Introduction

Portuguese labour law is highly protectionist. Its rules and principles apply both to individual employment relationships and to collective bargaining agreements, which endow trade unions with an important role, particularly in business areas or industries where said agreements are applicable on a broader scale as a result of government extension measures. In 2009 the Labour Code (originally issued in 2003) underwent a relevant reform. This resulted in more flexible solutions, namely on work time organisation issues. From 2011 onwards, in view of the austerity package measures, a number of relevant changes were also introduced, e.g. reductions to the severance compensations due in case of redundancy and reductions to extra work pay. Some of these measures were changed in 2016 under a tendency to withdraw some of the previously applied austerity provisions (e.g. national holidays that had been suspended were put back in place in 2016).

Key Points

• A relevant reform to labour law took place in 2009 and additional changes were introduced after 2011. These reforms had a significant impact on employee rights and obligations.
• Two of the most striking features of Portuguese law are probably the variety of its sources and the level of protection it grants employees.
• Collective bargaining agreements are entered into at the regional, national or industry levels, between the unions and employers‘ organisations or on company or multiple company levels between the unions and the relevant employing companies.
• The scope of application defined in a collective bargaining agreement may be extended, after its entry into force, by a government extension act. In such cases, the provisions of the extended collective agreement, depending on the extension terms, will apply either in a specific region or at a national level, to all companies operating in the relevant business sector or industry and employees at their service (regardless of such employees being union affiliated).

Legal framework

Employment law, rules and guidelines prevailing in Portugal are mostly based upon the following laws:

• The Portuguese labour and social Constitution provisions;
• The Portuguese Labour Code subject to a major reform in 2009 and subsequently amended and respective implementing decree;
• The Social Security Contributory Code and respective implementing decree [Law no. 110/2009, of September 16 (last amended by Law no. 2/2020, of March 31) and Implementing Decree no. 1-A/2011, of January 12 (last amended by Decree-law no. 84/2019 , of June 28)];
• Procedural legal framework on labour and social security misdemeanours (Law no. 107/2009, of September 14, last amended by Law no. 55/2017, of July 17);
• Legal framework on age and invalidity retirement (Decree-Law no. 187/2007, of May 10, last amended by Decree-Law no. 79/2019, of July 14);
• Legal framework on protection in the event of sickness (Decree-Law no. 28/2004, of February 4, last amended by Decree-Law no. 53/2018, July 2);
• Legal framework on protection in the event of parenting (parental leave and respective subsidies) [Decree-Law no. 91/2009, of April 9, last amended by Law no. 90/2019, of September 4];
• Legal framework on the Public Capitalisation Scheme (Decree-Law no. 26/2008, of February 22, last amended by Decree-Law no. 82/2018, of October 16);
• Legal framework on Safety and Health at Work (Law no. 102/2009, of September 10, last amended by Law no. 79/2019, of September 2);
• Legal framework on the compensation of accidents at work and occupational diseases (Law no. 98/2009, of September 4);
• List of Professional Illnesses and National Table of Disabilities (Decree-Law no. 352/2007, of October 23 and Implementing Decree no. 6/2001, of May 5, amended by Implementing Decree no. 76/2007, of July 17);
• Social Security’s Disability Verification System (Decree-Law no. 360/97, of December 17, last amended by Law no. 2/2020, of March 31);
• Legal framework on unemployment protection applicable to employees (Decree-Law no. 220/2006, of November 3, last amended by Decree-Law no. 75-B/2020, of December 31);
• Legal framework on unemployment protection applicable to self-employed professionals (whose services are mostly provided to a single contracting authority) [Decree-Law no. 65/2012, of March 15, last amended by Decree-Law no. 53/2018, of July 2];
• Legal framework on unemployment protection applicable to self-employed professionals with an entrepreneurial activity and to members of corporate bodies (Decree-Law no. 12/2013, of January 25, last amended by Decree-Law no. 53/2018, of July 2);
• Legal framework on Work Compensation Funds (Fundo de Compensação do Trabalho and Fundo de Garantia de Compensação do Trabalho) [Law no. 70/2013, of August 30 (amended by Decree-law no. 210/2015 of September 25)].

In addition to the abovementioned legal sources, employees’ and employers’ contractual relationships are also governed by the following instruments:

• Collective bargaining agreements (convenções colectivas de trabalho), i.e., agreements negotiated between one or more trade unions and one or more employers’ organisations or employers;
• Employment contracts;
• Company internal regulatory instruments (regulamentos de trabalho) implemented by each organisation to apply to its own employees;
• Precedent court decisions are not legally binding. However, the decisions of the Constitutional Court (Tribunal Constitucional) and the Supreme Court (Supremo Tribunal de Justiça) have in certain cases general application.

New Developments

The current general framework on employment law stems from 2009’s major reform of the labour laws. 2003 marked the turning point with the approval of a complete Labour Code – replacing an extensive number of legal acts that had been multiplied and reviewed in the previous twenty to thirty years. This had an important impact on the rights and obligations of employees. More flexible solutions and measures to safeguard and promote employment, and to protect the unemployed were implemented. In fact, the Labour Code known as the new 2009 Code was amended in the context of several public reforms that aimed to increase corporate competitiveness and productivity by allowing labour law, collective bargaining agreements, and individual employment contracts to be more flexible.

2012 also registered relevant reform amendments in labour law, affecting specific provisions of the Portuguese Labour Code namely on severance pay for contract termination.

In 2016, following the new government that took office, changes occurred / were implemented in the short run. The most relevant of which as far as private employment matters were an increase of the minimum wage, which has continued progressively, and the reinstatement of number of suspended national holidays. As far as public servants are concerned, measures such as the end of pay cuts and the reinstatement of the 35 hours working week after working hours of the public servants having been increased to 40 hours a week in the context of the austerity measures applied in Portugal, deserves a highlight.

Decree n.º 25/2018, of January 18, set the retirement age in 2019 at 66 years and 5 months. The same applied in 2020 (Ordinance no. 50/2019, of February 8). For 2021, the standard age to access the old-age pension of the general social security scheme has been set at 66 years and 6 months (Ordinance no. 30/2020, of January 31).

The year 2018 brought changes to rules on the transfer of undertakings (TUPE). Essentially, these new measures related to the operative concept of an economic unit, the duties of information and consultation of workers and their representative structures, and conferring with the employees on the right to oppose a change of employer resulting from the transfer of the undertaking, and the right to terminate the employment contract, in certain circumstances.

2019 brought, yet again, a new set of amendments to the Portuguese Labour Code and the Contributory Code – social security protection rules – resulting from the tripartite agreement reached in the Social Concertation, with the aim of fighting precarious employment in the labour market and thus, reinforcing job security, in particular for young employees. The new rules brought a number of changes at various levels: employment contracts; organisation of working time; instruments for collective labour regulation; employees who have cancer; and additional contributions.

2020 was, in every sense of the word, an atypical year following the global outbreak of the COVID-19 pandemic. The Portuguese Labour Code and related employment and social security legislation were not sufficiently flexible, single-handedly, nor as swift as the circumstances demanded, in order to fully respond to the wide-ranging requirements of a national state of emergency. The Portuguese Government adopted temporary exceptional measures – including swift furlough and financial support measures and allowances – in the form of successive legislative measures, which were not always easy to interpret, but had to be applied. The measures had an impact on several matters such as, inter alia, employer Occupational Safety and Health Services issues, remote working, holiday scheduling and financial support and incentives for employers (including swift furlough procedures and dismissal bans and restrictions on responding to the business crisis resulting from lockdown measures and acute losses in turnover and business activity.