What Is the Holiday Allowance?
The holiday allowance (subsídio de férias) is a mandatory payment made by employers to all employees under employment contracts. It is provided for in the Portuguese Labour Code (Article 264) and aims to compensate for the increased expenses workers have during holiday periods.
📌 The holiday allowance is mandatory by law. Failure to pay or paying less than required constitutes a serious offence.
When Is the Holiday Allowance Paid?
According to the Labour Code, the holiday allowance must be paid before the start of the worker's holiday period. In practice, most companies pay it in June, before the summer holidays.
General rule: payment must occur before the worker takes their holidays, even if holidays are staggered.
Who Is Entitled to the Holiday Allowance?
All workers with an employment contract - fixed-term, open-ended or indefinite - are entitled to the holiday allowance. This includes:
Self-employed workers (recibos verdes) are not entitled to the holiday allowance as they are not covered by the Labour Code.
How Much Is the Holiday Allowance Worth in 2026?
The holiday allowance corresponds, at minimum, to the worker's base salary plus seniority bonuses (diuturnidades), if applicable. The amount cannot be less than the monthly salary the worker would receive during the holiday period.
✅ Holiday Allowance = Base Salary + Seniority Bonuses (at minimum)
Practical Example with 2026 Values
| Situation | Base Salary | Holiday Allowance |
|---|---|---|
| Minimum wage worker (2026) | €920 | €920 |
| Worker with €1,200 salary | €1,200 | €1,200 |
| Worker with salary + seniority bonus (€50) | €1,200 + €50 | €1,250 |
First Year of Employment
In the first year of work, the worker acquires the right to 2 working days of holiday for each complete month of work, up to a maximum of 20 working days. The holiday allowance is calculated proportionally to those days.
Does the Holiday Allowance Pay IRS and Social Security?
Yes. The holiday allowance is subject to IRS withholding tax (like normal salary) and also to Social Security contributions, both from the worker (11%) and the employer (23.75%).
Frequently Asked Questions
Is the holiday allowance the same as holiday pay?
No. Holiday pay is the normal salary the worker receives during the month they take holidays. The holiday allowance is an additional amount, paid separately, to compensate for holiday costs.
Can the company split the holiday allowance payment?
Yes, provided there is an agreement between the parties or provision in a collective agreement.
What happens if the company doesn't pay the holiday allowance?
The worker can file a complaint with ACT (Authority for Working Conditions) or resort to the labour courts.
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