you find the right professionals:
Social Security Contributions in Portugal: both employers and employees are obliged to contribute to the Portuguese Social Security system;
Corporate Tax in Portugal: if you have your subsidiary in Portugal, understand and seek advice on matters like IRC, IRS, social security, and other relevant corporate and labor taxes.
Expanding to Portugal means a handful of opportunities, but it also requires careful planning and adherence to local laws and customs. By understanding Portuguese labor laws, complying with tax regulations, navigating the recruitment process, and considering cultural integration, foreign companies can position themselves for success.
Remember that seeking local, specialized advice is crucial to employ someone overseas, especially within the Portuguese market’s specific requirements (did we say we’re experts on those already?).
