What the law says: vacation cannot be replaced by work

Article 237 of the Portuguese Labour Code (Código do Trabalho) is clear: vacation leave cannot be replaced by financial compensation or any other consideration, except in specific cases.

Even if the employee requests to work and the company is willing to accept, they cannot agree that the employee works and receives money instead of taking their vacation. The reason is occupational health: the right to vacation exists to ensure rest — it cannot be monetised at will.

The exceptions where financial compensation is allowed

1. Termination of the employment contract. When the contract ends, any unused vacation days must be paid out.
2. Vacation days exceeding the legal minimum of 22 days. If the contract provides for more than 22 days, the days above the minimum may be compensated in cash — by mutual agreement between the parties.

What if the employee works during vacation anyway

If the employee works during their scheduled vacation period and the company benefits from that work:

1. The right to vacation is not forfeited — the vacation days must be rescheduled
2. The work performed during vacation may be considered overtime — with the applicable legal supplements. To find out how much, read how to calculate overtime in Portugal.

In other words: the company may end up paying twice — for the vacation and for the overtime.

What to do when the employee insists

The position should be clear: 'Vacation is for resting. The period has been scheduled. If there is a genuinely urgent situation, we will handle it case by case — but the vacation must be taken.'

To learn how to organise the vacation schedule properly so these situations do not arise, read how to build the 2026 vacation schedule without conflicts. And to understand the public holidays that affect vacation planning, consult the complete list for 2026.

Time tracking during vacation

Vacation days should appear in the system with the correct 'vacation' code — not as attendance and not as unjustified absence. In Picco, vacation days are configurable per employee and appear in the monthly report with the correct code.