On 31 December 2020, by means of Decree-Law 109-A/2020, Portugal increased the mandatory minimum monthly wage (Retribuição Mínima Mensal Garantida – RMMG). As of 1 January 2021, RMMG is €665.00.

In order to guarantee the competitiveness of its business fabric, especially in the context of adaptation to our ‘new normal’, the Portuguese government has launched an initiative to support companies and employers.

Decree-Law no. 37/2021 of 21 May 2021, creates an exceptional compensation for the increase in the value of the RMMG.

This exceptional measure applies to employers, regardless of legal form, as well as to individual persons with one or more employees, and consists of a pecuniary allowance, paid immediately by IAPMEI – Agency for Competitiveness and Innovation, IP (IAPMEI), or by the Portuguese Tourism Institute, IP (Turismo de Portugal).

The allowance applies throughout Portugese national territory and has the value of:

  1. €84.50 for each employee who earned € 635.00 as declared base remuneration in December 2020 (amount equivalent to RMMG for 2020).
  2. €42.25 for each employee who earned a declared basic remuneration value between €635.00 (RMMG for 2020) and €665.00 (RMMG for 2020) in remunerations for the month of December 2020.

To comply with the conditions of access and to receive payment, the employer must:

  1. Have had one or more full-time employees with a declared base remuneration equal to or greater than €635.00 and less than €665.00 in the declaration of remunerations for the month of December 2020; and
  2. Have met their tax and contributory commitments to the tax authority and social security.

The social security system will identify the employers covered, making the following information available to paying entities:

  1. Name or corporate name of the employer;
  2. Number of employees covered (full-time employees who, in the December 2020 declaration of remunerations, earned a declared basic remuneration value equal to or greater than €635.00 and less than €665.00). It should also be noted that social security considers the number of full-time employees included in the last declaration of remunerations submitted before this disclosure of information, whenever this count is less than the number of employees identified on 31 December 2020;
  3. Tax identification number (NIF) and Social Security identification number (NISS) of the employer.

IAPMEI and Turismo de Portugal have provided covered employers with an electronic registration system accessible through their respective electronic sites for the purpose of paying the allowance, and for the collection of information to award this benefit.

Employers must register by 26 June 2021, and payment of the allowance will be made by 26 July 2021.

With this measure, Portugal aims to further strengthen its business and productive network. In the first hours after being launched, the scheme has registered around 14,000 requests.

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Filipe Miguel Pedro Custodio

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