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Portugal PEO: Benefits & Best Services in 2024

VERDICT: The best Portugal PEO in 2024 is Horizons. Horizons is a top Portgual PEO through the strength of its SaaS platform and in-depth knowledge of Portugal labor law. 

Key Takeaways

  • A Portugal PEO, or Portugal Professional Employer Organization, is a valuable solution for businesses looking to expand or establish a presence in Portugal.
  • This article explores the concept of Portugal PEOs, their functioning, benefits, and drawbacks.
  • We present the top five leading Portugal PEOs, including Horizons, Deel, Papaya Global, Atlas HXM, and Velocity Global, highlighting their strengths as PEO providers.

What is a Portugal PEO?

A Portugal PEO is your local Portgual co-employer. As the administrative co-employer relationship, the PEO takes on the responsibilities of payroll management, tax compliance, human resources administration, and other employment-related tasks.

As the operational employer, the client company retains control over the day-to-day operations and management of its employees while leveraging the PEO’s expertise in navigating local regulations.

A Portugal PEO solution means an international company can hire and pay employees in Portugal without the need to set up a local entity or subsidiary. 

A PEO solution is similar to a Portugal Employer of Record (EOR) solution, where the HR company becomes the legal employer of your Portugal workforce. Often providers in Portugal use the terms PEO and EOR interchangeably. 

Top 5 Leading Portugal PEOs

  1. Horizons: Horizons offers comprehensive PEO solutions tailored to the Portuguese market. With staff on the ground to support your Portugal expansion, and the ability to support companies and remote workers through the Portugal tech visa process, Horizons is our pick for No. 1 Portugal PEO. 
  2. Deel: Deel is known for its user-friendly HR platform, simplifying global workforce management. They offer streamlined onboarding processes, automated payroll, and multiple app integrations, making them an attractive choice for businesses entering Portugal.
  3. Papaya Global: Papaya Global provides a unified platform for global workforce management. With advanced technology, they streamline payroll, benefits, and HR processes, ensuring compliance and efficiency in the Portuguese market.
  4. Atlas: Atlas combines human capital management and PEO services, offering a holistic approach to workforce management. Their expertise in HR strategy, payroll, and compliance makes them a strong choice for companies expanding in Portugal.
  5. Velocity Global: Velocity Global specializes in simplifying global expansion, including PEO services in Portugal. Their comprehensive suite of solutions covers HR, payroll, and compliance, helping companies establish a compliant presence swiftly.

How does a Portugal PEO work?

When a company engages a Portugal PEO, it enters into a co-employment agreement. The PEO becomes the employer of record for administrative purposes, while the client company remains the worksite employer. The PEO handles:

  • Payroll processing. They ensure that all employees are paid on time, and without errors. 
  • Benefits administration. The PEO makes sure that employees receive the benefits as mandated by labor law and their contract, including any social security deductions.
  • Tax compliance. This includes employee income tax withholding and ensuring that essential payroll taxes are paid to the Portuguese Government. 
  • Employee onboarding, and HR support.
  • Compliance. This means ensuring that employment adheres to Portuguese employment law and regulations. 

Employment Tax Compliance in Portugal

How a Portugal PEO Helps with the Employment Contract

A Portugal PEO ensures employees in Portugal have compliant employment contracts. The employees must be provided with a written contract that will state:

  • The type of contract: They can be fixed term contracts or of unspecified duration. Usually, Portuguese labor contracts also include probationary periods. 
  • That the worker is an employee. This is important to help avoid a charge of independent contractor misclassification. 
  • The legal responsibilities of the employer, and the legal duties of the employee. 
  • Employee working hours, including any special overtime pay. 
  • The notice period if either the employer or the employee decide to end the relationship.
  • The gross salary of the employee, as well as any deductions.  A Portugal PEO will be able to advise on the average salary for positions in particular industries and at particular levels. 

How a PEO Ensures Compliance with Local Labor LAws

Perhaps the most important role of a Portugal PEO is to ensure that employment is in complete compliance with Portugal labor laws. This includes: 

  • Making social insurance contributions. This covers healthcare, labour accident insurance, disability benefits and unemployment insurance.  Employers pay 23.75 percent of gross pay, while employees pay 11 percent. 
  • Paid leave, including paid sick leave, maternity leave, paternity leave, public holidays and annual leave.
  • Minimum wage laws. As of 2023 the minimum wage in Portugal was €760.00 per month. It is the responsibility of employers to ensure salaries and wages comply with Portuguese minimum wage laws. 

What are the benefits of a Portugal PEO?

  1. Compliance and Risk Management: Portugal PEOs possess in-depth knowledge of local labor laws and regulations, minimizing compliance risks for client companies. They ensure adherence to employment legislation, employee benefits, tax obligations, and statutory requirements, reducing the burden on businesses.
  2. Efficient HR Administration: PEOs handle time-consuming administrative tasks such as payroll processing, benefits administration, and employee record management, allowing companies to focus on strategic business initiatives.
  3. Access to Local Expertise: Portugal PEOs possess local market knowledge, enabling them to navigate cultural nuances, labor market trends, and legal requirements efficiently. They provide valuable insights and support for companies entering the Portuguese market.
  4. Cost Savings: Partnering with a Portugal PEO eliminates the need for establishing a legal entity, reducing employment costs significantly. This includes saving money on incorporation, infrastructure, and administrative personnel.  Overall, it is estimated that a PEO solution will save companies around 85 percent of the cost of expanding into Portugal. 

What are the disadvantages of a Portugal PEO?

  1. Reduced Control: As the PEO becomes the employer for administrative purposes, the client company relinquishes a degree of control over certain HR functions. This shared responsibility may not align with the preferences of every company.
  2. Dependency on a Third Party: Companies must rely on the PEO’s efficiency and expertise to ensure compliance and smooth operations. Choosing a reputable and reliable PEO provider is crucial to mitigate this risk.

Engaging a PEO in Portugal

Professional Employer Organizations in Portugal play a vital role in supporting businesses as they expand into the Portuguese market.

By leveraging the expertise of a Portugal PEO, companies can navigate complex employment regulations, ensure compliance, and streamline HR administration. While there are disadvantages to consider, the benefits of partnering with a reputable Portugal PEO far outweigh the potential drawbacks. 

Based on our assessment, the best Portugal PEOs for your business in 2024 are Horizons, Deel, Papaya Global, Atlas and Velocity Global.

Portugal Business Guides

FAQs

A Portugal PEO can benefit a wide range of companies, including startups, small and medium-sized enterprises (SMEs), and multinational corporations looking to establish a presence in Portugal without the need for establishing a legal entity.

Yes, one of the key advantages of partnering with a Portugal PEO is the efficient administration of employee benefits. PEOs can handle benefits management, including enrollment, contributions, and compliance with local regulations, ensuring that employees receive the appropriate benefits packages.

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