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02. Employment contracts

Minimum requirements

Generally speaking, the employment contract does not require any special form and may, therefore, be agreed under written form or verbally. However, there are certain situations in which the contract or some clauses must be executed in writing, examples of which are: i) fixed term employment contract; ii) part-time employment contract; iii) temporary work contract or intermittent employment contract; iv) teleworking contracts; v) single employee contracts with multiple employers; vi) non-competition clauses.

Where the law requires written form for certain employment contracts, failure in this requirement, does not entail, in principle, the nullity of the contract. In fact, what happens in most cases is that the contract is deemed to be subject to general employment rules (e.g. part time contract will be deemed to be full time; temporary contracts will be deemed permanent employment, etc.).

In order to supply the employee with a minimum set of information, the Code requires the employer to provide the employee with written information on the employment contract and working conditions, such as identification of the employer, the employee’s workplace, the employee’s category or a concise description of the employee’s duties, remuneration, normal daily and weekly working hours, etc.

When executed in written form, the employment contracts must be signed by the person or persons who are authorised to represent the company in dealings with third parties according to the company’s articles of association or duly empowered to do so.

There is no legal requirement for employment contracts to be executed in Portuguese, thus the use of other languages (e.g. English) is acceptable provided the employee understands the language used. Moreover, bilingual versions may also be used, in which case it is recommended to set a prevailing version. Nevertheless, contracts drawn in a foreign language, as a rule, will have to be translated into Portuguese when filed with a Portuguese authority or official and a translation certification may also be required.

Fixed-term/Open-ended Contracts

Unless otherwise specified by the parties, employment contracts are deemed open-ended (i.e. permanent employment). Fixed term contracts are permitted by law provided that they are executed in written form and provided they are meant to fill a role required on the basis of a merely temporary need of the employing company. Hence, if there is no written contract, the employment contract will be deemed to be an open-ended contract.

Trial Period

Trial periods (initial probation) for permanent employees are 90 days, 180 days for high complexity, trust or responsibility roles and 240 days for management, directorate and equivalent responsibility roles.

Fixed and unfixed term temporary contracts are subject to shorter probation periods (i) 15 days if agreed for an expected or fixed duration shorter than 6 months; and (ii) 30 days for durations equal to or longer than 6 months.

During the initial probation/trial period, the employer and the employee are free to terminate the employment. For termination within the contract trial period by the employer, no prior notice is required within the first 60 days. Termination during the probation period requires the employer to give a seven or 15-day prior notice in cases where the probation period has lasted for more than 60 or 120 days, respectively.

Termination of a labour agreement by either of the parties during the probation period does not require any grounds of justification and no indemnification is due. The maximum terms for the probation period vary between 15 and 240 days, according to the type of activity and the nature of the agreement (for a permanent employment contract, the average probation period is 90 days). The employee is not subject to any prior notice to terminate the contract during the trial period.

Notice Period

The employee is free to resign, subject only to certain prior notice periods:

For permanent employees: 30 days for contracts which have been on force for up to 2 years; 60 days for contracts which have been on force for more than 2 years;

For fixed (or unfixed) term (temporary) employment agreements: 15 days for contracts, which agreed (or expected) duration is less than 6 months; 30 days for contracts, which agreed (or expected) duration is equal to (or longer than) 6 months.

It is not possible to agree on longer probation periods than those legally foreseen, but it is possible to agree on shorter probation periods, as well as to fully exclude probation periods. Companies often pay salary in lieu of notice period in situations of collective dismissal, but the legality of this practice is questionable.  The employee is allowed to do it with the consent of the employer. The salary must be fully paid until the date of the proper termination of the contract.

Any questions

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