Forums For Adjudicating Employment Disputes
Employment disputes fall within the jurisdiction of the Labour Courts.
There is also an employment conciliation, mediation and arbitration system, governed by the Labour Code and Decree-Law No. 259/2009 of 25 September 2009, which provides for mandatory arbitration and necessary arbitration, as well as arbitration in relation to minimum services during a strike and the means necessary to guarantee those services. Mandatory and voluntary arbitration is limited to cases involving collective bargaining disputes and to cases where the judicial courts do not have jurisdiction and the parties are free to agree terms (issues such as the termination of labour agreements, holidays, the working schedule and overtime work are not matters on which the parties are free to negotiate, and therefore such matters cannot be resolved by arbitration).
The Main Sources Of Employment Law
There are a number of different sources: the Portuguese Constitution, International Law, EC law, the Labour Code and respective Regulation, the Labour Procedure Code, Collective Bargaining Agreements, Extension Regulations, labour uses provided they do not conflict with principles of good-faith and harmonised case law.
National Law And Employees Working For Foreign Companies
The parties are free to agree which law is applicable to their employment relationship. However, in the absence of an express agreement, determining the applicable law will depend on each specific situation and on international law.
Regardless of the law applicable to the contract, the mandatory provisions of Portuguese Labour law (which include provisions relating to maximum working hours, compensatory rest days, health and safety rules, minimum periods of holiday, minimum wage, payment for overtime work, equality and non-discrimination) will apply to foreign employees living and working in Portugal, whether they are doing so on a permanent basis or simply as temporary expatriated employees.
National Law And Employees Of National Companies Working In Another Jurisdiction
Please see the above section. An employee working in another jurisdiction is entitled to request the application of the mandatory provisions of Portuguese Labour law (as set out above) without prejudice to any more favourable regime which may apply by virtue of working in that other jurisdiction, or by virtue of the parties’ choice of contractual law.
The implementation into Portuguese national law of the General Data Protection Regulation (EU 2016/679) occurred in 2019 (Law 58/2019 of August 8). Among other aspects, this law:
- Designates the National Data Protection Commission (CNPD) as the national supervisory authority for the purposes of the GDPR and the law;
- Clarifies which public and private entities are obliged to appoint a Data Protection Officer;
- Determines the rules concerning the processing of employees’ data in the context of labour relationships, for instance regarding: consent by the employee (not lawful if the processing results in a legal or economic advantage for the employee), video-surveillance systems (remote surveillance images may only be used in disciplinary proceedings if they have been previously used in criminal proceedings) and biometric data (processing is only considered lawful for attendance control and access control to the premises).
Legal Requirements As To The Form Of Agreement
As a rule, employment agreements do not need to take any particular form and therefore they may be oral or written. However, the exceptions to this general rule are fixed term employment agreements, employment agreements under a commission of services regime, part-time employment agreements, intermittent employment agreements, tele-work and temporary work. Regardless of the form of agreement, there are a number of key terms and conditions that must be provided to the employee in writing, as follows:
- The identity of the employer. In the case of a corporate employer, this includes details of the company’s structure (i.e. its holdings and subsidiaries and/or the existence of a group of companies) and its respective headquarters or address;
- The place where the work must be performed, or, if there is no fixed place, a statement to that effect;
- The job title or a brief description of its functions;
- The date of execution and employment commencement date;
- The duration of the contract (if it is subject to a fixed term);
- Holiday entitlement and/or duration and the relevant method of calculation;
- The notice period required by the parties to terminate the employment relationship (if any) and/or the method for calculating such notice;
- The remuneration and the frequency of payment;
- The number of hours to be worked per day and per week. Where this is merely an average figure, that fact should be stated;
- The identification of the labour accidents insurance policy and the name of the relevant insurance company;
- Applicable collective agreements;
- The identification of the wage guarantee fund or equivalent mechanism.
Although as a general rule employment agreements do not have to be written, there are several advantages to having a written agreement - it allows both parties to agree upon and confirm in writing the main aspects of the employment relationship.
The trial period duration depends on the type of contract and/or of the employees’ job title/functions. In most cases the trial period is up to 90 days granted on the commencement of employment; when employees hold positions with technical complexity, perform trust-based functions, are looking for their first job or are long-term unemployed, the trial period is extended to 180 days; the trial period is up to 240 days for employees in senior management positions. In fixed term agreements, the trial period lasts 30 days in case of the duration of the contract is equal or longer than 6 months; for contracts shorter than 6 months, the trial period is 15 days.
The trial period is reduced or even excluded where there has been a previous contract between the same employer and employee under which the employee carried out the same work. The amount of the reduction or exclusion depends on the length of the previous contract. The parties may expressly reduce the trial period by agreement or by means of applicable collective agreement.
As a rule, during the trial period each party can terminate the employment contract without notice, cause or severance payment. However, where the trial period lasts longer than 60 and up to 120 days, the employer is obliged to give 7 days’ notice of termination; where the trial period last for more than 120 days, the relevant notice period is 15 days.
Hours Of Work
Under statute, the normal maximum permitted working period is 8 hours per day and 40 hours per week. These maximum amounts may be increased or reduced in certain situations, for example through collective bargaining agreements or agreement between both parties in the context of legal flexible forms of working time organisation. In certain economic sectors of activity or job titles/functions the maximum working period may be lesser than 40 hours per week (for instance in the insurance sector). Where an employee is engaged in unhealthy work (as defined by the Labour Ministry) the employee cannot work longer than 6 hours per day. Unhealthy work is similar to unsafe work. Employees who work night shifts between 9pm and 6am cannot work longer than 7 hours.
Special Rules For Part-time Work
Part-time employment agreements must be agreed in writing and must detail the number of working hours per week with comparative reference to full time work. Part-time employees must be paid the same rate as their full-time colleagues in the same situation, on a pro-rata basis and failure to do so will be held to be unlawful.
Employees with children under 12 years of age or, regardless of age if with a permanent disease or disability, are entitled to work part time.
There are minimum wage restrictions which apply in Portugal. For 2021, the minimum wage is equivalent to € 665 per month.
In general, all employees are entitled to a minimum of 22 working days paid holiday per year, though there are some exceptions to this rule. During the first year of employment, holiday entitlement accrues at the rate of 2 working days for each full month of work after a six-month period of work but is subject to a maximum of 20 days. It is mandatory for employees to take one holiday period of at least 10 consecutive working days per year.
Generally, the parties are free to agree between themselves when holiday should be taken. However, if agreement cannot be reached, (unless otherwise prescribed in collective bargaining agreements) the employer is entitled to determine when holidays should be taken provided that it allows the employee to take holiday between 1st May and 31st October. In exceptional circumstances, employees are allowed to carry unused holiday forward to the following year, provided that such holiday days are taken prior to 30th April of the subsequent year. The circumstances previously referred to are agreement between both parties, or if the employee wishes to spend the holidays with relatives living abroad. Employees are also allowed to accumulate half of the holiday period that became due at the beginning of the previous year by agreement with the employer. In addition to the above holiday entitlements, employees will also benefit from two kinds of annual public holiday: mandatory public holidays and optional public holidays.
An employee has to be at least 16 years of age (plus completion of compulsory schooling), although in certain circumstances it is possible to employ someone younger. Different rules apply to children and young workers.
In 2021 the retirement age is 66 years and 6 months but is not compulsory.
Inherent subsidy is granted by the Portuguese Social Security System to eligible employees. Employees maintain all rights and obligations when they are ill, except the rights concerning the remuneration and the obligation to work. The amount of the subsidy varies in accordance with the nature and the period of absence between 55% and 75% of the remuneration according with the duration of the disease or, in case of tuberculosis between 80% and 100% of the remuneration depending on the household, with a minimum limit and a maximum limit (which is the reference remuneration of the employee). The requirements to be granted the subsidy are the registry of remunerations in the 6 months prior to the beginning of the absence and 12 days of registry of remuneration for effective work in the previous 4 months preceding the month in which the disability occurs. The maximum period during which it is granted is 1095 days (in case of tuberculosis the subsidy is granted by an unlimited period time).
Location Of Work/Mobility
Employees may be temporarily or permanently transferred to a different working place, provided there is reasonable justification communicated in writing and prior notice is given. Parties are allowed to agree on the extension of the transfer conditions which expires within 2 years if it has not been applied within such period.
Employers are free to implement/subscribe to Pension Plans to complement the Portuguese Social Security Pension Scheme, which his mandatory.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
There are several statutory rights granted to pregnant women, puerperal women and breast-feeding women, as well as to parents or adoptive parents or candidates to adoption.
Employees (male or female) are entitled to take up to 120 or 150 consecutive days of initial parental leave where they are entitled to a subsidy equal to 100% or 80% of their remuneration, respectively. This leave may be increased by 30 days if both parents share the initial parental leave, i.e., both parents must enjoy 30 consecutive days or two periods of 15 consecutive days after the mandatory six-week period enjoyed by the mother. Therefore, when shared, the initial parental leave may achieve 180 days and a subsidy equal to 83% of their remuneration will be granted.
Fathers of new-born children are entitled to take paid leave of up to 25 working days as follows: 20 mandatory working days, from which 5 working days must be taken immediately after birth and the other 15 working days during the following 6 weeks after birth. The remaining 5 working days are not mandatory and may be taken consecutively or interpolated after the above mentioned 20 days period and along with the initial parental leave taken by the mother.
The termination of pregnant women, puerperal women or breast-feeding women on grounds of dismissal (with objective or subjective cause) benefits from a special legal regime. There is a presumption that such a termination is unfair, and it is necessary to obtain a previous favourable legal opinion issued by the Portuguese Equality Entity (CITE) prior to the dismissal decision being issued by the employer.
Please see the answers to paragraph 2 above - Legal Requirements as to the Form of Agreement.
Without prejudice of the existence of mandatory rules that allow the parties to provide otherwise, parties are free to agree non-compulsory provisions provided such provisions are more favourable to the employee than the mandatory ones.
Types Of Agreement
Employment agreements may be open ended, and this is the rule, or for a term which is fixed either by time or by the completion of a task. Fixed term employment agreements may only be executed to satisfy temporary needs of the employer and only during the period strictly required for that purpose, otherwise they will be deemed as an open-ended employment agreement. There are also temporary agreements, part-time agreements, intermittent work agreements, telework agreements and labour agreement under a commission of services regime.
The parties may insert in the employment agreements clauses where it is established that during its execution, as well as after its termination, the employee shall not disclose any trade secrets or confidential information related to the employer.
Ownership of Inventions/Other Intellectual Property (IP) Rights
Both Portuguese Industrial Property Code and the Copyright Code contain several provisions on this regard.
An invention created during the course of employment belongs to the employer, provided that the creation of inventions is one of the intentional purposes of the employee’s employment and he is remunerated accordingly.
If separate remuneration has not been agreed, the employee will be entitled to receive reasonable compensation based on the value of the invention to the employer.
If the invention is made during the regular course of employment and within the scope of activity of the employer, and although it is not part of the employee’s specific job function, the employer shall be entitled to assume ownership of it or to reserve the right to the exclusive working of the invention. The employer shall be entitled to the acquisition of the correspondent right and title and the right to apply and acquire a foreign correspondent title.
Copyright for the work created during employment will belong to the employee unless agreed otherwise within the contract of employment or if the work is not signed by its author. Moreover, if the employer decides to sell or to exploit such copyright, the employee/author may claim compensation based on the profits made by the employer.
Both parties are to negotiate the employment contract in good faith, and otherwise may be held accountable for damages caused to the other party. If the parties desire to enter into a promise of employment contract it must be executed in writing and contain the following information: the identification, signature and address of both parties; a declaration clearly stating the will to celebrate the employment agreement; the activity to be performed and corresponding remuneration.
Citizens from countries that are not members of the European Union (nor of countries that have a similar regime, like Switzerland) must request a visa to entry, stay and a residence authorisation to work in Portugal without any special requirement or formality other than having a valid Identity Card or Passport and must have an employment contract or the promise of an employment contract. In case of EEA nationals, if their permanence in national territory lasts more than 3 months those citizens should formalise their right of residence. They may do so by obtaining a Certificate of Register but there is no need to request a visa or a residence authorisation. Due to Brexit agreement UK employees are no longer covered by the previous referred special rules with regard to the contracting of EU nationals.
Hiring Specified Categories Of Individuals
There are several restrictions regarding the performance of activities by young employees, pregnant, disabled or people with chronic disease (including cancer), namely activities involving risks to their health and safety.
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
These issues are ruled by the Portuguese Civil Code and, in case of Work Agencies by Decree Law 260/2009, of 25 September of 2009, amended by Law 5/2014 of 12 February 2014, and Law 28/2016 of 23 August 2016.