Portuguese law presumes an employment relationship once two or more set indicators are present, even if someone is paid as self-employed.
What it means
Some workers are paid as self-employed, often through invoices, while in practice they work much like employees. Portuguese law refers to this as disguised employment, sometimes called a "false green receipt" (a reference to the invoice self-employed workers normally use). The Labour Code (article 12) sets out five indicators:
The workplace belongs to the client or is set by the client
The tools or equipment belong to the client
The working hours are set by the client
The worker receives a fixed periodic payment
The worker performs management or leadership functions within the client's organisation
When two or more of these are present, the law presumes there is actually an employment relationship.
How it works
Once the presumption applies, the burden of proof shifts. It then falls to the party paying for the work, the client, to prove that the relationship is genuinely independent, rather than the worker having to prove it is disguised employment. A written contract calling someone self-employed does not override what actually happens on site day to day.
What happens if it is reclassified
If a relationship is reclassified as employment, converting it into an employment contract is mandatory. Social security contributions that should have been paid as an employee become due retroactively, covering the period already worked. Fines also apply.
As a further consequence, if a self-employed worker earns most of their yearly income from a single client, that client can owe an extra social security contribution for that worker, on top of any reclassification issue.
What to watch out for
Paying someone through invoices does not make them self-employed if the daily reality looks like employment. Fixed hours, a fixed periodic payment and a workplace and tools provided by the client are the clearest warning signs to look for.
Calling someone "self-employed" in a contract does not protect against reclassification. What matters is how the work actually happens day to day, not what the paperwork says.