The termination of an employment contract may occur either at the initiative of the employee or the employer.

In either case, Portuguese labour legislation establishes specific procedures and legal requirements that must be followed.

Below, we explain the main rules applicable to each situation.

1 – Termination Iniciated by the Employee

Under Portuguese labour law, an employee may terminate their employment contract at any time, provided they comply with the applicable notice period.

The required notice period depends on both the duration of the employment relationship and the employee’s length of service with the company.

According to the Portuguese Labour Code:

• Employees with less than two years’ service must generally give 30 days’ notice; 
• Employees with more than two years’ service must generally give between 30 and 60 days’ notice, depending on their length of service. 

However, there are situations in which the notice period may be reduced or waived altogether.

These exceptions apply where there is just cause for termination by either party.

Examples include serious breaches of employment rights, workplace harassment, non-payment of wages, and other situations provided for by law. In such circumstances, the employee may terminate the contract immediately without giving prior notice.

In addition, employees should be aware of the following rights and obligations when resigning.

1.1 Right to Salary and Employment Benefits

Employees are entitled to receive all salary owed up to the effective date of termination.

They are also entitled to receive any outstanding employment benefits, including holiday pay and Christmas bonus, where applicable.

1.2 Compensation for Failure to give notice

If the employee fails to comply with the legally required notice period, they may be required to compensate the employer.

The compensation generally corresponds to the remuneration that would have been earned during the notice period that was not observed.

2 – Termination Iniciated the Employer

An employer may also decide to terminate an employment contract.

The employment relationship may end for several legitimate reasons, including:

• Economic reasons; 
• Company restructuring; 
• Unsatisfactory employee performance; 
• Other legally recognised grounds. 

In these situations, employers must comply with several legal obligations, such as:

2.1 Notice Period

The employer must formally notify the employee of its intention to terminate the employment contract.

The required notice period depends on the duration of the employment relationship and the employee’s length of service.

Under the Portuguese Labour Code, this notice period generally ranges from 30 to 60 days, depending on the employee’s seniority.

2.2 Severance Compensation

In certain circumstances, termination initiated by the employer may entitle the employee to statutory severance compensation.

The amount payable depends on factors such as:

• The employee’s length of service; 
• The legal grounds for termination. 

Portuguese labour legislation establishes different methods for calculating compensation depending on the specific circumstances of the dismissal.

2.3 Outstanding Payments

The employer must pay the employee all remuneration due up to the effective date of termination.

This includes:

• Outstanding salary; 
• Holiday pay; 
• Christmas bonus; 
• Any other amounts legally owed. 

Employees may also be entitled to receive additional financial benefits provided by law, such as payment for outstanding overtime or other accrued employment entitlements, where applicable.

2.4 Delivery of Employment Documents and Benefits

The employer must provide the employee with all relevant employment documentation, including:

• Employment certificates; 
• Payslips; 
• Any other documents required to prove the employee’s professional experience or employment history. 

In addition, any employment-related benefits or entitlements accrued during the employment relationship must be settled and provided to the employee.

Conclusions

Employment contract termination is a complex area of Portuguese labour law, with different rules depending on the circumstances of each case.

For this reason, it is advisable to seek professional guidance to ensure that the termination process is carried out correctly and in full compliance with the applicable legal requirements.