Payroll and Benefits Guide Azores

Termination Process

Termination in the Azores is strictly regulated under the Portuguese Labour Code, which sets out detailed procedures depending on the type of contract and grounds for dismissal. Contracts may end through resignation by the employee, dismissal for just cause (such as serious misconduct, repeated disobedience, or unjustified absences), redundancy based on economic, structural, or technological grounds, unsuitability where an employee demonstrably cannot fulfill their role even after training or redeployment, mutual agreement, or natural expiry of a fixed-term or temporary contract. Dismissals must always be communicated in writing, with employers required to provide clear justification and evidence supporting the decision. In cases of disciplinary dismissal, employers must follow a formal process including prior notification, opportunity for the employee to respond, and documentation of findings. For redundancies, employers are obliged to consult with employee representatives, notify labor authorities, and, in collective redundancy cases, explore redeployment options or mitigation measures. Any failure to comply with procedural requirements can render the dismissal unlawful, potentially leading to court-ordered reinstatement of the employee or significant compensation awards based on length of service and damages incurred.

Notice Period

In the Azores, notice periods are defined by the Portuguese Labour Code and depend on the employee’s length of service rather than role. For contracts of less than one year, the minimum notice is 15 days. Employees with one to five years of service are entitled to at least 30 days’ notice, those with five to ten years receive 60 days, and those with more than ten years must be given 75 days’ notice. These periods apply to employer-initiated terminations not based on misconduct. In cases of disciplinary dismissal for just cause, no notice is required. Employers may also choose to provide pay in lieu of notice if they do not require the employee to work through the notice period.

Severance Pay

Employees dismissed for economic redundancy or unsuitability are entitled to severance compensation under Portuguese law. For open-ended contracts, the statutory compensation is generally 12 days of base salary and seniority allowances per year of service, subject to maximum caps, though transitional rules for older contracts may still apply. For fixed-term contracts, employees are entitled to 18 to 24 days of base salary per year of service, depending on whether the contract is definite or indefinite in duration. Severance does not apply in cases of dismissal for just cause or resignation. Collective agreements may improve upon these statutory amounts, and unlawful dismissals can result in reinstatement or court-awarded damages in addition to or instead of severance.

Probation Period

Probationary periods in the Azores follow the Portuguese Labour Code and vary by contract type and position. For indefinite contracts, the standard probation period is 90 days for most employees, 180 days for positions involving greater technical complexity, trust, or responsibility, and up to 240 days for senior management or executive roles. For fixed-term contracts, the probationary period is 15 days if the contract is shorter than six months, and 30 days if it is six months or longer. Probation allows either party to terminate the employment with minimal notice and without severance obligations.