Holiday on a Portuguese fixed-term contract: the correct calculation and what you are paid at the end
Posted at 17/08/2026
Summary - Key points
- In the year of hiring you accrue two working days per month of contract duration, up to 20 days. It is not a proportion of 22: six months gives 12 days, not 11.
- On a contract shorter than six months, the holiday is taken immediately before the contract ends, unless the parties agree otherwise. That is not the employer's choice to make.
- On termination, the worker is paid for accrued untaken holiday plus the pro rata days for the year of termination, with the corresponding allowances. This applies however the contract ends.
The formula circulating online is wrong
This is the most repeated error on the subject and it costs holiday days to anyone who follows it. Several guides present the calculation as a rule of three: months worked divided by twelve, times 22 days. That is not what the law says.
Article 239(1) of the Portuguese Labour Code provides that, in the year of hiring, the worker is entitled to two working days of holiday for each month of contract duration, up to 20 days. The difference between the two methods is not academic.
Contract length | Wrong formula (months ÷ 12 × 22) | The law article 239 | Difference |
3 months | 5.5 days | 6 working days | |
4 months | 7.3 days | 8 working days | +1 day |
6 months | 11 days | 12 working days | +1 day |
9 months | 16.5 days | 18 working days | +2 days |
10 months or more | 18.3 days upwards | 20 working days (cap) | +2 days |
Our position at Fed Finance is blunt: if the final payslip shows a figure that does not match two days per completed month, ask for the calculation in writing before signing anything. The 20-day cap in the year of hiring is also widely overlooked a twelve-month contract starting in January gives 20 days that year, not 22.
Contracts under six months: the rule that changes everything
Here the general first-year regime does not apply; paragraphs 4 and 5 of article 239 do, and the difference is operational.
Where the contract runs for less than six months, the worker is entitled to two working days per completed month of duration, counting all days of work performed, consecutive or not. And that holiday is taken immediately before the contract ends, unless the parties agree otherwise.
That is the opposite of common practice. The usual reflex is to pay the days out rather than grant them, for operational convenience. The law starts from the reverse premise: taking the leave before the end is the rule, payment is the exception that requires agreement. A worker on a four-month contract is entitled, in principle, to take their 8 working days before leaving.
A case seen this year at a services company in Porto: five five-month contracts, all settled in cash on the final payslip, with no written agreement. It drew no complaint, but it was irregular. What must appear on the payslip is set out in our guide to the Portuguese payslip.
What happens when the contract crosses the calendar year
This is the scenario that causes the most confusion, and three different provisions come into play depending on the dates.
Situation | Applicable rule | Practical consequence |
Hired in January, twelve-month contract | Art. 239(1) | 20 days in the year of hiring (cap), 22 days on 1 January following |
Hired in September, calendar year ends before six months of service | Art. 239(2) | The year-of-hiring holiday may be taken up to 30 June of the following year |
Untaken days from the year of hiring plus the new year's 22 | Art. 239(3) | Maximum 30 working days in the same calendar year; the excess carries over |
Contract ends in the year after hiring | Art. 245(3) | Total holiday cannot exceed the amount proportionate to the contract's duration |
Article 245(3) is the provision workers discover too late. A contract starting in October and ending in March of the following year does not give access to the 22 days accruing on 1 January plus the year-of-hiring days: the total is capped at the amount proportionate to the six months actually worked.
Renewal, conversion and length of service
One point where the law is more favourable than people assume. Renewing a fixed-term contract does not open a new year of hiring: for holiday purposes the employment relationship is continuous. Accrued untaken days carry over, and length of service runs from the start of the first contract.
The same applies where the contract converts into a permanent one because the legal rules were not observed maximum duration exceeded, too many renewals, no stated justification, breach of the rules on successive contracts. Conversion does not reset the clock: service counts from day one of the first contract, with direct effect on holiday, allowances and, in the event of dismissal, on compensation. The full rules on the relationship are in our guide to fixed-term employment contracts in Portugal.
On termination: what the final payslip must show
Whatever the form of termination expiry, resignation, dismissal, termination by agreement the entitlement to untaken holiday remains. Article 245 is clear and does not distinguish according to who ended the contract.
Confirm the days of accrued untaken holiday: those that vested on 1 January of the current year and have not been used.
Add the pro rata days for work performed in the year of termination.
Check the holiday allowance corresponding to both: every holiday day paid carries its allowance.
Check the Christmas allowance in twelfths, one twelfth per completed month worked in the calendar year.
If the contract ended in the year following hiring, apply the article 245(3) cap before claiming.
Compare the total with the amount actually paid. If they differ, ask for an itemised breakdown before signing any receipt in full settlement.
One important point: days paid as untaken holiday count towards length of service, which can affect other entitlements. And the expiry of a fixed-term contract is involuntary unemployment, so it does not prejudice access to unemployment benefit, provided the qualifying period with the social security has been met the conditions are set out in our guide to unemployment benefit in Portugal.
Working during holiday: the ban has two exceptions
Many guides state the ban is absolute. It is not. Article 247(1) provides that a worker may not carry out other paid activity during holiday, except where they were already doing so alongside their job or the employer authorises it.
The distinction matters for anyone on short fixed-term contracts who holds more than one job. If the second activity was already being carried out in parallel before the holiday, there is no breach. If it is new, the employer's authorisation resolves it and it is worth obtaining in writing.
Where the rule is breached, the employer may reclaim the holiday pay and the corresponding allowance, half of which goes to the social security, without prejudice to any disciplinary consequences. That is not a theoretical sanction.
Frequently asked questions
Does a two-month contract carry holiday entitlement?
Yes, four working days, two per completed month. They should be taken immediately before termination unless otherwise agreed; if not taken, they are paid with the corresponding allowance.
Can the employer schedule my holiday during the notice period?
Not as a way of extinguishing it. Accrued holiday must be taken or paid; imposing it during notice as though notice were a rest period distorts both. With a written agreement the position is different.
If I am on sick leave when the contract ends, do I lose my holiday?
No. Sick leave suspends the taking of holiday, it does not extinguish the entitlement. Untaken days are paid on termination with the corresponding allowance.
Is the Christmas allowance due on a three-month contract?
Yes, in twelfths: three twelfths of base pay, corresponding to the completed months worked in the calendar year.
What if the company does not pay the holiday on termination?
Complain in writing with an itemised calculation. If there is no response, file a complaint with the working conditions authority. In insolvency or closure, the wage guarantee fund covers employment claims within certain limits.
