How to dismiss an employee in Portugal: 6 legal routes

In Portugal you cannot dismiss someone just because you want to: the Constitution forbids dismissal without just cause (Art. 53 CRP). What the law gives employers is 6 legal routes to end a contract (Art. 340 of the Labour Code), each with its own grounds, procedure and price tag.

This guide is written for you, the employer. It shows which route to choose, what each one costs, and the mistakes that turn any exit into a lost court case.

The 2 questions that pick the right route

The route is chosen by the real reason, not by preference. Using the wrong route, for example inventing a "redundancy" to remove someone you dislike, is the most common way to lose in court.

Run the two-question test:

1. Is the employee at fault? Culpable, serious behaviour (unjustified absences, illegitimate disobedience, violence, serious damage to company interests) means just cause, always through a full disciplinary procedure.
2. No fault, but the position no longer makes sense? Count the positions you will cut within 3 months: from 2 upwards (micro and small companies) or 5 upwards (medium and large) it is collective redundancy; below that it is individual redundancy. If the position still exists but the employee has not kept up with changes, it is unsuitability.

Outside dismissal there are three exits without litigation: agreement (always available), expiry of a fixed-term contract (simply do not renew) and termination during the probation period (while it lasts).

Table: the 6 routes side by side

The 14 days per year apply to service from 01/05/2023; time between October 2013 and April 2023 counts at 12 days (Art. 366 and transitional rules). The 15/30/60/75 day notice depends on seniority: under 1 year, 1 to 5 years, 5 to 10 years, and 10 years or more.

Route 1. Termination by agreement: the fastest (Art. 349)

Most negotiated exits close here. Employer and employee sign a written agreement, in 2 copies, stating the signing date, the date the contract ends and the legal cooling-off period (Art. 349). There is no notice period and no procedure: the end date is whatever the parties write down.

Three precautions that prevent surprises:

• The employee can back out until the 7th day after signing, returning everything received (Art. 350). Exception: if the signatures are certified in person by a notary, there is no cooling-off right (Art. 350(4)). In high-value agreements, notarial certification closes that risk.
• Itemise the compensation. If you only write a "global compensation", the law presumes it includes all accrued credits: holidays, allowances, proportionals (Art. 349(5)). Spell out what is severance and what is credits, line by line.
• Unemployment benefit is not automatic. An agreement only gives the employee access to unemployment benefit if it is based on market, structural or technological grounds in form Mod. RP-5044, and within yearly quotas: in companies with up to 250 employees, up to 25% of the workforce per year through this route (Art. 10 of DL 220/2006). Outside that, the employee leaves with no benefit, and an informed employee will not sign. See the mutual agreement guide.

Route 2. Expiry of a fixed-term contract (Art. 344 and 345)

If the contract has a fixed end date, simply do not renew it: give written notice of your intention to end the contract 15 days before the term expires (Art. 344(1)). Severance is 24 days of base pay and seniority payments per year of service, higher per day of service than dismissal severance (Art. 344(2), as amended by Law 13/2023). Not paying it is a serious administrative offence.

The trap is the calendar. If you let the 15-day deadline pass without giving notice, the contract renews, and after the possible renewals run out it converts into a permanent contract. Diarise the notice date on the day you sign the contract, not the week before it ends.

For unspecified-term contracts (project, temporary replacement), notice is 7, 30 or 60 days, depending on whether the contract lasted up to 6 months, between 6 months and 2 years, or longer (Art. 345). Severance is the same: 24 days per year. Details in the non-renewal guide.

Route 3. Just cause: only with a procedure (Art. 351 to 357)

Just cause covers culpable behaviour so serious that the employment relationship becomes impossible (Art. 351): unjustified absences (5 in a row or 10 spread over the year), illegitimate disobedience, violence, serious damage to company assets.

What it never allows is firing on the spot. The mandatory path is the disciplinary procedure: a written accusation (nota de culpa) with detailed facts, 10 working days for the employee to respond, an evidence phase, and a written decision within 30 days (Art. 353 to 357). You can suspend the employee preventively, with pay, if their presence is a problem (Art. 354).

Deadlines kill cases: you have 60 days to open the procedure from the moment management learned of the offence, and the offence itself expires 1 year after it was committed (Art. 329). If the facts are still unclear, a prior inquiry (Art. 352) protects the deadline.

Done well, just cause pays no severance and no notice. Done badly, it is the route employers lose most often in court: any error of form or deadline makes the dismissal unlawful (Art. 382). The full walkthrough is in the disciplinary procedure guide.

Routes 4 and 5. Collective or individual redundancy: the number decides (Art. 359 and 367)

Both routes rest on the same grounds: market reasons (drop in activity), structural reasons (reorganisation, closing a department) or technological reasons (automation). The difference is how many positions you cut within 3 months:

• 2 or more in a micro or small company, 5 or more in a medium or large one: collective redundancy, with communications to worker representatives, an information and negotiation phase and the involvement of the labour authorities (Art. 360 to 362).
• Below that: individual redundancy, with 4 cumulative requirements (Art. 368): real grounds, the legal selection order for the position (appraisal, qualifications, cost, experience, seniority), the practical impossibility of moving the employee to another compatible position, and no fixed-term contracts covering the same tasks.

In both: 15 to 75 days of notice depending on seniority, severance of 14 days per year, and, watch this, severance and credits paid by the end of the notice period. Paying one day late makes the dismissal unlawful (Art. 383 to 385).

Route 6. Unsuitability: the rarest, with a trap of its own (Art. 373 to 380)

Unsuitability covers the employee who, without fault, can no longer keep up with the job: continued drop in productivity or quality, repeated equipment failures, safety risks (Art. 374). For technically complex or management roles, missing objectives agreed in writing also counts (Art. 374(2)).

Observing the problem is not enough. Where the job changed (new technology, new processes), the company must prove that, in the previous 6 months, it provided certified professional training and an adaptation period of at least 30 days, and that no other compatible position exists (Art. 375(1)). Where the job did not change, the path is narrower: inform the employee in writing, give at least 5 working days to respond, and issue concrete instructions to correct performance before moving forward (Art. 375(2)).

The procedure has written communications, 10 days for consultation and a decision within 30 days, with 15 to 75 days of notice also sent to ACT, the labour inspectorate (Art. 376 to 378). Severance matches the other objective routes: 14 days per year (Art. 379).

The trap: unlike redundancy, here the position keeps existing. The law therefore requires the company to maintain its employment level for 90 days, hiring or transferring someone into the role (Art. 380). If your plan was to shrink headcount, the right route was a different one.

What about the probation period? The simple exit, while it lasts (Art. 114)

During the probation period, 90 days as the general rule, 180 for positions of technical trust or first jobs, 240 for management (Art. 112), either party can terminate the contract without giving a reason and without severance (Art. 114(1)).

Two limits: notice (7 days once the employee has 60 days of service; 30 days once they have 120, Art. 114(2) and (3)) and the ban on discriminatory reasons: terminating because of pregnancy, illness or union activity is unlawful even during probation. For first-job employees, the termination must also be reported to ACT within 15 days (Art. 114(6)). Full rules in the probation period guide.

The 6 mistakes that turn any route into unlawful dismissal

1. Dismissing verbally. "Do not come back tomorrow" is not a legal route, it is an instant unlawful dismissal (Art. 381) with no defence available to the company.
2. Faking job abandonment. Logging absences for someone you sent home, to invoke Art. 403, ignores what the law actually requires: 10 working days of absence and a registered letter with proof of receipt. Wrongly invoked abandonment counts as unlawful dismissal.
3. Hiring or outsourcing right after. After a redundancy, outsourcing the same duties is forbidden for 12 months (Art. 338-A). [Common interpretation:] recruiting someone for the same duties immediately afterwards is the classic proof that the position never ended. See the outsourcing guide.
4. Ignoring special protections. Pregnant workers, recent mothers, breastfeeding workers and parents on parental leave require a prior opinion from CITE (Art. 63); if it is unfavourable, only a court decision allows the dismissal. Employee on sick leave: the illness can never be the reason.
5. Paying late. On the objective routes, severance and credits must be available to the employee by the end of the notice period. A delay makes the dismissal unlawful (Art. 383 to 385).
6. Missing disciplinary deadlines. 60 days to open, 1 year before the offence expires, 30 days to decide. The calendar loses more cases than the lack of evidence does.

The cost of getting it wrong: the employee challenges the dismissal within 60 days (Art. 387; 6 months for collective redundancy, Art. 388). If the company loses, it pays back pay from the dismissal until the final decision (Art. 390) and the employee chooses: reinstatement or compensation of 15 to 45 days per year of service, with a 3-month minimum (Art. 391). Micro companies and management roles may oppose reinstatement, but compensation then rises to 30 to 60 days per year (Art. 392). On a 10-year contract with a 1,500€ salary, the mistake can pass 20,000€ before legal costs.

After the exit: 3 obligations that remain

• Documents (Art. 341): hand over the work certificate (start and end dates plus duties) and the documents for official purposes, in practice form Mod. RP-5044 for unemployment benefit. Refusing is an administrative offence and, in the case of RP-5044, leaves the employee without benefit.
• Social Security: report the contract termination by the 10th of the following month, through Segurança Social Direta.
• Work tools (Art. 342): collect equipment, vehicle and access credentials on the last day. After the exit, recovery gets much harder.

Are you the employee receiving one of these?

This guide is written for the decision-maker on the company side. If you are on the other side, start here: fired in Portugal, what to do in the first 48 hours and can my employer fire me like this?.

This guide explains the general Labour Code rules for employer-initiated termination in Portugal. Collective agreements and specific cases can change deadlines and amounts. For high-value exits or cases involving special protections, consider legal advice before moving forward.