Portugal: The Employment Reform - New Challenges Of A Global Market

Last Updated: 11 April 2012
Article by Cláudia Vaz Póvoa and Filipa Farinha Santos

The Commitment for Growth, Competitive and Employment (CGCE) was signed with the purpose of implementing a long term reform in the Employment Sector, whereby a more permanent, stable and competitive model is created, based on a more interventive and thought out legislation.

The new economic policies and the increment of active employment and training strategies within the Commitment will never reach the self set interventive goals if, on a parallel time scale, there isn't a coexisting intervention and restructuration of employment laws.

Thus the final dossier of the CGCE focuses exclusively on Employment Law and approaches various issues which will ultimately revolutionize Portuguese employment foundations and shorten the distance between this system and other European models.

Working Time Rules

The integration of Portugal into a global economy demands from companies a great capacity of adaptation, namely in terms of working hours.

The CGCE suggests a better use of the existing resources within the companies via the adaptation and better organization of the work time, notwithstanding the need to respect the work time limits.

Thus considered, there are three measures to be created and implemented:

  • Set up of a Banco de Horas agreed upon individually between the employer and the employee, in which 2 extra hours of daily work can be negotiated, with a limit of 50 weekly hours and 150 yearly hours. To date, the Banco de Horas could only be negotiated within collective conventions;
  • Set up of a collective Banco de Horas, established in similar terms to those of the group adaptability, whereby all employees of a certain establishment or sector will be covered as long as a majority of 60% or 75% (depending if it is foreseen in a collective Convention or agreed upon individually) of the employees agree to such a measure;
  • Faced with the above, alteration of the current resting periods, whereby an employee that can work over 10 hours must rest between 1 to 2 hours, and cannot work for more than 6 consecutive hours, unlike the current legal limit of 5 hours.

Furthermore, to further stimulate and implement the organization of the work time, the Commitment accrues alterations in the regime established for overtime which will necessarily have to be adapted and implemented within the 1st quarter of 2012, namely:

  • Withdrawal of the compensatory resting periods;
  • Cut in the amounts paid as overtime compensation – 25% in the 1st hour or fraction of hour and 37.5% per hour or fraction of hour thereon, when the overtime is carried out on a working day; and 50% when overtime is to take place on the weekly resting day or on a bank holiday;
  • 50% cut of the current amounts due for overtime stipulated within the Collective Conventions;
  • Notwithstanding, for the following 2 years, the legally imposed limits are applicable to all, individual contracts or collective conventions, and only once the 2 year probation period is over are the aforementioned limits applicable to collective conventions, unless new limits are negotiated during said period;
  • 50% cut of the overtime pay received on a bank holiday in a company with authorization to operate without interruption, notwithstanding the employer's option to maintain the possibility of compensatory rest instead of the overtime compensation payment;

Alterations to the Bank Holiday and Holidays' System

a) Bank Holidays

With reference to Bank Holidays, it has been long discussed that the number of days off will be reduced and, within the Commitment, the parties have agreed upon a reduction between 3 to 4 days, in spite of the non disclosure of the precise dates.

Furthermore, it has been set forward that the date on which the Bank Holidays are commemorated will not be changed, however, should the employer decide to close the company or establishment on the day immediately before or after a Bank holiday that falls on a Tuesday or Thursday, respectively, the employee will be forced to take said day off as a day of holiday or make up the time off in the future.

It is also hereby introduced a new system to avoid unjustified absences between a bank holiday and a weekend, whereby an unjustified absence for a day or half a day immediately before or after a bank holiday translates in an immediate loss of payment for the respective resting days or bank holiday.

b) Holidays

The Commitment has revoked the 3 additional days of holidays, re-establishing the annual holiday period of 22 working days, with no possibility of extensions.


The parties agreed on alterations within the Employment Code as to allow a greater flexibility of dismissals due to individual redundancies and to employee's inadaptability.

a) Individual redundancies

The employer has been given the possibility of determining the criteria for the redundancy, as long as the criteria proves to be relevant, non-discriminatory and adequately justifies the redundancy itself.

Furthermore, the obligation to place the employee in a compatible work position within the company or establishment is to be ceased.

b) Employee's inadaptability

The dismissal due to the employee's inadaptability is facilitated as it is no longer dependant on technological or production innovations, and now includes further criteria such as the inability to comply with goals and the inability to adapt to new rules or work methods.

Thus considered, within this regime of dismissal, it is equally suggested that the obligation to place the employee in a compatible work position within the company or establishment is removed and therefore the employee is offered, besides the legal compensation, all the credits due as a result of the termination of the contract until the end of the notice period.

The consultation period is reduced and a deadline for the employer to issue the dismissal is established, which should be carried out in writing and presented with the due justification.

The employee can appeal the dismissal decision based on inadaptability if it is not directly based on any changes to the employment position, therefore the inadaptability will have to be verifiable and substantial, and the employer would have had to make available all the necessary means to eliminate the inadaptability situation.

Once the inadaptability situation is communicated to the employee there will be a 30 day trial period granted to the employee in which substantial modifications can be shown, however, it is equally accepted that the employee immediately terminates the contract without giving up the rights to compensation.

Compensation for the Termination of Employment Contracts

Notwithstanding the signing of the contracts until November 1st 2011, the compensation will be calculated according to new rules, although the employees acquired rights have been taken into consideration and are safeguarded:

  1. The employee is entitled to the compensation to which he/she was entitled to up to the date the new law comes into force;
  2. Should this compensation be equal or above 12 basic salaries and diuturnidades or 240 National Minimum Wages, the employee is entitled to the amount in 1), and to no further amounts accrued;
  3. Should said compensation be lower than 12 basic salaries and diuturnidades or 240 National Minimum Wages, the employee is entitled to 1) and will continue accruing the due amounts he/she is entitled to according to the new compensation laws (applicable to contracts signed after November 1st 2011) to a maximum limit of 12 basic salaries and diuturnidades or 240 National Minimum Wages.

The present alterations to the compensation calculations are mandatory and applicable to all employment contracts and collective conventions, without exception.

The CGCE further adds that the present calculation may not be definite to date. Currently, there are studies carried out comparing the various compensation payments within other European countries, and the current proposal is open to additional alterations in November 2012.

New Compensation Fund

It is only hereby referred that there is a commitment from the Government to present a Legal Project during the 2nd quarter of 2012, as to have the Fund operational in November.

Other Contract Types

With reference to the Very Short Term Contracts, whose name translates' their precise nature, an important alteration has been implemented due to the highly reserved set of activities in which this contract can be used, as it has been considered justifiable to extend the maximum duration of the contract to 15 days.

Notwithstanding, the maximum duration of the contract with the same employer cannot exceed 70 days a year.

With reference to the Service Commission, it has been agreed to include, by means of Collective Convention, new management positions.

Unemployment Benefit

Referencing the commitments already undertaken by the Government within the Memorandum of Understanding from Troika, the following changes to the unemployment subsidies are to be noted:

  • Those who are currently unemployed will maintain the benefit amounts for the duration and the amount initially approved;
  • A limitation to a maximum duration of 18 months of unemployment benefit for newly hired employees, although those who have contributed towards the system for a longer period of time will be entitled to a longer period of benefit;
  • For employee who are currently employed there will be a double standard of calculation:
  1. Those who are entitled to over 18 months of unemployment benefit will not lose these rights;
  2. All others will only be entitled to a maximum of 18 months.
  • Reduction of the maximum amount payable to 2.5 of the Social Index (€ 1,048.05), unlike the current amount of 3 SI; The minimum amounts are maintained.
  • 10% cut of the benefit after 6 months of unemployment;
  • Should both elements of a couple be beneficiaries of the unemployment benefit and have children in their care, the above will not be applicable (also applicable to single parents);
  • Reduction from 15 to 12 months of the time necessary to access the unemployment benefit;
  • Further coverage of unemployment benefit, namely to freelance workers employees who supply a service in 80% or more to a single entity, and pay Social Security.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions