It is important to be aware of the net salary and fringe benefits to be offered to candidates and of the total amounts involved in specific compensation packages.
Minimum wages in Portugal in 2024 are €820/gross/month for a full-time job. Unlike most other countries, salaries are paid 14 months per year (the last two relating to a Christmas and a Vacation supplement), even though the yearly amount can be paid in twelfths.
Monthly gross base salaries are subject to personal income tax, which applies only to employees. Regardless of monthly withholding brackets, the final tax rate is progressive, but taxable income depends on several variables. Social security, on the other hand, applies to both employees (11%) and employers (23.75%).
When hiring, employers must also consider other associated costs:
- Wage Guarantee Fund – 1% over monthly gross base salaries.
- Workers Compensation Insurance – cost may vary according to industry/workplace hazards, but it amounts to circa 1% over yearly gross base salaries.
- Training – 40h/year compulsory training relevant to the job role.
- Health & Safety – before admission, employees are required to undergo occupational health assessments, which are associated with the risks of the workplace/industry (for office roles, for instance, basic tests are usually enough). From then onwards, these will be repeated at specific intervals, according to the hazards of the role and the age of the employee.
- Meal allowance – payment of a daily meal allowance is not mandatory (unless determined within a certain industry because of a collective labour agreement/convention), but it is common practice. Meal allowance is exempt from personal income tax and social security up to € 6 per working day, which may increase to € 9.60 if paid through a meal card.
- Other allowances – all other allowances or benefits are typically optional unless determined by a collective labour agreement/convention (e.g., bonuses, health or life insurance, pension funds, travel cards/transport expenses, seniority bonuses, per diem, etc.). Some of these benefits, if regular, may also be limited to a certain amount and the difference will then be subject to social security and personal income tax, exemptions depending on the type of benefit.
For further information or assistance, feel free to reach out to us at geral@sbpslegal.com.