Portuguese severance splits into a handful of distinct categories, each with its own formula, or no formula at all. Despedimento coletivo, extinção do posto de trabalho, and despedimento por inadaptação, the “authorized cause” objective dismissals, are paid under Article 366 of the Código do Trabalho, period by period: 14 days of base salary per year for service since 1 May 2023, 12 days for October 2013 to April 2023, and more for older contracts (20 days to September 2013, one month a year to October 2012 for contracts from before November 2011). The 2023 increase does not reach back. Caducidade de contrato a termo, when an employer simply doesn't renew a fixed- or uncertain-term contract, pays more: 24 days per year since May 2023 and 18 days before.
Despedimento por justa causa and an ordinary resignation carry no statutory compensation at all. Despedimento ilícito, an unlawful dismissal where the employee opts for compensation instead of reinstatement, is different again: there's no fixed formula, a court sets the figure between 15 and 45 days per year of service, with a 3-month minimum. This calculator lets you slide across that range to see how different court outcomes would play out, rather than pretending a single number is guaranteed.
The tax mechanic surprises a lot of people. Portugal doesn't cap the IRS exemption at a fixed euro amount, it caps it structurally: exempt up to one month's average regular pay per year of service. Since 14 days and 24 days per year are both under that 30-day/year threshold, the two statutory formulas are typically fully exempt in the ordinary case. Only when a court sets an unlawful-dismissal award above 30 days per year does a taxable excess appear, and Social Security doesn't apply to any of these compensation categories regardless.
