Non-Compete and Stay Clauses in Portuguese Employment Contracts in 2026 — A Practical Guide to the Pacto de Não Concorrência, the Two- and Three-Year Limits, the Compensation Rule, the Pacto de Permanência and Your Right to a Second Job

You have been offered a job in Portugal, or you are thinking of leaving one, and the contract contains a clause saying you cannot work for a competitor after you go. Is it enforceable? Can your employer really stop you taking your next job? And can they stop you holding a second job on the side right now? Portuguese labour law has clear answers, and they are more protective of the worker than many people — and many employers — assume. This is a practical 2026 guide to the rules on non-compete clauses, stay-put clauses and second jobs under the Código do Trabalho (the Labour Code), so you know where you stand before you sign.

A recent OECD study found that up to a third of Portugal's private-sector workers are bound by a non-compete clause, and that many of those clauses may not actually be valid under Portuguese law. Knowing the difference is worth real money.

The starting point: you are free to work

Portuguese law begins from the presumption that, once your contract ends, you are free to work wherever you like. Article 136 of the Código do Trabalho states the principle bluntly: any clause that could restrict your freedom to work after the contract ends is null — void by default. A non-compete clause (a pacto de não concorrência) is only a narrow, conditional exception to that rule. If the exception's conditions are not all met, the clause simply does not bind you.

When a non-compete clause is actually valid

For a post-employment non-compete to hold up, Article 136 requires all three of the following at the same time:

• It must be in writing. The clause has to appear in a written agreement — typically the employment contract itself, or a written termination agreement. A verbal understanding is worthless here.
• The activity restricted must be one that could genuinely harm your employer. The clause cannot lawfully bar you from work that poses no real competitive threat. If your new role could not plausibly damage your former employer, the restriction has no basis.
• You must be paid compensation for the restricted period. This is the condition employers most often get wrong. The clause is only lawful if it grants you a compensação — a payment — during the time your working freedom is limited. A non-compete with no compensation attached is void.

Meet all three and the clause can bind you for a maximum of two years after you leave. That extends to three years only where your role involved a special relationship of trust or access to information that is particularly sensitive in competitive terms (Article 136(5)).

How much compensation? What the law does — and does not — say

Here is a point where misinformation is common. The Labour Code does not fix a percentage or a minimum amount for the compensation. It leaves the figure to the parties to agree. You will often see it claimed — in HR guides and even some Portuguese sources — that the payment "must be 50% to 80% of your salary." That is a market rule of thumb, not a legal requirement. Do not treat it as the law.

What the law and the courts do require is that the amount be genuine and proportionate. Portuguese appeal courts have struck down non-compete clauses where the compensation was judged too low to be adequate — in one case, an amount equal to roughly 11% of annual income was ruled inadequate and disproportionate, and the clause fell. There is also a specific adjustment: the compensation can be equitably reduced where the employer spent heavily on your professional training (Article 136(2)(c)).

Two further protections are worth knowing. If you were unlawfully dismissed, or you resigned with just cause because of your employer's wrongdoing, the compensation must be raised up to the value of your base salary at termination — and if the employer fails to pay it, they cannot invoke the non-compete against you at all (Article 136(3)). And any earnings from a new job you start after leaving are deducted from that raised compensation, up to the baseline amount (Article 136(4)).

What happens if the clause is invalid

If a non-compete clause fails any of the three conditions — most commonly because no compensation was agreed — it is null. That means it does not bind you at all: you are free to take the competing job, and there is no "buy-out" to negotiate, because there is nothing valid to buy out of. The clause is simply treated as if it were not there. Because these situations turn on legal detail, though, it is worth getting specific advice before you rely on a clause being void.

The stay-put clause: the pacto de permanência

A different kind of clause binds you while you are still employed. Under Article 137, the parties can agree a pacto de permanência (a permanence or stay clause): you undertake not to resign for a set period, in return for the employer having spent heavily on your professional training. Think of an employer paying for an expensive qualification or a long training programme, then asking you to commit to staying on.

The key limits are:

• The maximum period you can be tied in is three years (Article 137(1)).
• It must be genuinely tied to despesas avultadas — substantial expenses — the employer incurred on your training. It is not a general lock-in.
• You can always buy your way out. Article 137(2) lets you free yourself from the obligation at any time by paying back the amount corresponding to those training costs. So a stay clause is, in practice, a repayment obligation rather than a cage.

Competing while you are still employed

Separate from any written clause, you already owe your current employer a duty of loyalty. Article 128(1)(f) requires you, while the contract is in force, not to trade on your own account or another's in competition with your employer, and not to disclose the company's organisational, production or business information. This duty applies automatically, by operation of law — no clause is needed, and no payment is owed for it. It falls away the moment your contract ends; after that, only a valid Article 136 non-compete can restrain your competing activity.

Can your employer stop you having a second job?

Generally, no. Portuguese workers are free to hold a second job, and Article 129(1)(k) — one of the worker guarantees — specifically forbids an employer from preventing you from taking other work, or treating you unfavourably for doing so. The only exceptions are objective grounds, which the law names as workplace safety and health, or professional confidentiality. This guarantee was reinforced by Lei n.º 13/2023 (the "Agenda do Trabalho Digno," the Decent Work Agenda), in force since 1 May 2023, which transposed the EU's directive on transparent and predictable working conditions; barring a second job without proper grounds is treated as a very serious administrative offence.

There are real limits, though. You still cannot take a second job that puts you in competition with your main employer or breaches confidentiality — that runs into the Article 128 loyalty duty above. A true exclusivity clause, which the Labour Code does not expressly regulate, is only accepted by the courts narrowly: the employer must have a legitimate interest to protect, you must receive compensation for the restriction, and it must be proportionate. And whatever you do, the overall legal cap on working time — an average of 48 hours a week — still applies across your jobs combined.

A quick checklist before you sign or leave

• Is the non-compete in writing? If not, it is void.
• Does it promise you compensation for the restricted period? No payment, no valid clause.
• Is the duration two years or less (three only for special-trust or sensitive-information roles)? Anything longer is unenforceable.
• Could your next role genuinely harm the employer? If not, the restriction has no basis.
• Is there a stay clause tied to training? Remember you can exit it by repaying the training cost, and it cannot exceed three years.
• Being told you cannot have a second job? That is only lawful on safety, health or confidentiality grounds — or a properly compensated exclusivity clause.

This guide is general information for 2026, not legal advice, and individual contracts and court interpretations vary — if a clause could affect your next move, confirm your position with a Portuguese labour lawyer or the Autoridade para as Condições do Trabalho (ACT, the Working Conditions Authority) before you act. But the underlying message of Portuguese law is reassuring: your freedom to work is the rule, and the clauses that limit it are valid only when they are written down, time-limited, justified and — crucially — paid for.