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Transfer of undertakings in Portugal
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Transfer of undertakings in Portugal

Employees’ Rights in Case of a Transfer of Undertaking

When a transfer of undertaking occurs, all employment contracts are automatically transferred to the new employer. This means the employee’s rights, responsibilities, and terms of the contract, such as wages, seniority, and working conditions, are maintained without any need of renegotiation.

Employees have the right to object to the transfer. If an employee does not wish to work for the new employer, they may oppose the transfer under certain specific conditions provided in the law. In such cases, the employment contract can be terminated, and the employee may be entitled to compensation, as if they were dismissed without just cause, unless they terminate the contract for another legitimate reason.

Both the old and new employers are required to inform and consult employees (or their representatives, such as unions or works councils) about the transfer in advance. Employees must be notified of the reasons for the transfer, its legal, economic, and social implications, and any potential changes in their working conditions.

Both the former and new employer may be held jointly liable for obligations arising before the transfer, for a certain timeframe. This includes, among others, outstanding wages, holiday pay or any social security contributions due to employees. This ensures that employees are not left vulnerable if the previous employer had failed to meet its obligations before the transfer.

Requirements for Predecessor and Successor Parties

The transferor and the acquirer must consult the representatives of the respective employees prior to the transfer, with a view to reaching agreement on the measures they intend to apply to the employees following the transfer, without prejudice to the legal and conventional provisions applicable to such measures.

At the request of either party, the competent department of the ministry responsible for the labour area shall take part in the negotiation, with a view to promoting the regularity of its substantive and procedural instruction, the conciliation of the interests of the parties, as well as respect for the rights of the employees.

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