Spotlight on Portugal – A guide to implementing employee benefits technology

Portugal’s strategic location, skilled workforce, and economic growth make it an attractive destination for businesses expanding into Southern Europe. To attract and retain top talent, Portuguese employers are focusing on enhancing employee benefits that promote financial security, health, and career development.

In a competitive labour market, comprehensive and flexible employee benefits packages that address wellbeing, family support, and professional growth are crucial for talent acquisition and retention.

Although the Portuguese benefits market hasn’t typically enabled a great deal of flexibility and choice for employees, this is starting to change with employers offering more flex or voluntary benefits. And we expect this to continue in the next few years as organisations look to meet employees’ growing expectations.

An overview of the employee benefits landscape in Portugal

Mandatory benefits

Portugal has a social security system that ensures comprehensive protection for employees through mandatory contributions:

• Social Security Pension Scheme: Employers contribute 23.75% of an employee’s gross salary to social security, while employees contribute 11%. This system funds pensions, unemployment, maternity/paternity leave, and sickness benefits.

• Health insurance is provided through the National Health Service (SNS): While this covers basic healthcare needs, employers often provide supplementary private health insurance to enhance access to services such as dental and vision care.

• Unemployment insurance: this is part of the social security contribution, ensuring income protection in the event of job loss.

Core benefits in Portugal

In addition to mandatory social protections, many Portuguese employers offer supplementary benefits to improve employee satisfaction and engagement.

Health insurance and wellness programmes

Private health insurance is a common benefit, often covering areas not included in public healthcare, such as dental, vision, and mental health services. Around 85% of employers provide supplementary health insurance, and wellness programmes like gym memberships and mental health counselling are increasingly popular.  Employees value these benefits as they can avoid waiting times and access treatment faster.

Although cover can include dependants/family members, this may be at employee’s expense depending on how generous the benefits package is. Increasingly we are seeing employers giving their people an allowance that they can spend on benefits, including adding their family members to their policy.

Life and disability insurance

Life and disability insurance plans, typically covering two to three times an employee’s annual salary, are standard. This ensures financial protection for employees and their families in the event of long-term incapacity or death.

Life insurance usually includes death cover, accident and lump sum disability. We see almost all of our customers offering this benefit in Portugal.

Supplementary retirement plans

Employers may offer supplemental pension plans (usually defined contribution (DC) schemes), to supplement state pensions. Employee contributions typically range from 2% to 5% of gross salary, with the majority of employers matching contributions to 5%.

Most companies in professional services sectors (e.g. tech, finance, legal etc) offer a private pension.

Other popular benefits in Portugal

Benefits to support work-life balance

Portugal mandates a minimum of 22 days of paid annual leave, but many companies increase this to 25 days to make their offering attractive to employees. Additional leave for marriage, bereavement, and family care is also common.

And flexible work hours and remote work policies have grown in popularity, giving people the work-life balance they’re increasingly seeking.

Transport, commuting allowances and WFH allowances

Companies often offer transport subsidies, fuel allowances, or public transport passes. Senior employees may receive company cars or allowances for personal vehicle use.

With the rise of remote and hybrid work, more Portuguese companies are starting to provide home office allowances, IT equipment, and internet subsidies. Mobile phone allowances are also common.

Family and childcare benefits

Parental leave in Portugal is generous, with up to 180 days of shared leave for both parents. Paid leave and childcare vouchers are also usually provided, and some employers offer on-site daycare facilities or partnerships with local childcare providers.

Meal vouchers

The majority of employers offer meal allowances or vouchers to employees where there are no local subsidised facilities or canteens. These are company funded and tax free up to the current limit of €9.60 per day worked.

Wellbeing

Although discounted or subsidised gym membership is often offered by larger employers, we have seen a rise in the use of wellbeing allowances as an alternative. A wellbeing allowance is more prevalent in upper middle quartile and above market offerings.

In the last 12 months, we have organisations increasing support offerings – such as EAP services, financial advice and guidance, as well as support resources.

Bike to Work

The Bike to Work benefit is increasing in popularity thanks to a state subsidy promoting bicycle use in Portugal. Employees can purchase an electric bike with support from the government of 50% of the cost, to a limit of €500.

Charitable giving and volunteering

Portuguese employers are increasingly incorporating corporate social responsibility initiatives into their total reward package. Indeed, this is something that employees themselves are demanding; 78% of global employees say a commitment to diversity and inclusion is important when looking for a new role, and 73% say a commitment to sustainability is important.

Employees are encouraged to volunteer, with paid leave often provided for charitable activities. Companies sometimes also match employee donations to non-profit organisations.

3 key considerations for implementing employee benefits in Portugal

1. Leverage tax-efficient benefits

Portugal offers tax incentives for certain employee benefits, including health insurance and retirement savings plans; structuring benefits to take advantage of these tax breaks enhances value for both employers and employees.

2. Promote flexibility

Flexible benefits plans allow employees to select from a range of options that suit their individual and family needs. This customisation increases employee satisfaction and engagement.

To promote flexibility, we’re seeing some employers introducing a flex fund/allowance that employees can put towards their benefits. Managed through the benefits platform, employees can use this for health insurance, pension contributions etc. and some companies enable employees to spend any remaining allowance on wellbeing or leisure.

3. Put the right benefits tech in place

A benefits platform makes it easier for employees to flex their benefits – taking advantage of tax breaks and ensuring they get the benefits package that suits their needs. It also shows employees the full value of everything their organisation offers.

Benefits tech also reduces the administration usually associated with medical insurance options such as managing dependants; the platform can capture information such as the ‘Fiscal Identification Number’ that health providers require.

Rolling our benefits globally?

Check out our country spotlights area to get key considerations for rolling our benefits across a range of countries, or speak to our global benefits team.