Portuguese severance depends on which route ended the contract and on when you started. A permanent employee made redundant receives 14 days of pay per year for service since May 2023, but only 12 days for 2013 to 2023 and more for older contracts. A fixed-term employee whose contract simply expires receives 24 days per year for recent service.
On a €2,500 salary, a redundancy after ten years pays about €10,593, and after twenty years the 12-month ceiling of €30,000. A two-year fixed-term contract that is not renewed pays about €4,005. Resignation and dismissal for just cause pay nothing at all. Our Portuguese simulator works it out from your exact dates.
What each route pays
| How the contract ends | Rate | 3 years | 10 years |
|---|---|---|---|
| Collective redundancy or extinction of the post | 14 days a year since May 2023, 12 days before | €3,506 | €10,593 |
| Expiry of a fixed-term contract | 24 days a year since May 2023, 18 before | €4,005 (2 years) | Not possible: fixed terms last 2 to 4 years |
| Resignation by the employee | None | €0 | €0 |
| Dismissal for just cause | None | €0 | €0 |
PayMetric Labs' own modelled figures on a €2,500 monthly salary and a contract ending 31 October 2026, each period of service at the rate in force at the time. The total is capped at 12 months' pay.
Calculate your own compensation by route and tenure.
Open the Portugal severance calculatorUnlawful dismissal is a different calculation entirely
If a dismissal is found unlawful, whether because there was no valid ground or because the employer failed the procedure, the court sets compensation between 15 and 45 days of base pay and seniority payments per year of service, with a three-month minimum. Where the employer lands in that range depends on how serious the conduct was.
On top of that, the employee is generally entitled to the pay they would have earned between the dismissal and the decision, and may ask for reinstatement instead of compensation. Portuguese dismissal procedure is formal for exactly this reason: getting the process wrong is often more expensive than the redundancy would have been.
Agreeing to leave can cost you the compensation
Termination by mutual agreement (revogação) is negotiated, not statutory, so whatever you agree is what you get. If the employer is in fact extinguishing your post, the statutory amount (14 days a year for recent service, 12 for 2013 to 2023) is your baseline, and a mutual agreement should not fall below it without a reason you have chosen. Ask which legal ground the employer intends to rely on before signing, and check whether the amount offered clears what the statutory route would have paid.
Check the offer against the statutory figure
Enter your salary, years of service and the termination route, including the days per year a court might apply to an unlawful dismissal, to see where a proposed settlement sits.
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Frequently asked questions
How is Portuguese severance compensation calculated?
Period by period. For a permanent contract ended by collective redundancy or extinction of the post, service since 1 May 2023 earns 14 days of base pay and seniority payments a year, service from October 2013 to April 2023 earns 12 days, and contracts from before November 2011 earn more for their early years. Part years are pro-rated. On a €2,500 salary that is about €3,506 after three years and €10,593 after ten. The total is capped at 12 months' pay, and only contracts from before November 2011 have a three-month floor.
Why does a fixed-term contract pay more per year than a redundancy?
Because it is compensating for something different. When a fixed-term contract simply expires, the employee receives 24 days of pay for each year of service since May 2023, against 14 days for a permanent employee made redundant. It looks counterintuitive until you see it as the price of the flexibility the employer enjoyed during the term. Fixed terms are short by law, so the amounts are too: on €2,500, a two-year contract pays about €4,005.
What if the dismissal was unlawful?
A different and more generous scale applies. Compensation for an unlawful dismissal is set by the court at between 15 and 45 days of base pay and seniority payments per year of service, taking account of how serious the employer's conduct was, with a minimum of three months. The employee may also seek reinstatement, and is generally entitled to pay for the period between the dismissal and the court decision.
Is severance compensation taxed?
There is an exemption calculated from your average pay over the last 12 months multiplied by years of service, with anything above it taxed as employment income. Amounts paid to someone who is subsequently re-engaged by the same employer or a related company within a defined period lose the exemption, which is designed to stop severance being used as disguised pay.
What is the Fundo de Compensação do Trabalho?
A fund into which employers contribute during employment so that part of any future compensation is pre-funded rather than paid entirely from cash flow at termination. From the employee's point of view it does not change the entitlement, but it does mean a portion may be paid from the fund rather than directly by the employer.
How much notice applies?
For a collective redundancy or extinction of the post, notice runs from 15 days for under a year of service up to 75 days for ten years or more. Employers must also follow a formal procedure, including written communication of the grounds and, in a collective redundancy, consultation with employee representatives. Failing the procedure is itself a route to the dismissal being declared unlawful.
Does the three-month floor apply to everyone?
No. Since the 2012 and 2013 reforms, a redundancy pays only what the per-year calculation gives, with no minimum, so two years of service pays about a month's salary. The three-month floor survives only for contracts that started before 1 November 2011, under the transitional rules. Unlawful dismissal is different: a court award has a three-month minimum.
Related reading & tools
General information only, not legal advice. Figures come from PayMetric's Portugal severance engine under the Código do Trabalho. Entitlement depends on the contract type, the ground for termination and any applicable collective agreement. Take professional advice before agreeing a settlement.