Portugal: 2026, Looking Ahead

As we enter 2026, several legislative changes and initiatives are expected to influence employment and labor law in Portugal. Here is an overview of the of relevant upcoming developments:

1. Labour law reform

In July 2025, the Portuguese Government presented a draft labour law reform proposal aimed at broadly revising the Labour Code. The proposal represents, to a significant extent, a reversal of several measures adopted during the previous Socialist-led governments, including key elements introduced under the labour reforms enacted during that period. At the same time, the proposal also introduces new and innovative measures intended to modernise labour relations and increase labour market flexibility.

The stated objectives of the reform include promoting economic competitiveness, increasing labour market adaptability, fostering job creation and retention, and aligning labour legislation with new forms of work and business organisation, especially in a context of digitalisation and technological change.

The draft proposal covers a wide range of matters, with key measures focusing on working time organisation, term contracts, collective bargaining, outsourcing and dismissal regime. It also makes adjustments to parental rights and work-life balance frameworks.

The reform has generated significant social and political controversy. Strong opposition from trade unions culminated in a general strike on 11 December 2025, reflecting widespread concern that certain measures may represent a rollback of labour protections introduced in recent years.

Negotiations between the government and social partners are ongoing, with the government signalling its intention to re-engage in social dialogue. Although the legislative process is not yet concluded, the government has publicly expressed its commitment to pursuing a comprehensive labour law reform. The goal is to approve a revised Labour Code during 2026.

Employers and employees alike should therefore closely monitor the evolution of this legislative process.

2. Minimum wage increase

Effective 1 January 2026, the Minimum Monthly Wage is expected to raise from € 870 to € 920 in mainland Portugal.

This increase is part of the multi-year agreement (2025–2028) that the Government signed with Social Partners in October 2024 to promote economic growth and wage valorisation.

Companies covered by Collective Bargaining Agreements (CBAs) may offer higher minimum salaries. The statutory minimum wage increase may also influence these agreements, as unions often push for salary adjustments to reflect broader wage progression.

3. Equality and wellbeing at work

Corporate Sustainability Reporting Directive (CSRD) Implementation

The EU’s Corporate Sustainability Reporting Directive (CSRD) establishes extensive obligations for sustainability reporting, including detailed employment and workforce disclosures. The directive applies to large companies and listed SMEs, requiring them to report on environmental, social, and governance (ESG) practices, including workforce diversity, equal pay measures, and working conditions.

While Portugal has not yet transposed the directive into national law, companies operating in Portugal should prepare to comply. This involves establishing data collection mechanisms, aligning reporting practices with European Sustainability Reporting Standards (ESRS) and ensuring transparency regarding ESG metrics.

 

Gender Pay Gap Reporting and Pay Transparency Directive

The Authority for Labour Conditions (ACT) is expected to continue to inspect compliance with the gender pay gap obligations under Law No. 60/2018, which establishes a framework to promote equal pay for equal work and to address gender-based pay discrimination.

At the EU level, Directive (EU) 2023/970 on pay transparency represents a key upcoming development. Member States must transpose the directive by 7 June 2026, a deadline that is approaching. Although Portugal has not yet adopted the transposing legislation, the new framework is expected to build upon and expand the existing national regime significantly.

Once transposed, the directive will introduce enhanced pay transparency obligations, including transparency prior to recruitment, reinforced employee rights to pay information, mandatory gender pay gap reporting for larger employers and strengthened enforcement mechanisms.

4. Other developments and trends

Authority for Labour Conditions (ACT)  Inspections

Following enforcement campaigns in 2024 and 2025, the ACT is expected to maintain a strong focus on inspections throughout 2025. Priority areas will include addressing gender pay gaps, verifying whether temporary and independent workers are or not, in fact, engaged under permanent employment contracts, and monitoring compliance with quotas for disabled workers.

 

Redundancies & Layoffs

The government forecasts a modest decline in unemployment in 2026. Despite this, data indicates a rise in collective redundancies/layoffs in 2025 (the highest number since 2020) and it is expectable that specific industries continue to face structural challenges – e.g. related to economic / market outlook, digitalisation and the introduction of technologies and AI – requiring additional intervention.

 

Artificial Intelligence

Portuguese employment law already addresses the use of AI, including algorithms, by requiring transparency regarding the parameters, criteria, rules, and instructions underlying such systems. These regulations cover AI-driven decision-making processes related to employment access, job retention, working conditions, profiling, and performance monitoring.

Looking ahead to 2026, discussions and regulations surrounding AI are expected to evolve further, particularly considering the enactment of the EU Artificial Intelligence Act and the growing implementation of these systems, which will require driving greater scrutiny and regulatory focus.

Conclusion

Portugal’s employment and labour law landscape in 2026 is expected to be shaped by a combination of legislative reform, enhanced enforcement and increasing alignment with EU-driven regulatory frameworks.

In this context, it will be essential to mitigate risk and ensure legal compliance by preparing early and carefully monitoring the upcoming legislative developments.