Mutual agreement in Portugal: 8 things they won't tell you (2026)

Your employer called you into a meeting and put a paper on the table: a mutual agreement to terminate the contract (revogação por mútuo acordo). Sign and you leave today. You get severance. All "amicable".

Stop. Before signing, there are 8 things the employer will not tell you, things that can be worth thousands of euros and months of unemployment benefit you are about to lose.

This guide shows your real rights when an employer offers you mutual agreement, based on Articles 349 and 350 of the Portuguese Labour Code and DL 220/2006 (unemployment benefit).

What is mutual agreement, in plain English

Mutual agreement (technical name: "revogação do contrato por mútuo acordo") is the path set out in Article 349 of the Labour Code to end the contract without a dismissal and without a resignation. You and the employer sign a document and the contract ends on the agreed date.

For the employer, this is the cleanest path: no disciplinary procedure, no court risk, no back pay if something goes wrong. That is why employers usually pay more than the legal minimum, to convince you not to take a different route.

For you, it can be a good deal, as long as the 8 points below are respected.

1. The employer must give you the RP-5044

This is the biggest one. It is not automatic.

Unemployment benefit is granted by IEFP/Social Security only if the termination reason matches one of the points in Art. 10 of DL 220/2006: workforce reduction for market, structural or technological reasons. If the employer fills in the RP-5044 simply as "mutual agreement" without that justification, IEFP can refuse the benefit.

What you must demand:

1. The reason on the RP-5044 must be clear: "job extinction for market, structural or technological reasons".
2. The RP-5044 must be handed to you in person at the same time you sign the agreement. Do not accept "we will send it later".
3. A clause in the agreement requiring the employer to cooperate with any IEFP request or appeal.

If the employer refuses? Do not sign. Without a properly completed RP-5044, you lose months of benefit (up to 1,260 euros/month for up to 18 months depending on age, see Art. 37 of DL 220/2006).

2. You have 7 days to change your mind

Set out in Art. 350 n.º 1: after signing the mutual agreement, you have 7 calendar days to back out, with no need to justify. You send a registered letter with acknowledgement of receipt and the agreement is cancelled.

Important exception (Art. 350 n.º 4): if the agreement was signed in person before a notary, with notarised signatures, this revocation right disappears. That is why many employers ask you to go to the notary or a lawyer's office. It is not for legal certainty, it is to close the revocation door.

If you are still considering, do not go to the notary. Sign at the company office or at home. Notarisation is not legally required (Art. 349 n.º 4 only requires a written document in duplicate).

3. The amount is negotiable (and there is a benchmark)

The law sets no legal minimum for mutual agreement. But there is a benchmark everyone uses: the severance for collective dismissal, regulated by Art. 366 CT.

Benchmark calculation (post Law 13/2023 regime):

14 days of base salary plus seniority allowances × full years of service

For a worker with 6 years of service and base salary 1,800 euros: 14 × 6 × (1,800 / 30) = 5,040 euros minimum benchmark.

Companies that fear court typically pay 1 to 2 months per year of service, so for the Sara example above, that would be 10,800 to 21,600 euros.

Your bargaining power depends on:

• High seniority. The longer you have been there, the more back pay the employer risks in court.
• No real just cause. If they know there is no real reason to dismiss, they will pay more.
• Reputation risk. Larger companies do not want public complaints.
• Company timeline. If they are closing or downsizing, they want a fast deal.

4. Pro-rata entitlements are always separate

Regardless of the severance amount, you are entitled to receive separately:

• Pro-rata holiday pay and holiday bonus for the year of termination (Art. 263 CT).
• Pro-rata Christmas bonus (Art. 264 CT).
• Untaken holidays from the previous year, double if it is a termination case (Art. 245).
• Unpaid salary, if any.
• Unpaid overtime.

This cannot be lumped into the severance. If the employer offers a "single lump sum", demand a breakdown:

Severance: X euros Pro-rata 2026 holidays: Y euros Pro-rata 2026 Christmas bonus: Z euros Untaken holidays: W euros Total: X + Y + Z + W

If you accept a lump sum, the tax authority will tax the whole amount and you will lose the partial IRS exemption on the severance (see point 7).

5. Do not sign on the same day

The "today or never" pressure is a negotiation tactic. There is no legal urgency. The employer wants you to decide before you have time to think.

What to do:

1. Ask for the offer in writing (paper or email).
2. Say: "I will review at home and respond tomorrow."
3. Calculate what you are really entitled to (this guide and the calculators).
4. Reply with a written counterproposal of values and conditions.
5. Only sign once you have the RP-5044 in your hand with the correct reason.

If the employer refuses to give you time, that is a red flag. As a rule, it means the initial proposal is well below what they are willing to pay.

6. The just cause threat is almost always a bluff

Classic line: "If you do not sign today, we will fire you for just cause."

For just cause dismissal under Art. 351 CT, the employer must:

1. Prove a serious breach (failure of duty, harm to the company, with intent or negligence).
2. Run a formal disciplinary procedure: disciplinary notice, 10 working days for reply, evidence gathering, final report, decision (Arts. 353 to 357).
3. All within a short time window (60 days from the day they decide to act).

If you have not committed any concrete serious breach, there is no possible just cause. The threat is empty.

What to ask:

"What is the specific breach that would justify just cause? Please issue a formal disciplinary notice in writing."

In 9 out of 10 cases, the employer backs off. If a real disciplinary notice is issued, the game changes. You have 10 working days to reply, and there are other options.

7. There is a partial IRS exemption on severance

Good news: the portion of severance equal to 1× average annual salary × years of service is exempt from IRS (Art. 2 n.º 4 b of the IRS Code).

Example:

• Average monthly salary: 1,800 euros
• Average annual salary: 1,800 × 14 = 25,200 euros / 12 = 2,100 euros equivalent monthly
• Years of service: 5
• Exemption cap: 2,100 × 5 = 10,500 euros

Anything below this cap is tax-free. Anything above is added to your annual income.

Important: this exemption only applies if the severance is itemised in the agreement as such. If it is bundled into a single lump sum, the tax authority can tax everything. So always demand itemisation as in point 4.

On Social Security: severance does not pay Social Security contributions (Art. 46 of the Contributory Code). It comes net.

8. Mandatory form: written, in duplicate

Art. 349 n.º 4 is clear: the termination agreement must be in writing, in duplicate, signed by both parties. Verbal does not count.

Each side gets one signed original. If the employer wants to keep both copies "to make a copy for you", refuse. Walk out with your original.

The agreement must contain (minimum):

1. Full identification of both parties.
2. Termination date.
3. Severance amount and breakdown of all other credits.
4. Form and date of payment.
5. Employer commitment to deliver certificate of employment + RP-5044 + Social Security declaration.
6. Discharge clause only for the itemised amounts (not general).

Beware of the "general discharge clause". This is a phrase like "the worker declares to have nothing else to claim regarding the termination of the contract or any other period of employment". If you sign that, you lose the right to claim old unpaid overtime, salary arrears from previous years or wrongly paid holidays. Limit the discharge only to the itemised amounts.

Practical path: what to do when you receive the offer

Day 1, you receive the offer

• Listen. Do not sign. Do not say yes or no.
• Ask for the proposal in writing.
• Take it home.

Day 1 evening, you analyse

• Calculate the legal minimum severance (severance calculator).
• Calculate unemployment benefit (unemployment calculator).
• Check what you have in pro-rata entitlements (holidays + Christmas bonus calculators).
• Compare with the company offer.

Day 2, written counterproposal

• Severance: at least 14 days × year of service (benchmark minimum).
• Mandatory itemisation of all credits.
• RP-5044 with market/structural reason.
• Certificate of employment + Social Security declaration.
• Discharge clause only on itemised amounts.
• Send by email with read receipt request.

Days 3 to 7, negotiate

• The employer counters. Back and forth. Stay calm.
• Do not go to the notary.

When you sign:

• In duplicate, with one original for you.
• Receive the RP-5044 in hand the same day.
• Receive the certificate of employment (Art. 341).
• Payment on the agreed date, ask for a payment receipt.

After signing, you have 7 days if you want to revoke.

Most common mistakes

1. Signing on the same day. Never. The pressure is a trick.

2. Accepting a single lump sum. Always itemise by category.

3. Not demanding the RP-5044 before signing. Without it, you lose the benefit.

4. Going to the notary. You lose the 7 day revocation window.

5. Accepting a "general discharge clause". Limit to itemised amounts.

6. Believing the just cause threat. Ask for the disciplinary notice in writing.

7. Negotiating without numbers. Calculate first using the calculators.

8. Leaving without the certificate of employment. It is your right (Art. 341) and you need it for IEFP.

What if the employer refuses to negotiate?

If the employer holds firm on minimum values, your real alternatives are:

• Keep working normally. The ball is in their court. If they really want to dismiss, they have to run a disciplinary procedure (with risk) or a collective dismissal (with strict rules).
• Resign with normal notice (Art. 400). But you lose unemployment benefit.
• Wait for a formal collective dismissal if the company is genuinely downsizing. They will pay the same as a mutual agreement and the unemployment benefit is guaranteed.
• Just cause termination by the worker but only if there are unpaid salaries, harassment or unfair changes (Art. 394).

Disclaimer

This guide explains the general regime of mutual agreement under the Portuguese Labour Code and its impact on unemployment benefit. Each case has its own specifics: seniority, sector, collective bargaining agreement, the company's actual situation. If the amounts are large or the situation is complex, consider taking legal advice before signing.