Overtime in Portugal 2026: What Changed in IRS, How Much You Will Earn and Where the Law Protects You

What counts as overtime (and what does not)

The Portuguese Labour Code does not actually use the term "overtime" in everyday English. It uses trabalho suplementar (supplementary work), defined in article 226.º as time worked beyond the normal schedule generally more than 8 hours per day or 40 hours per week, as set out in article 203.º.

This is where confusion sets in. Many workers assume that anything done outside the normal schedule is overtime. It is not. Three situations look like overtime but are treated differently:

• Tolerance time agreed in advance for internal compensation arriving early, leaving later on a flexible basis.

• Hours bank validly set up by collective agreement or individual arrangement additional hours are accumulated and offset by time off, not by extra pay.

• Workers exempt from working hours under article 218.º, except where statutory ceilings are exceeded.

In practice, the test is simple: if the work was expressly or tacitly required by the employer and exceeds contractual hours, it counts as supplementary work and must be paid as such.

Quick distinction: overtime vs hours bank

Overtime is paid immediately, with a supplement, in the following month's salary. The hours bank accumulates time to be offset through days off or reduced hours during the year. Mixing the two is one of the most common mistakes we see in payroll departments and it generates complaints filed with the Working Conditions Authority (Autoridade para as Condições do Trabalho, ACT).

When the employer can (and cannot) require supplementary work

Overtime is the exception, not the rule. Article 227.º of the Labour Code permits it in only two cases:

1. Temporary and unforeseen workload increases that do not justify hiring an additional worker.

2. Force majeure, or to prevent or repair serious damage to the company, or to ensure its viability.

Outside these two scenarios, the worker can lawfully refuse. Refusal is also possible within these scenarios when there is a legitimate reason health issues, family responsibilities or comparable circumstances.

Practical note: refusal should be put in writing whenever possible, with the supporting reason. That paper trail is what protects you in any later dispute.

Legal limits: daily, weekly and annual

Article 228.º of the Labour Code sets maximum overtime caps that vary with company size and contract type. These figures cannot be negotiated downwards only collective agreements can set higher limits.

To work out which category applies, the workforce is counted at the close of the previous calendar year. Start-ups default to the bracket that matches their size on the first overtime payment date.

Daily and weekly limits the bit most people miss

On a working day, normal hours plus supplementary work cannot exceed 10 hours. On a weekly basis, total effective working time (normal plus supplementary) cannot exceed an average of 48 hours over a 4-month reference period (article 211.º). When a company schedules overtime regularly, this 48-hour ceiling is usually hit before the annual cap of 150 or 175 hours.

Who is exempt from working overtime

Five categories of workers benefit from reinforced protection and may refuse supplementary work without further justification. The list is exhaustive (articles 35.º to 65.º of the Labour Code):

• Pregnant workers, those who have recently given birth or are breastfeeding, for 12 months after childbirth.

• Workers with a child under 12 months old.

• Workers with a disability or chronic illness with a documented incompatibility.

• Working students, when supplementary work clashes with class or exam schedules.

• Workers recognised as informal carers under Law 100/2019.

An employer who insists after a substantiated refusal commits a very serious infraction, with fines that can reach approximately 61,000 euros depending on company size.

How to calculate one overtime hour: the formula and Marta's worked example

The calculation always starts with the value of one normal working hour. The formula has long been settled in Portuguese HR practice:

Hourly rate = (Monthly base salary × 12) ÷ (52 × number of weekly hours)

Let us run through a real-world case. A payroll specialist we work with base salary of 1,800 euros, 40-hour week. In November 2026, she worked 2 overtime hours on a working day, 4 hours on a Saturday (complementary rest day) and 3 hours on a public holiday.

Normal hourly rate: (1,800 × 12) ÷ (52 × 40) = €10.38 per hour

Applying the 2026 statutory supplements (assuming she is still within her first 100 annual hours), here is what she earns from supplementary work that month:

If Marta had already exceeded 100 annual hours (a common situation in year-end accounting closes), the same scenarios would yield €183.29 almost 50 euros more. This is precisely why running, cumulative tracking matters.

The calculation errors we keep finding

In more than 60% of internal payroll audits run by our Fed Finance team in Portuguese SMEs, at least one of these three errors shows up: using 30 days × 8h (240h) instead of the correct divisor based on 52 weeks; applying 25% to all hours rather than stepping up to 37.5% from the second hour; forgetting that Saturdays in a 5×8 schedule are complementary rest days and carry the 50% supplement, not 25%.

Statutory supplements: the full 2026 table

Article 268.º of the Labour Code sets two tiers before and after 100 annual hours. This dual structure is central and was reintroduced in 2019 by Law 93/2019. You can complement this calculation with our guide to net salary in Portugal to see how it all flows through to your payslip.

Collective bargaining agreements (CCT) may set higher supplements. Banking, insurance and several industrial sectors typically apply a 100% supplement on public holidays from the very first hour. They can never set lower rates than the legal minima any clause to the contrary is null.

What changed in IRS in 2025-2026: the rule many people still miss

This is the most significant change of recent years for anyone working overtime. Until 2024, withholding tax (IRS) on supplementary work was only reduced by 50% from the 101st hour worked in the calendar year. The 2025 State Budget amended article 99.º-C(10) of the IRS Code: the 50% reduction of the effective monthly rate now applies from the very first hour of supplementary work. This rule is maintained in 2026.

In practical terms, going back to Marta: if her effective monthly IRS rate is 12%, on the €136.24 of overtime she only withholds 6% that is, €8.17. Before 2025, she would have withheld €16.35. Monthly difference: roughly 8 euros more in her pocket. Over 12 months with steady overtime volume, this works out to around 100 euros of additional net income per year for a profile like hers.

One caveat: this is a reduction in withholding, not in final tax. Overtime still feeds into annual taxable income and into the IRS bracket at year-end reconciliation. Workers who gained on monthly withholding may see a smaller refund (or owe tax) in their 2027 return covering 2026. We cover the new 2026 IRS tables in detail in a dedicated article.

What about non-resident workers?

For non-resident workers providing services in Portugal to a single entity, supplementary work is exempt from withholding up to a monthly limit equivalent to the national minimum wage (€920 in 2026), or up to the first 100 annual hours. Beyond that, the flat 25% rate applies.

Compensatory rest: when the company owes you time, not money

Article 229.º establishes that, in two situations, supplementary work entitles the worker to paid compensatory rest, not just to a pay supplement:

• When the overtime prevents the minimum 11-hour daily rest between consecutive working days the worker is entitled to equivalent rest within the next three working days.

• When work is performed on a mandatory weekly rest day (typically a Sunday) entitlement to a full day of paid compensatory rest within the next three working days.

Compensatory rest is cumulative with the payment of overtime hours. Someone who works on a Sunday earns the hour at 150% (up to the 100th hour) and gets a paid day off. Receiving only one of the two means being shortchanged.

Special cases: green receipts, part-time and exemption from working hours

Three situations have their own regime for supplementary work and trigger constant questions in the consultations we run:

Workers on green receipts (category B): the Labour Code's overtime concept does not apply. A service provider does not have working hours, only a fee per service. If the contracting company demands attendance on a fixed schedule, this points to a sham service relationship and the worker can apply via ACT for recognition as an employee a scenario increasingly common in Lisbon and Porto since 2024.

Part-time: hours that exceed contracted hours but stay within the 40h/week ceiling are complementary hours, not supplementary generally without an automatic legal supplement, except where a CCT provides otherwise. Only beyond 40h/week (or the equivalent full normal schedule) do they fall under the overtime regime.

Exemption from working hours (article 218.º): an exempt worker is not entitled to standard overtime pay, receiving instead a specific exemption allowance. They retain, however, the right to be paid for hours worked on rest days and public holidays at 50% (or 100% above the 100-hour threshold).

Mandatory recording and infractions: what a non-compliant company risks

Article 231.º of the Labour Code is unambiguous: the employer must keep a record of all supplementary hours worked, indicating the start, end, reason and worker validation. The record must remain available for ACT inspection for at least 5 years.

Our practical advice to companies is straightforward: digitise. Manual Excel sheets create inconsistencies and do not survive an inspection. Time-and-attendance platforms integrated with payroll eliminate 90% of the errors and provide protection in any dispute. Compliance with the legal deadlines for paying salary and overtime is under active oversight and deserves close HR attention.

Non-compliance exposes employers to:

• Missing or incomplete records: serious infraction (fine between €612 and €9,690 per worker, scaled to company size).

• Failure to pay or payment below legal minima: very serious infraction (fine between €2,040 and €61,200).

• Exceeding annual caps without force majeure cover: very serious infraction plus the risk of the hours bank being declared void, with retroactive payment of every hour as overtime.

The most common mistakes in calculating and managing overtime

A round-up of the errors we keep correcting in 2026, on the worker side and the employer side:

On the worker side:

1. Failing to validate the hours record within 15 days in any dispute, the favourable presumption is lost.

2. Accepting time off only when the law mandates payment (except under a formal hours bank).

3. Not keeping evidence (emails, messages) showing the company actually requested the extra work.

4. Confusing supplementary work with hours bank and losing the right to the supplement.

5. Failing to escalate to ACT for unpaid amounts within the limitation period (1 year after contract termination).

On the employer side:

1. Not distinguishing the mandatory weekly rest day (Sunday) from the complementary one (Saturday) the supplement is the same, but compensatory rest differs.

2. Paying everything at 25% to "keep things simple" illegal and a frequent trigger for complaints.

3. Applying the IRS reduction only from the 101st hour outdated since 2025.

4. Keeping records only on paper or in a non-auditable Excel file.

5. Ignoring the 48h/week average over 4 months, which can block overtime before the annual cap.

Frequently Asked Questions

Does overtime count towards retirement pension?

Yes. It feeds the Social Security contribution base (11% from the worker, 23.75% from the employer) and is included in the reference earnings used to calculate the pension. Workers who consistently log overtime over their career retire on a higher pension than peers with the same base salary.

Can I ask for an overtime advance before the following month?

The law provides that supplementary work is paid in the month immediately after it was worked. There is no statutory right to an advance, but a growing share of SMEs do pay overtime within the same month when it is processed by the 15th.

What if the company does not pay my overtime?

Gather all the evidence (records, emails, messages) and file a complaint with ACT. The process is free of charge. In parallel, formally notify the company in writing demanding payment of the outstanding amounts. The limitation period is 1 year after contract termination do not let it lapse.

I work a night shift. Is there an additional supplement?

Yes, the two supplements stack. Night work carries a 25% supplement on the normal hour (article 266.º). If those night hours are also supplementary, the overtime supplement is added to the night work supplement. Some CCTs replace this stacking with a single, higher rate always check your sector's collective agreement.

Can I refuse overtime on grounds of fatigue?

Generic tiredness is not, under settled case law, a legitimate reason. But medically documented exhaustion, health issues or specific family responsibilities (a child's illness, for example) are. Always refuse in writing, with proof of the reason invoked.

Do I get a meal allowance when I work overtime?

Only when the overtime covers an actual meal break (more than 5 continuous hours worked). The general rule is that the allowance is daily and tied to effective work with a lunch break. For late-afternoon overtime, there is usually no additional entitlement.

Useful Resources and Documents

• Consolidated Labour Code Law 7/2009 (Diário da República)
• Working Conditions Authority (ACT)
• CITE Commission for Equality in Labour and Employment: Labour Code

Sources

• Portuguese Labour Code (Law 7/2009 of 12 February), articles 203.º, 211.º, 218.º, 226.º to 231.º, 266.º and 268.º.
• IRS Code, article 99.º-C(8) and (10) (amendment introduced by the 2025 State Budget and maintained in 2026).
• Ministerial Order 480-A/2025/1 IAS update for 2026 (€537.13).
• Decree-Law setting the National Minimum Wage (RMMG) at €920 for 2026.
• 2026 IRS withholding tables Tax and Customs Authority Portal.
• Law 100/2019 Informal Carer Statute.