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The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The employment relationship in Portugal is governed by:

  • the Portuguese Constitution;
  • European legislation and other international conventions to which Portugal is party;
  • the Labour Code;
  • other employment and labour laws and ministerial ordinances; and
  • collective bargaining agreements.

Who do these cover, including categories of worker?

The Labour Code protects every employee, regardless of the specific type of agreement entered into with the employer. Nevertheless, there are specific regulations applicable to certain types of employee (eg, domestic employees, professional athletes, artists and performers).

Employment relationships between public institutions and their employees are also governed by special legislation.

Misclassification

Are there specific rules regarding employee/contractor classification?

An employment contract exists when “a natural person undertakes to, for retribution, provide his or her activity to another person or persons, within the organization and under their authority” (Article 11 of the Labour Code).

By contrast, self-employed individuals (contractors) enter into services agreements – that is, “agreement[s] whereby one of the parties undertakes to make available the result of his/her intellectual or manual work, with or without pay” (Article 1154 of the Civil Code). Self-employed workers can claim that they are employees and are in fact bound by an employment agreement if they can provide evidence of some elements that are inherent to an employment relationship, which include:

  • having a working time schedule;
  • receiving orders and instructions from the employer; and
  • the employer having disciplinary power over them.

This classification depends on many factors that are frequently adjusted by case law.

Contracts

Must an employment contract be in writing?

As a rule, employment agreements do not have to be in writing.

However, the following must be in writing:

  • promissory agreements;
  • term employment agreements;
  • teleworking;
  • temporary and pre-retirement employment agreements; and
  • employment agreements with a foreign employee.

Are any terms implied into employment contracts?

All employment relationships implicitly include the employer’s obligation to:

  • provide work;
  • pay for the work rendered; and
  • provide a safe working environment.

As for the employee, every employment agreement implies that the employee:

  • will carry out the work; and
  • be loyal to his or her employer.

In addition, employment agreements are always subject to an implied probation period, unless the parties choose to reduce or exclude it in writing.

The Labour Code (and the applicable collective bargaining agreement) provides for supplementary rules governing the employment agreement.

Are mandatory arbitration/dispute resolution agreements enforceable?

Under Portuguese law, mandatory arbitration and dispute resolution agreements are unenforceable.

However, employment litigation procedural rules include a mandatory conciliation act before the claim is discussed during a judgment hearing. This conciliation act can be presided over by the judge or the Public Attorney’s Office, depending on the type of judicial action and claim at stake.

How can employers make changes to existing employment agreements?

In principle, any change to an employment agreement requires mutual consent between the employer and employee. However, the law recognises an employer’s right, in certain cases, to regulate some aspects of the performance of work (eg, the working schedule and the place of work) and amend them unilaterally, provided that the requirements established by the law are complied with.

The most common mechanisms to change terms and conditions consist of:

  • the employer’s management unilateral decision (when applicable and to the extent possible);
  • the employee’s consent (eg, through an addendum to the employment agreement); and
  • variation clauses in the employment agreement that allow the employer to make the change unilaterally.

Regarding changing terms and conditions of employment in general, only in very limited situations is it possible to reduce the employees’ salaries and other benefits of employment, regardless of consent.

Certain changes that affect multiple employees may be subject to prior consultation with the relevant employees’ representatives.

Foreign workers

Is a distinction drawn between local and foreign workers?

The law distinguishes between Portuguese and foreign employees by establishing certain obligations and legal thresholds regarding employment agreements concluded with foreign employees (eg, the employment agreement needs to be in writing and contain an appendix with the identification and addresses of the people that will benefit from the employee’s pension in case of death resulting from a work-related accident or occupational disease, as well as a copy of the employee’s visa or work permit). Further, all employment agreements entered into with foreigners must be notified to the labour authorities (Autoridade para as Condições de Trabalho).

Apart from these obligations and formal thresholds, foreign employees authorised to exercise a professional activity in Portugal have the same rights and are subject to the same duties as Portuguese nationals.

However, a distinction can be made between employees on international assignments in Portugal and employees under a Portuguese contract. The first are subject to core mandatory rules (eg, health and safety, holidays, maximum working time limits, minimum wage, etc), rather than the entire Labour Code. Further, when a foreign company seconds an employee to Portugal, the labour authority must be notified.

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