The rules on severance pay in detail

Statutory termination pay in Portugal applies in cases of termination at the initiative of the employer.

For employees hired after 1 November 2011, the severance amount corresponds to (i) 18 days’ base salary (plus length of service allowances, if applicable) for each year of service for fixed-term employment contracts, and (ii) 12 days’ base salary (plus any length of service allowances) for each year of service for indefinite-term employment contracts. There is a cap at 12 months’ pay or EUR 144,000.

For employment contracts entered into before 1 November 2011, the rate is 30 days’ base salary (plus any seniority allowances) per year of service accrued until 31 October 2012.

Year fractions are prorated.

Higher compensation may be negotiated between the employer and employee. This sometimes occurs, for example, in relation to redundancy.

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Author: pbbr

Date: December 2019