Holiday Allowance: When and How Companies Must Pay
What is the holiday allowance?
The holiday allowance (subsídio de férias) is a mandatory payment under the Portuguese Labour Code (Article 264) that supplements employees' base salary during their holiday period. It applies to all employees, regardless of contract type - permanent, fixed-term, or uncertain-term.
Its purpose is to ensure workers enjoy their holidays without financial penalty, maintaining equivalent pay to what they would earn if working.
When must it be paid?
The law requires the holiday allowance to be paid before the start of holidays. In practice, companies typically choose one of two approaches:
Paid in full before the employee's holiday period, usually in June or July.
Spread monthly throughout the year, dividing the total by 12 instalments.
How to calculate the amount?
The holiday allowance generally equals the employee's monthly base salary, and may include other regular periodic payments (such as seniority bonuses or meal allowances paid in cash).
Allowance = Base salary × (holiday days / 30)
An employee entitled to 22 working days of holiday (the legal maximum) will generally receive an amount equivalent to one month's base salary. Employees who have not yet completed one year of service are entitled to a proportional allowance.
Special cases companies should know
The employee is entitled to 2 working days of holiday per full month worked. The allowance is calculated proportionally, and leave may be taken after 6 months of contract.
Upon termination, the company must pay the proportional holiday allowance for time served that year, even if holidays were not taken.
The allowance is calculated based on proportional pay according to working hours, using the same criteria as full-time workers.
The right to holidays and the corresponding allowance is maintained during periods of temporary incapacity, provided the contract is not suspended beyond the normal holiday period.
Employer costs
The holiday allowance directly impacts company costs. Beyond the amount paid to the employee, the employer bears:
Social security (employer)
Social security (employee)
Withholding tax per tables
Best practices for efficient management
Rigorous management of holiday allowances prevents processing errors, labour disputes and fines from the Working Conditions Authority (ACT). We recommend:
Discover our Payroll & HR service and simplify your company's payroll management. You can also use our Net Salary Simulator to estimate costs.
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