Law No. 29/2017, of May 30 Transposes the Directive 2014/67/EU of the European Parliament and of the Council of May 15, 2014 concerning the posting of employees in the framework of the provision of services This law applies to both the posting of employees in Portuguese territory and the posting of employees to another Member State by service providers established in Portugal, covered by Articles 6 to 8 of the Labor Code. The verification of facts and the control in relation to the posting of employees in Portuguese territory shall be carried out by the Authority for Working Conditions (AWC) on its own initiative or at the request of the competent authorities of the Member State of establishment. In order to verify the situation of an employee temporarily posted in Portuguese territory, the AWC considers, in particular, the following elements that characterize the work and the situation of the employee (which do not need to be cumulatively verified for a situation to be characterized as posting of employees): The work is performed for a limited period; The work is carried out from the date on which the posting starts; The employee does not habitually carry out his duties in Portuguese territory; The posted employee returns, or must resume, his/her activity in the Member State of which he/she was posted, after completion of work or provision of services at the origin of the posting; Travel, food or accommodation expenses are paid or reimbursed by the employer who posted the employee and, if applicable, the manner in which the costs are ensured or the method of reimbursement; The nature of the employee's activity; The former postings of that or of another employee for the same job. In order to verify whether a company carries out activities which go beyond the scope of internal or administrative management in the Member State in which it is established, the AWC considers inter alia the following elements which characterize that activity (which do not need to be cumulatively verified for a situation to be characterized as posting of employees): The place where the registered office and administration of the company are located, where it has offices, where it pays taxes and social security contributions and, when WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 3/9 applicable, where it is authorized to carry out its activity; The place of recruitment of posted employees and from which they are posted; The law applicable to contracts concluded by the company with its employees; The place where the company carries out the bulk of its business and employs administrative staff; The number of contracts carried out, the amount of turnover achieved in the Member State of establishment, the size of the company and its date of commencement of work; The nature of the business activity and the activities carried out by the employee. The law also provides for the right to information on the working conditions to which an employee posted in Portuguese territory is entitled, which must be clearly and exhaustively disclosed on an official website. To ensure compliance with the obligations established in this law, concerning the posting of employees in Portuguese territory, the service provider is obliged to: Submit a statement (according to a form available on the official website and sent electronically to the AWC), until the start of the service, which must contain: (i) The identity of the service provider; (ii) The number and identification of the employees to be posted; (iii) The identification of the person to establish the connection with the AWC; (iv) The estimated duration and estimated dates for the start and end of the posting; (v) The address of the workplace, or workplaces; (vi) The nature of the services justifying the posting; Keep copies, in paper or electronic form, of: (i) The employment contract, or written document with information on the relevant aspects of the employment contract provided for in the Labor Code; (ii) Pay slips; (iii) Records of working time indicating the start, end and duration of daily working time; (iv) Proof of payment of the remuneration; Submit, up to one year after the termination of the posting, the documents referred to in the previous paragraph when notified by the AWC; Designate a person to liaise with the AWC and to send and receive documents and information and, when appropriate, to liaise with the social partners on collective bargaining. The declaration and the documents, when requested, are presented in Portuguese or accompanied by a translation certified in legal terms. The documents must be kept throughout the period of posting and be available in an accessible and clearly identified place in the WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 4/9 Portuguese territory, namely: At the workplace indicated in the declaration; At the construction site; At the basis of operations or the vehicle with which the service is provided. A breach of all these obligations is a serious misdemeanor, with the exception of failure to submit the declaration to the AWC according to the form available on the official website and electronically, which is a minor misdemeanor. In case of non-compliance with the working conditions provided for in Article 7 of the Labor Code, an employee posted in Portuguese territory is entitled and cannot be discriminated because of the exercise of these rights: To file a complaint against the employer before the the AWC; and To file a judicial proceeding before the competent court for any damages resulting from such breach, even after termination of the employment relationship, in accordance with the law. Union trades and other third parties, such as associations and other legal organizations that have a legitimate interest, in accordance with their statutes, to ensure compliance with the provisions of this law, as well as the rules established in the Labor Code relating to the posting of employees, have the right to intervene on behalf of or in support of the posted employee or his employer, provided that there is express authorization of the person represented. The employer of the posted employee, even if the latter has returned to the Member State of establishment, is liable for any obligations due under the law resulting from the employment relationship, in particular: For any due net remuneration; For any arrears or refunds of taxes or social security contributions wrongly withheld from the employee's remuneration; For the reimbursement of any amounts in relation to the net remuneration or accommodation, retained or deducted from the consideration for payment of accommodation provided by the employer; For the contributions from the employer due to common funds or social partner organizations, where appropriate, unduly withheld from the employee's remuneration. The law also extends liability in cases of posting of employees to the contractor to whom the service is provided, who is jointly and severally liable for any net remuneration in arrears corresponding to the minimum remuneration, whether legal, conventional or guaranteed by contract, due to the posted employee by the service provider, as a direct subcontractor. WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 5/9 Finally, the law provides for mechanisms for cross-border enforcement of administrative pecuniary penalties or fines. II LEGISLATION Law no. 26/2017, of May 30 Facilitates recognition of professional qualifications and reduces constraints on the free movement of persons This Law proceeds with the third amendment to Law No 9/2009 of March 4, 2013 and transposes Directive 2013/55/EU of the European Parliament and of the Council of November 20, 2013 amending Directive 2005/36/EC on the recognition of professional qualifications and Regulation (EU) no. 1024/2012 on administrative cooperation through the Internal Market Information System. Law no. 27/2017, of May 30 Adopts measures for uniform application and practical implementation of the right of free movement of employees This Law transposes Directive 2014/54/EU of the European Parliament and of the Council of April 16, 2014 laying down measures facilitating the uniform application and practical implementation of the right of free movement of employees. III EXTENSION ORDERS Area of Activity Order Ports Order No. 151/2017 - Diário da Repú- blica (Official Gazette) No. 85/2017, Series I of 2017-05-03 Establishes the extension of the collective bargaining agreement and amendments thereto between the Association of Terminal Operators of the Douro and Leixões Ports and another and the Trade Union of Dockers, Gate and Traffic Clerks of the Douro and Leixões Ports. WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 6/9 IV NATIONAL CASE-LAW Ruling by the Lisbon Court of Appeal, March 22, 2017 Lawful grounds for dismissal – Breach of the obligations of diligence and care In proceedings brought to contest the procedural formalities and lawfulness of a dismissal, the employer essentially alleged that the employee, who was employed to work as a cook, and was in charge of the eggs and salads section on August 2, 2015, served an egg to a customer which was unfit for consumption. He also served a salad to a customer which was unfit to be eaten. The employer further alleged that on August 23, 2015, the employee was about to serve a steak and egg sandwich, which had bits of rubbish on it, owing to it not having been prepared with due care. Ultimately, it was not served thanks to the head chef's intervention. Lastly, he alleged that on September 6, 2015, the employee behaved egotistically, completely cutting himself off, failing to help colleagues and causing delays to the meal service, pretending not to hear his colleagues' requests. The employee in question had already been subject to disciplinary measures on two prior occasions, by dint of not having noticed that certain products had gone past their expiry date, when it was his responsibility to do so. This resulted in two disciplinary measures of five days' suspension with loss of remuneration having been imposed. The dismissal was judged to be unlawful and the employer was obliged to reinstate the employee. The Court of First Instance considered that the employee had not performed his duties with the diligence required of a cook, and that preparing and serving unfit food to customers has serious repercussions for a catering firm, by undermining its reputation. An employee who does not cooperate with others, when working in a business environment which depends on speed and teamwork is a major concern, too. Nevertheless, in the Court of First Instance's opinion, the incidents in question were not so damaging as to preclude the employment relationship from continuing, since they were oneoff episodes and the previous similar incidents which had given rise to disciplinary proceedings had occurred five years earlier. Given the long intervening period, they were no longer relevant to the case. The Lisbon Court of Appeal upheld the ruling of the Court of First Instance, having considered the dismissal to be excessive given that the incidents described did not preclude nor hinder the employer from keeping the employee in question. Furthermore, the Court of Appeal endorsed the Court of First Instance's decision on the basis of the employee's length of service; career progression and professional development, having generally worked well. WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 7/9 Hence, even though the acts were sufficiently grievous in nature to warrant disciplinary measures, it was not untenable for the employer to pursue the employment relationship, imposing another disciplinary penalty that does not involve its termination, being wholly appropriate and commensurate. Notwithstanding, one cannot overlook the fact that the Lisbon Court of Appeal's decision was not unanimous, given that a dissenting opinion was issued, according to which, the acts in question constituted “wholly unprofessional behavior which seriously breached the employee's obligations of effort and diligence, with the ensuing damage to the defendant's reputation and business image and possible economic losses (not only compensation for customer complaints, but above all commercial reputation); combined with the fact that the Plaintiff had already twice been suspended for 5-day periods, with loss of remuneration in 2009 and 2010, I consider his 13 years of service to the company to be irrelevant, with his behavior precluding the employment relationship from being pursued.” Ruling by the Évora Court of Appeal, April 28, 2017 Breach of the obligation of loyalty – Obligation to compensate The employer, who undertakes plumbing jobs, sued a former employee for compensation and interest because the latter had established a private limited liability company with the same business activity as his employer, i.e. installing pipes, whilst in his employ. He alleged that the employee, who was given the requests for quotes by his employer, chose those he was interested in and sent lower estimates on behalf of the company he had set up for such work than the ones made by his employer, thereby breaching his obligation of noncompetition. The Court of First Instance dismissed the case against the employee, with the employer lodging an appeal with the Évora Court of Appeal. The Évora Court of Appeal's ruling upheld the judgement at First Instance, considering that even though there had been an egregious breach of the obligation of loyalty, pursuant to Article 128 of the Labor Code, liability contained therein is clearly restricted to the sphere of employment, hence, had the employee not resigned in the meantime, there could have been lawful grounds for dismissal. However, the lawsuit referred to a decrease in business turnover and the establishment and launch of a competitor company, held by the former employee, having contributed to an alleged fall in sales, which the employer failed to prove. As a result, the Court considered that the grounds for the demand for compensation had not been established and therefore rejected the case, since as the Court of First Instance stated WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 8/9 and the Appeal Court reaffirmed: “... the establishment of a rival company to the employer's by an employee whilst in the former's employ, constitutes an infringement of the obligation of loyalty set out in Article 128, section 1, paragraph f) of the Labor Code, but does not constitute grounds by itself for the right to compensation. This entails demonstrating that the new company's activity has harmed the employer's interests during the period of employment by him, which requires a cause and effect relationship to be established…” Ruling by the Évora Court of Appeal, April 28, 2017 Labor infringement – Failure to pay salaries punctually The employer appealed a decision handed down by the Authority for Working Conditions, which imposed a lump-sum fine of € 44,891.92 on him, for failure to pay remunerations, which constitutes a serious misdemeanor. The Court of First Instance found partially in favor of the appeal and, although it reduced the amount of the fine, it considered the employer's conduct wrongful and that he should have opted for a collective redundancy with corresponding severance pay or suspended employment contracts on the basis of a company crisis. The employer refused to accept the decision and lodged an appeal to the Évora Court of Appeal alleging that his conduct was neither wrongful nor even negligent, since going down the path of a collective redundancy “was quite impossible given that if the appellant did not have enough funds to pay the monthly wage bill, he certainly would not be able to pay severance packages”, and “since his operations continued, he needed his employees to meet his business commitments and receive revenue in order to honor his obligations, above all towards his own employees.” Furthermore, the employer proved that he had not neglected company management nor ceased to explore measures allowing him to pay amounts owing to his employees, and that he had kept them constantly informed of the initiatives he was taking and that the entire scenario had been triggered by the national economic recession. Thus, the Évora Court of Appeal was called to rule on the employer having acted wrongfully or not, in view of the fact that liability for administrative offences is determined by proving the perpetrator of the infringement's wrongdoing. Having taken note of the employer's allegations, the Court of Appeal considered that the facts demonstrated that the employer had been facing cash-flow problems for several years, which he had been trying to solve, and that the employees could choose to terminate their employment contracts on the grounds of wages not being paid in a timely fashion, but that the employer could not be criticized for having tried to survive in order to keep the business going and protect jobs, having in good faith kept employees abreast of the company's economic and financial situation. WWW.CUATRECASAS.COM NEWSLETTER I EMPLOYMENT LAW 9/9 The Court, therefore, found that late payment of employees' remuneration was not wrongful and, since presumed guilt cannot be the basis for conviction of a misdemeanor, the Court acquitted the employer. CONTACTS CUATRECASAS, GONÇALVES PEREIRA & ASSOCIADOS, RL Sociedade de Advogados de Responsabilidade Limitada LISBOA Praça Marquês de Pombal, 2 (e 1-8º) I 1250-160 Lisboa I Portugal Tel. (351) 21 355 3800 I Fax (351) 21 353 2362 firstname.lastname@example.org I www.cuatrecasas.com PORTO Avenida da Boavista, 3265 - 5.1 I 4100-137 Porto I Portugal Tel. (351) 22 616 6920 I Fax (351) 22 616 6949 email@example.com I www.cuatrecasas.com This Newsletter was prepared by Cuatrecasas, Gonçalves Pereira & Associados, RL for information purposes only and should not be understood as a form of advertising. 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