By Inês Reis, Firm: pbbr
This is article provides information on recent legislation (Law no. 93/2019 of 4 September 2019) introducing important changes to the Portuguese Labour Code and Social Security Code.
1. Changes to the Portuguese Labour Code (‘LC’)
The maximum limit for a trial period for fixed-term employment contracts entered into with employees seeking a first job or in a long-term unemployment situation is now 180 days.
A period of professional training previously carried out for the same activity and for the same employer will be taken into account to reduce or exclude the trial period of the employment contract. This is similarto what already happens with:
- prior fixed-term employment contracts for the same activity;
- temporary employment contracts for the same position; and
- service provision agreements for the same object.
The minimum number of hours per year of professional training to be provided by employers to employees increases from 35 to 40. For employees with fixed-term employment contracts with a duration equal to or longer than three months, the minimum number of training hours will still be pro-rated to the duration of the contract.
Fixed-term employment contracts
The scope for Collective Bargaining Agreements (CBAs) to waive the application of the fixed-term employment contract legal regime is eliminated, even if the CBA is more favourable to the employee. This does not apply to the list of situations considered as temporary needs of the company, or to the rules foreseeing the precedence in hiring employees under term employment contracts.
The use of fixed-term employment contracts based on the launch of a new activity of uncertain duration or of a new company or undertaking is now only allowed in companies with fewer than 250 employees. This is a reduction from the previous threshold of 750 employees. The new law also clarified that this motive will only be valid for the two years subsequent to the facts that triggered it.
Workers looking for a first job and in long-term unemployment are not admissible reasons for using fixed-term employment contracts. However, these contracts can still be executed in situations where the worker has been in a situation of very long-term unemployment, i.e. individuals aged 45 years or older who have been registered in the employment centre for at least 25 months.
Fixed-term employment contracts will have a maximum duration of two years (instead of three), and the total duration of renewals, up to a limit of three, must not exceed the initial term.
Non-fixed term employment contracts will have a maximum duration of four years (instead of six).
Employees’ entitlement to compensation for forfeiture of fixed-term employment contracts is now expressly foreseen, even when the contract’s non-renewal has been agreed between the parties.
Finally, the duration of very short-term contracts has been increased from 15 to 35 days. This regime is now applicable to all sectors that register an exceptional and substantial increase in activity.
Working hours banks
The individual working hours bank regime was eliminated. Pre-existing individual agreements will be automatically terminated within one year of the new law coming into force.
However, new rules are foreseen for the implementation of the group working hours bank. If approved by a referendum of workers with 65% of affected employees in favour, this can now be implemented, subject to specific rules, for a period not exceeding four years.
The minimum period of full-time work is reduced to five months per year (instead of six), and at least three months of that time (instead of four) must be consecutive.
The new law foresees that, whenever an employee carries out another professional activity during the inactive period, the amount earned will be deducted from the salary paid by the employer.
The posting of a temporary employee in a user company, without the corresponding temporary employment contract or indefinite term employment contract for temporary posting having been executed, will mean the temporary employee is included in the user’s headcount (and not in the temporary work agency headcount) on an open-ended employment contract.
Any contract for the use of temporary workers which does not expressly include the mandatory references legally foreseen (including the identification of the parties, the reason for using temporary workers, job description, place of work, working hours, salary and start and end date) is null.
A maximum limit of six renewals is introduced for fixed-term temporary employment contracts. This limit does not apply to contracts executed for the replacement of an absent employee, for reasons not attributable to the employer (sickness, accident, parental leave and similar situations).
The CBA applicable to the user company will now automatically apply to temporary workers, instead of only applying after 60 days of work having lapsed.
Whenever an employer applies more than one agreement, employees may choose the CBA applicable to them if they are part of the activity, professional and geographic sectors of the chosen agreement.
CBA provisions that are contrary to LC rules must be updated on the first review occurring within the 12 months subsequent to the new law coming into force. If they are not updated before 30 September 2020, such rules will be considered null.
Termination of contract for harassment
An employee is now entitled to terminate his or her employment contract for cause as a result of ‘harassment by the employer or other employees’.
At the same time, any disciplinary sanction applied by the employer as a result of an employee claiming to be a victim of harassment or being a witness in a judicial or disciplinary procedure based on harassment, is considered abusive.
The new law came into force on 1 October 2019. This does not apply to:
- fixed-term employment contracts’ validity, renewal and duration; or
- renewal of temporary employment contracts’, where these contracts were executed before 1 October 2019.
Modifications regarding the trial period extension, the generalisation and encouragement of very short-term employment contracts and the forfeiture of collective agreements have recently been sent to the Constitutional Court for scrutiny and may therefore shortly be subject to additional changes.
3. Changes to the Social Security Code
An additional contribution for excessive employee turnover, intended for protection against unemployment was implemented on 1 October 2020.
Employers who, in the same calendar year, have an annual temporary employment contract (for either a fixed or unfixed term, known as ‘term contracts’) hiring rate higher than the relevant sectoral indicator in force (published in the first quarter of each calendar year), will be subject to an additional contribution that applies progressively, based on the difference between their annual term contract hiring rate and the sectoral average, up to a maximum of 2%.
Please note that this regime does not apply to:
- term employment contracts executed for the replacement of an employee on parental leave or on sick leave for a period equal or longer than 30 days,
- very short-term employment contracts and contracts mandatorily executed for a temporary period.