PORTUGAL: An Introduction to Employment

Chambers Practice Area Overview 2019 – Employment

I - Current state of the Portuguese employment market

The Portuguese employment market performed very well in 2018. Supported by 2.1% growth in GDP and economic growth just short of 3%, the unemployment rate has fallen to 6.7%, thus returning to pre-crisis unemployment rates.

Foreign companies are investing in Portugal again and creating jobs, in particular in the tech area, with a significant number of foreign companies opening tech hubs in the country.

On the legislation side, the trend appears to be to intervene less in the improvement of employment market competitiveness and more in introducing limitations on human resources management.

II - FORTHCOMING LEGISLATION 

Amendment of the legal framework on term employment and agency work

The Portuguese Parliament is currently debating a draft law aimed at introducing further limitations on term employment.

The measures currently being debated can be summarised as follows:
a) Reducing the maximum duration of contracts for an uncertain term from 6 to 4 years;
b) Reducing the duration of fixed term contracts from 3 to 2 years;
c) Reducing the number of possible extensions of fixed term contracts from 3 to 2;
d) Elimination of possibility of term hiring workers looking for their first job or long-term unemployed workers;
e) Limitation of term hiring on grounds of the launch of new activities for companies with under 250 employees;
f) Introduction of additional social security contributions for companies that register excessive use of term hiring;
g) Extension of trial period applicable to permanent employment contracts entered into with workers looking for their first job and long-term unemployed workers;

The legal framework for agency work is also targeted by the forthcoming amendments to the Portuguese Employment Code. The objective of these amendments is to limit the use of agency work. The changes under discussion can be summarised as follows:
a) Introduction of a maximum number of extensions (6) of use of agency work agreements;
b) Elimination of the minimum period for those contracts that excluded the applicability of the User Company CBA to temporary workers. The latter will be covered by the CBA from day one;
c) Introduction of an information duty towards the temporary worker concerning the grounds that justify the execution of the agency work agreements;
d) Agency work agreements executed in breach of the legal requirements will mean that the worker will be considered a permanent employee of the user company.

Bank of Hours (by individual agreement) 

Another expected forthcoming change to employment law is the elimination of the bank of hours by individual agreement with the employee.

A bank of hours is a mechanism provided for in Portuguese law under which the employee may work up to two additional hours per day. These hours do not qualify as overtime work and are compensated, at the employer’s choice, with rest, payment in lieu (at the standard hourly rate) or with an increase in the number of holidays.

The amendment will end the possibility of implementing a bank of hours scheme by individual agreement with workers. The latter scheme may only be implemented if at least 65% of the work force approves it or if provided for in the collective bargaining agreement.

III - RECENT CHANGES 

TRANSFER OF UNDERTAKING 

A recent amendment to the legal framework on the transfer of undertakings is impacting the Portuguese market. The amendments envisage increasing workers’ guarantees and the transparency of these transfer processes.

Apart from changing the concept of an ‘economic unit’– limiting it significantly, contrary to European Court case law – these changes also introduced new and extensive information and consultation duties, the possibility of employment authorities to intervene as a real regulator and effectively veto the transfer, and the possibility of employees individually objecting to the transfer of their employment contracts.

The aim of these measures is to avoid fraudulent conduct by certain companies and to safeguard the professional status of impacted workers.

GENDER-BASED SALARY DISCRIMINATION 

According to the most recent statistics, women’s salaries are, on average, 16.9% lower than those of men. Against this background, the government will enact legislation to mitigate the issue of salary gender discrimination.

The proposed legislation will introduce a transparency principle applicable to remuneration policies. This means that employers will have to set up remuneration policies based on clear, objective criteria. In the event of salary discrimination claims, the employer will have to demonstrate that (i) it has an objective remuneration policy in place and that (ii) the person claiming to have suffered discrimination is covered by that policy.

Any unjustified salary differences are classified as discriminatory and must be corrected.

Failure to comply with these obligations will constitute a serious administrative offence, punishable with a fine.

In the first two years, this legislation will apply to companies with more than 250 employees and, after the third year, it will apply to companies with more than 100 employees.

EMPLOYMENT QUOTAS FOR DISABLED EMPLOYEES. 

A minimum quota system for employment of workers with at least a 60% disability was very recently enacted. We would like to highlight the following measures:

1. Employing entities in the private sector (and also of the public sector, excluded from Law no. 29/2001) with more than 75 employees will be forced to hire workers with at least a 60% disability;
2. The disabilities included refer to cerebral, organic, motor, visual, auditive and intellectual palsy;
3. Companies with 75 or more employees should admit workers with a disability in a number not less than 1% of the total number of workers;
4. Large employers (250 or more workers) should admit workers with a disability in a number not less than 2% of the total number of workers;
5. Employers with a number of workers between 75 and 100 will benefit from a 5-year transition period to achieve the minimum quota. Employers with a number of workers exceeding 100 will benefit from a 4-year transition period to achieve the minimum quota. The transition period starts on 1 February 2019;
6. As from 1 January 2020, companies must ensure that, in each calendar year, at least 1% of the yearly workers’ admissions are of workers with a disability;
7. Companies may apply for an exclusion from these rules regarding certain work positions, by submitting a request to the Authority for Working Conditions (ACT), together with a grounded opinion of the National Institute for Rehabilitation (INR), also supported by the Vocational Training and Employment Institute (IEFP).
8. Companies may also apply for an exception concerning the fulfilment of the minimum quota threshold, by submitting a request to the ACT, together with evidence (notably, a declaration of the IEFP) about the insufficient number of candidates with disability registered in employment services that meet the necessary requirements to perform the duties of the job offers presented in the previous year.
9. The Law will be enacted as of 1 January 2019.

BY: Nuno Ferreira Morgado (Partner)