Nuno Ferreira Morgado Pedro Rosa March 1 2022 Évora Court of Appeal clarifies scope of ministerial extension orders PLMJ | Litigation - Portugal Nuno Ferreira Morgado, Pedro Rosa Litigation IntroductionDecisionCommentIntroductionOn 13 January 2022, the Évora Court of Appeal handed down its judgment in Case No. 1842/19.9T8FAR.E1. In this judgment, the Court took a clear position in the debate on the non-applicability of a collective labour agreement (CLA) that is subject to a ministerial extension order to companies affiliated with an employers' association which is not a signatory to the extended CLA.The legal uncertainty faced by companies in situations where several collective labour regulation instruments are potentially applicable to their activity is well known. Not only is the assessment of potentially applicable instruments complex, but also the conflict rules are difficult to understand and have resulted in contradictory decisions in court.DecisionThe Évora Appeal Court has taken an important step in terms of case law by adopting the legal interpretation that limits the scope of application of the ministerial extension orders. Specifically, it held that an employer cannot be covered by a collective regulation instrument signed by an association to which it is not affiliated, even if it has been extended by a ministerial order, as long as it is affiliated with another employers' association that has its own regulation instrument.As such, the judgment upholds the parties' bargaining autonomy and contractual freedom, including the freedom not to contract. It safeguards the freedom of action of companies and employees, and their legal security in defining a stable and predictable labour status. It also safeguards their freedom of association.CommentIt should be noted that the thesis endorsed in the judgment is simply the other side of the coin of an understanding that protected unionised employees themselves. In fact, in the past and in defence of employees' rights of collective autonomy and freedom of association,(1) the courts had already upheld the position that employees could not be subject to a collective agreement negotiated and signed by an employee representation structure in which they were not involved.The Court also valued the principle of "subsidiarity" expressed in article 515 of the Employment Code to stress that the scope and possibility of issuing a ministerial extension order should be limited to cases in which there is a vacuum of potentially applicable collective regulation.It should be noted that this ruling emerged from an appeal of a lower-court decision, which went in the opposite direction. This means there may well be an appeal to the Supreme Court of Justice.Curiously, even though the full reasoning of the first-instance judgement is unknown, and thus the understanding of the case is restricted to the operative part of its ruling, it clearly reflects the legal insecurity that has been noted. The first-instance court decided that a certain collective instrument would apply to the company between 1 September 2017 and 30 June 2018, and another one would apply from 1 July 2018 onwards. Both were negotiated by parties totally unrelated to the company in court. In other words, the company would be obliged to apply a certain instrument for only 10 months, and then another instrument would apply to it, possibly only until a new ministerial extension order came along and imposed itself as well, without it having been involved.In sum, this decision makes an important contribution to clarifying the framework of the labour status for companies and employees, which is fundamental for the stability of labour relations.For further information on this topic please contact Nuno Ferreira Morgado or Pedro Rosa at PLMJ by telephone (+351 213 197 300) or email ([email protected] or [email protected]). PLMJ website can be accessed at www.plmj.com.Endnotes(1) Judgment of the Supreme Court of Justice of 20 June 2018, Case No. 3910/16.0TVIS.C1.S1.