New minimum salary will cost companies €866 per year for each employee

Company bosses will have to fork out an extra €866 per annum for each employee because the minimum wage has gone up from €870 to €920 per month starting from January 1.

The wage increase adds an additional €50 per month (€700 per year) to wage packets but goes up to €866 for each worker because of social security contributions from the company’s side.

In October, 2024, the government signed a social pact with four Portuguese business associations/confederations and the UGT union which progressively raises Portugal’s national minimum wage to 2028.

To meet this accord, last week the Luís Montenegro government published a government order which establishes that in 2026 the minimum guaranteed monthly salary will be €920 gross, corresponding to an increase of 5.7% on the amount in force in 2025 (€870 gross).

Taking into consideration salary costs alone, companies will have to spend an extra €50 per month per employee on the minimum wage. At the end of the year this amounts to €700 per employee at this salary level taking into account 14 statutory months of salary.

And add to this the amount employers have to pay monthly in terms of social security (Sole Social Tax) which is 23.75% of the salary.

If in 2025 the monthly social security payment on the minimal wage that bosses have to pay was €206.6, then in 2026 that amount rises to €218.50 or €11.90 more.

At the end of one year (14 months), in 2026 the cost to companies on social security contributions rises to €166.24 per annum on 2025.