Law no. 93/2019, of September 4, was published in Diário da República, which introduced changes to the Labor Code and its Regulation, as well as to the Code of Contributory Regimes of the Social Security Social Security System and its Regulation.
As regards the amendments to the Labor Code, the following should be highlighted:
- The trial period is now 180 days for open-ended contracts entered into with employees seeking their first job and long-term unemployed (it is foreseeable that this change, due to the doubts it has raised, will still be subject to review by the Constitutional Court).
- The trial period is reduced or excluded in the case of a previous professional traineeship, concluded with the same employer and carried out for the same activity.
- The maximum duration of fixed-term contracts, including renewals, shall be reduced from 3 to 2 years; such contracts may be renewed up to 3 times, provided that the total duration of renewals does not exceed that of the initial contract period.
- The maximum duration of open-ended employment contracts is reduced from 6 to 4 years.
- Fixed-term employment for permanent jobs is no longer possible for young people looking for their first job and for the long-term unemployed, but only for the very long-term unemployed (for more than 24 months).
- A fixed-term employment contract can only be concluded to meet temporary needs "objectively defined by the employer".
- Companies with more than 250 employees may no longer hire for a fixed term based on the reason for launching a new activity of uncertain duration or for starting up a company or establishment, a possibility that will be limited to Micro, Small and Medium Enterprises (i.e. with less than 250 employees).
Additional Contribution by Excessive Turnover
- The Additional Excessive Turnover Contribution is created and will be applicable to employers (legal entities and individuals with business activity) that have an annual weight of fixed-term contracts higher than the respective sector indicator in force.
- This additional contribution rate is applied progressively based on the difference between the annual weight of forward contracting and the sectoral average, up to a maximum of 2%, and the scale of progression must be defined in a regulatory decree.
- The Additional Excessive Turnover Contribution is not applicable in situations of resolutive fixed-term employment contracts entered into to replace a employee i) on parental leave and ii) with temporary incapacity to work due to illness for a period equal to or longer than 30 days; very short term employment contract and contracts mandatorily entered into for a resolutive term by legal imposition or due to the constraints inherent to the type of work or the employee's situation.
- The application of the additional contribution due to excessive turnover takes effect on January 1, 2020, and the first notification for payment shall occur in 2021.
Very Short Term Employment Contract
- The maximum duration of this contract increases from 15 to 35 days and the total duration of contracts signed between the same employee and employer shall not exceed 70 working days in the calendar year.
- The possibility of concluding these contracts is no longer limited to the agricultural and tourism sectors, but is now admitted to other sectors provided that there is an exceptional and substantial increase in business activity, whose annual cycle presents irregularities resulting from the market or of a structural nature that cannot be guaranteed by its permanent structure.
- The minimum period of annual employment under an intermittent employment contract is reduced from 6 to 5 months, of which at least 3 months must be performed consecutively.
- The employer must inform the employee at least 30 days in advance of the beginning of each work period, when the employee is performing another paid activity during the period of inactivity.
- Renewals of temporary employment contracts entered into for a fixed term, which were not subject to limits, are now subject to a limit of 6 renewals, except in case of contracts entered into to replace absent employees, is suche absence is not attributable to the employer, namely in cases of illness, accident, parental leave and other similar situations.
- The reason justifying the signing of the temporary work contract must be grounded on the reason justifying the use of temporary work indicated by the user company in the temporary work use contract.
- The assignment of an employee by the temporary employment agency without an employment contract having been concluded between them, obliges the user company to integrate the temporary employee into an employment contract of indefinite duration.
- The individual hour bank is abolished and it is no longer legally allowed to establish the hour bank system by agreement between the employer and the employee. Hour banks set up by individual agreement that began before the new law came into force will cease within a maximum of 1 year from that date.
- A new form of group hour bank is created, through which it becomes legally admissible to apply the hour bank regime to the set of employees of a team, section or economic unit, provided it is approved in a referendum by at least 65% of the employees covered. The referendum is convened by the employer who must inform, in addition to the employees covered, their representatives and the ACT.
- In this type of bank of hours, the normal period of work can be increased up to 2 hours daily and can reach 50 hours weekly, with a limit of 150 hours per year, and its regime may not be applied for a period longer than 4 years.
Termination of the Employment Contract
The time limits for the dismissal procedure for termination of employment contracts are extended from 10 to 15 days for the representative structure of the employees, the employee and the trade union association, to issue a reasoned opinion on the communication of the intention to dismiss sent by the employer, and from 3 to 5 working days for the period in which they may request the intervention of the ACT to issue an opinion on any of the requirements for dismissal.
- The vocational training to which employees are entitled is increased from 35 to 40 hours per year.
- Provision is made for labor protection for employees with cancer, through the equalization of working conditions for employees with disabilities or chronic illnesses, and the employer has the duty to take appropriate measures to ensure that the person with an active cancer disease undergoing treatment has access to, can exercise and progress in employment, or to provide vocational training, unless such measures would impose a disproportionate burden. In addition, employees with active oncological diseases undergoing treatment are exempted from some of the more onerous forms of organization of the working time, such as adaptability, hour bank, concentrated hours and night work.
- The prevention of harassment at work (mobbing) is reinforced, and is now considered to be an abusive sanction, with a very serious administrative offence, motivated by the fact that the employee has allegedly been a victim of harassment or is a witness in legal and/or administrative proceedings for harassment, expressly providing that the practice of harassment by the employer or by other employees constitutes a culpable violation of the employee's legal or conventional guarantees.
- The provisions of collective bargaining instruments contrary to mandatory standards of the Labor Code must be modified in the first revision that occurs within 12 months after the entry into force of these amendment, otherwise becoming invalid.
- Collective bargaining instruments may only regulate the payment of overtime work in the most favorable sense to the employee, that is, as long as they provide for the payment with an increase equal to or higher than that provided for in the Labor Code (25% for the first hour or fraction thereof; 37.5% per hour or fraction thereof, on a working day; 50% for each hour or fraction thereof, on a weekly, mandatory or complementary day of rest, or on a public holiday).
- It is now foreseen that, in case of extinction of the trade union association or employers during the effectiveness of the collective agreements it has entered into, it expires, but the effects that would remain in case of denunciation remain. Such expiration shall not occur if it can be demonstrated that the union or employers' association was terminated voluntarily in order to obtain the termination of the collective agreements granted.
- The party wishing to denounce a collective agreement (i.e. terminate its validity) must now provide the respective grounds for the economic, structural or misalignment of the regime of the denounced agreement.
- The "survival" period of the collective agreement, whose maximum limit was 18 months, can now be extended up to a further 4 months period through specific arbitration to be requested by any of the signors (this amendment is dependent on the entry into force of legislation governing the matter).
- The provisions on parenthood and safety and health at work are now included in the list of the effects of the expired collective labor agreement that last until the entry into force of another that replaces it (and which already included the matters relating to pay, the professional category and respective definition and the duration of working time).
Entry into Force and Apllication
- This law shall enter into force on the first working day of the month following its publication, that is, on October 1, 2019.
- Amendments to the Labor Code apply to employment contracts in force, with the exception of those that respect the conditions of validity of the contracts and the effects of situations or facts totally past the date on which they come into force.
- The new rules on the admissibility, renewal and duration of fixed-term employment contracts, as well as on the renewal of temporary employment contracts, are not applicable to contracts entered into before the entry into force of these amendments to the Labor Code.