Judgment by the Lisbon Appeal Court dated 04-11-2015 – Multi-location employment contract - Applicable law

In the case under review, the Lisbon Appeal Court was called on to pass judgment on the law applicable to a multi-location employment contract – under which the law chosen by the parties was Spanish law, and the place where work was performed was Portugal –, following a claim for unfair dismissal, which would have been undertaken, in the employee’s view, without the possibility of a prior hearing.

The Court began by analysing if Spanish substantive law would be applicable since both under the terms of the Rome Convention on the Law Applicable to Contractual Obligations and under the terms of Regulation (EC) no. 593/2008, of the European Parliament, of 17 June 2008, on the law applicable to contractual obligations (“Rome I Regulation”), the contract shall be governed by the law expressly chosen by the parties.

Notwithstanding, the Court added that, under the terms of the above mentioned law and under the terms of the Portuguese Civil Code, the choice of the parties regarding the law applicable to the employment contract “may not result in depriving the employee of the protection provided by mandatory provisions of the law, which would, had a choice not been made, be applicable from an objective view”.

In the case under review, the Court considered that, in the absence of choice by the parties, the applicable law would be Portuguese law, because it was the law of “the country where the employee normally performs his work activity”. In this regard, the Court ruled that, even if Spanish law was applicable to the contract, the fact that the dismissal was communicated with immediate effects – the employee having been dismissed “without being given the non-derogable right of defense” – constituted a clear breach of Portuguese constitutional rules with mandatory and immediate application.

Thus, the Court pointed out, that even though the situation was “lawfully permitted by the rules set out in Spanish law”, it breached “the fundamental principle of job security and the proscription of unfair dismissal”, by virtue of which, Portuguese law was the applicable law, and the dismissal had to be considered unlawful.

Judgment by the Lisbon Appeal Court dated 07-10-2015 – Term contract – Extraordinary renewal arrangements

The ruling under review analysed the legal arrangements governing extraordinary renewals of term employment contracts established under Act 3/2012, of 12 January, since the employer communicated the expiry of the said contract, on the supposit ion that there was a term employment relationship, by dint of there having been an automatic extraordinary renewal of the said contract. For his part, the employee challenged the termination of his contract in the courts, alleging that the parties had entered into a permanent employment contract and that expiry of the contract constituted unlawful dismissal.

The Court explained that it is the Labour Code that is applicable to all matters pertaining to the extraordinary renewals foreseen in special legi slation, other than those that are specifically provided for in the latter. Hence, the Court ruled that extraordinary renewals of term employment contracts must abide by formal requirements and do not occur automatically, since that would contradict the mandatory arrangements for renewals foreseen in the Labour Code, pursuant to which a term contract converts into a permanent contract following three renewals.

The Court also considered that the extraordinary renewal arrangements could not be invoked retroactively, when they had not been agreed to by the parties, since this would be tantamount to thwarting the employee's legitimate expectations of his term contract being converted into a permanent contract, once the last period of renewal had lapsed and he remained in the employer's service.

Thus, it was ruled that the term contract in question had not been subject to extraordinary renewal arrangements, but had converted into a permanent contract, with the Court having concluded that dismissal was unlawful, since prior disciplinary proceedings had not been engaged.