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EmploymEnt law ovErviEw 2017

Portugal

i. GEnEral 01ii. hirinG practicEs 04iii. EmploymEnt contracts 06iv. workinG conditions 08V. Anti-DiscriminAtion LAws 10vi. social mEdia and data privacy 11vii. authorizations for forEiGn EmployEEs 12 viii. tErmination of EmploymEnt contracts 13iX. rEstrictivE covEnants 18X. riGhts of EmployEEs in casE of a transfEr of undErtakinG 19Xi. tradE unions and EmployErs associations 20Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs 21Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfits 22

Table of contEnts

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atanationallevel,toallcompaniesoperatingin therelevantbusinesssectororindustryand employeesattheirservice(regardlessofsuch employeesbeingunionaffiliated).

3. LegalFramework

Employment law, rules and guidelines prevailing inPortugalaremostlybaseduponthefollowinglaws:

• ThePortugueselabourandsocialConstitution provisions;• ThePortugueseLabourCodesubjecttoamajor reformin2009andsubsequentlyamendedand respectiveimplementingdecree;• TheSocialSecurityContributoryCodeand respectiveimplementingdecree[Lawno. 110/2009,ofSeptember16(amendedbyLawno. 119/2009,ofDecember30andLawno.23/2015, ofMarch17)andImplementingDecreeno. 1-A/2011,ofJanuary12(lastamendedby ImplementingDecreeno.6/2013,ofOctober15)];• Procedurallegalframeworkonlabourandsocial securitymisdemeanours(Lawno.107/2009,of September14,lastamendedbyLawno.63/2013, ofAugust27);• Legalframeworkonageandinvalidityretirement (Decree-Lawno.187/2007,ofMay10,last amendedbyDecree-Lawno.8/2015,ofJanuary 14);• Legalframeworkonprotectionintheeventof sickness(Decree-Lawno.28/2004,ofFebruary4, lastamendedbyDecree-Lawno.133/2012,June 27);• Legalframeworkonprotectionintheeventof parenting(parentalleaveandrespectivesubsidies) [Decree-Lawno.91/2009,ofApril9,lastamended byDecree-Lawno.70/201,ofJune16andDecree- Lawno.133/2012,ofJune27];• LegalframeworkonthePublicCapitalisation Scheme(Decree-Lawno.26/2008,ofFebruary22);• LegalframeworkonSafetyandHealthatWork (Lawno.102/2009,ofSeptember10,lastamended byDecree-Lawno.88/2015,ofMay28);• Legalframeworkonthecompensationofaccidents atworkandoccupationaldiseases(Lawno. 98/2009,ofSeptember4);• ListofProfessionalIllnessesandNationalTable ofDisabilities(Decree-Lawno.352/2007,of


i. GEnEral

1. IntroductoryParagraph

Portuguese labour law ishighlyprotectionist. Its rulesand principles apply both to individual employmentrelationships and to collective bargaining agreements,which endow trade unions with an important role,particularly in business areas or industrieswhere saidagreementsareapplicableonabroaderscaleasaresultofgovernmentextensionmeasures.

In 2009 the Labour Code (originally issued in 2003)underwent a relevant reform. This resulted in moreflexible solutions, namely on work time organizationissues.

From 2011 onwards, in view of the austerity packagemeasures, a number of relevant changes were alsointroduced.Reductionstotheseverancecompensationsdueincaseofredundancyandreductionstoextraworkpay. Some of these measures were changed in 2016undera tendencytowithdrawsomeof thepreviouslyappliedausterityprovisions(e.g.nationalholidaysthathadbeensuspendedwereputbackinplacein2016).

2. KeyPoints

• Arelevantreformtolabourlawtookplacein2009 andadditionalrelevantchangeswereintroduced after2011withimportantimpactonemployee rightsandobligations.• TwoofthemoststrikingfeaturesofPortugueselaw areprobablythevarietyofitssourcesandthelevel ofprotectionitgrantsemployees.• Collectivebargainingagreementsareenteredinto atregional,nationalorindustrylevel,betweenthe unionsandemployers‘organizationsoroncompany ormultiplecompanylevelsbetweentheunions andtherelevantemployingcompanies.• Thescopeofapplicationdefinedinacollective bargainingagreementmaybeextended,after itsentryintoforce,byagovernmentextensionact. Insuchcases,theprovisionsoftheextended collectiveagreement,dependingontheextension terms,willapplyeitherinaspecificregionor

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October23andImplementingDecreeno.6/2001, ofMay5,amendedbyImplementingDecreeno. 76/2007,ofJuly17);• SocialSecurity’sDisabilityVerificationSystem (Decree-Lawno.360/97,ofDecember17,last amendedbyDecree-Lawno.165/99ofMay13);• Legalframeworkonunemploymentprotection applicabletoemployees(Decree-Lawno. 220/2006,ofNovember3,lastamendedbyDecree- Lawno.167-E/2013,ofDecember31);• Legalframeworkonunemploymentprotection applicabletoself-employedprofessionals(whose servicesaremostlyprovidedtoasinglecontracting authority)[Decree-Lawno.65/2012,ofMarch15, lastamendedbyDecree-Lawno.13/2013,of January25];• Legalframeworkonunemploymentprotection applicabletoself-employedprofessionalswithan entrepreneurialactivityandtomembersof corporatebodies(Decree-Lawno.12/2013,of January5);• LegalframeworkonWorkCompensationFunds (FundodeCompensaçãodoTrabalhoandFundo deGarantiadeCompensaçãodoTrabalho)[Law no.70/2013,ofAugust30(amendedbyDecree- lawno.210/2015ofSeptember25)].

In addition to the abovementioned legal sources,employees’ and employers’ contractual relationshipsarealsogovernedbythefollowinginstruments:

• Collectivebargainingagreements(convenções colectivasdetrabalho),i.e.,agreementsnegotiated betweenoneormoretradeunionsandoneor moreemployers’organizationsoremployers;• Employmentcontracts;• Companyinternalregulatoryinstruments (regulamentosdetrabalho)implementedbyeach organizationtoapplytoitsownemployees;

Precedent court decisions are not legally binding.However, the decisions of the Constitutional Court(Tribunal Constitucional) and the Supreme Court(Supremo Tribunal de Justiça) have in certain casesgeneralapplication.

4. NewDevelopments

Arelevantreformoflabourlawinrecentyearsoccurredin2009.Thishadanimportantimpactontherightsandobligationsofemployees.Moreflexible

solutionsandmeasurestosafeguardandpromoteemployment,andtoprotecttheunemployedwereimplemented.Infact,theLabourCodeknownasthenew2009Codewasamendedinthecontextofseveralpublicreformsthataimedtoincreasecorporatecompetitivenessandproductivitybyallowinglabourlaw,collectivebargainingagreements,andindividualemploymentcontractstobemoreflexible.2012alsoregisteredarelevantreformamendmentsinlabourlaw,affectingspecificprovisionsofthePortugueseLabourCodenamelyonseverancepayforcontracttermination.

In2016,followingthenewgovernmentthattookoffice,changesoccurred/wereimplementedintheshortrun.Themostrelevantofwhichasfarasprivateemploymentmatterswereanincreaseoftheminimumwageandthereinstatementofnumberofsuspendednationalholidays.Asfaraspublicservantsareconcernedmeasuressuchastheendofpaycutsandthereinstatementofthe35hoursworkingweekafterworkinghoursofthepublicservantshavingbeenincreasedto40hoursaweekinthecontextoftheausteritymeasuresappliedinPortugal.

Thereforeinrecentyears,2015startedwiththeendofasuspensionperiodofalmosttwoandahalfyears,duringwhichallclausescontainedincollectivebargainingagreementsprovidingextraworkbonusamountsthatexceededthoseprovidedforbylaw,werekeptonhold,thesamehavingbeenappliedtotheextrapaymentamountsapplicabletoworkrenderedonpublicholidays.ThesuspensionmeasurehadbeenorderedbyLawno.23/2012onJune15andcameintoforceon1August2012.ThissamelawreducedbyhalftheamountsthatwerepreviouslyforeseenintheLabourCodeforextraworkpayandpublicholidayworkextrapay.From1January2015,theapplicationofsuchcollectivebargainingagreementprovisionswasautomaticallyreinstated.

During2015thePortugueseLabourCodeunderwenttwoamendments.ThefirstamendmentoccurredinApril(Lawno.28/2015,ofApril14)wherebygenderidentitywasexpresslyaddedtotheillustrativelistoffeaturesonthebasisofwhichnodiscrimination,privilegeorprejudicemayinfluencerecruitmentorlabourrightsorconditions,thusreinforcingtherightofequalopportunitiesandtreatmentintheaccesstoworkandemployment(article24/1).AsecondamendmentwaspublishedinSeptember(Lawno.120/2015,ofSeptember1).Thelatterincludeda


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numberofprovisionsontheprotectionandsupportofparenthood,bothforfemaleandmaleworkers.Newmeasuresincludetheextensionofthemandatoryperiodforthefatherparentallicenseandprovisionswherebybothparentswillbepermittedtoenjoytheirlicenseatthesametime.Parentswithchildrenundertheageof3areallowedtoexecutetheirjobfunctionsthroughtelework.Flexibletimetablesandparttimeoptionsareavailableforparentswithchildrenundertheageof12.Othermeasurescouldbepinpointedlike,forexample,measuresthatintroducedfinancialincentivesforprofessionaltraining(thesocalled“chequeformação”).

In2016,severalimpendingchangestolegislation,asaresultofthenewgovernment,havebeenincludedbelow.

Lawno.8/2016of1AprilintroducedthereinstatementofpublicholidaysCorpusChristi(movable),implantationoftheRepublic(October5),AllSaints’Day(November1)andrestorationofindependence(December1).Allfourindicatedholidayshadbeensuppressed(orsuspended)fromthe2013workingcalendarinthecontextoftheausteritymeasuresapprovedtheyearbefore.Onthesamedateadecreen.º67/2016waspublishedsettingtheretirementagein2017at66yearsand3months.

Atthesametime,newrulesofaccesstoearlyretirementin2016,werealsoapprovedamendingtheregimeofretirementageanticipation(Decreeno.10/2016).Theeligibilitytoapplyforearlyretirementpensionnowdependsonthebeneficiarybeingatleast(i)agedequaltoorover60yearsandhaving,atleast,(ii)40yearsofrelevantremunerationregistrationandpaymentofsocialsecuritymonthlycontributionsoverthesameremuneration.Thegrantingofearlyretirementpensionsisnowalsosubjecttopriorinformationgiventothebeneficiaryontheamountofthepensionandthesubsequentexplicitacceptancebythesame.

Itisalsoimportanttonotetherighttoearlyretirementofbeneficiarieswithageequaltoorabove55yearsandbelow60yearsand30ormorecivilyearswithregistrationofrelevantremunerationforcalculatingthepension,whohavesubmittedapplicationforearlyretirementtothedateofentryintoforceofthislaw,evenifthebeginningofthepensionwilloccurafterthatdate.

Moreover,decreeno.11/2016createsanexceptionalmeasure,asa“reverseausterity”measure,tosupportemploymentbyreducingthecontributionratepaidbytheemployer.Followingtherecentincreaseoftheminimummonthlywagefrom€505to€530thePortuguesegovernmentdecidedtoimplementanexceptionalmeasuretosupportemploymentbyreducingby0.75%theSocialSecuritycontributionratepaidbytheemployersontheremunerationduetoemployeesbetweenFebruary2016andJanuary2017(includingtheamountspaidasvacationandChristmasallowances).Themeasureappliestoemployeeshiredpriorto1January2016andearning,asof31December2015,amonthlybasesalarybetween€505and€530.

Atthesametime,pensionswerealsoincreasedinlinewiththestrategicpoliciescontainedinthenewgovernmentprogrammetowardsincreasingfamilyincome“asameanstorelaunchtheeconomy”.Inthissameline,PortugueseParliamentapprovedprovisionstorestorefullpaymenttocivilservantsandpublicsectoremployees,aftersalarycutsbeingkeptinforceforbetween2011and2015.Thecutswerereducedin40%inJanuary2016andgraduallyreducedonaquarterlybasis(60%on1Apriland80%on1July)beingcutstotallyeliminatedon1October2016.


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Therearesomelegalrestrictionsonconductingbackgroundverificationsonjobcandidatesandemployeessuchasdrugtests,financialandcreditchecks,criminalchecks,academicqualificationsorpreviousemployments.

Inwhatconcernstheselectionprocess,forexample,therearesomelegalrestrictionsoninformationthatmaybesoughtincandidatescreening,includinginformationthatthecandidatemaybeaskedtoprovideataninterview,duringthehiringpracticesandintheemploymentagreement.Anemployerisnotallowedtorequestinformationonthecandidate’sprivatelifeexceptforinformationthatisstrictlynecessaryorrelevanttoassessthecandidate’saptitudeandabilitiesforthejob.Insuchcases,thespecificreasonsforrequiringsuchinformationmustbeprovidedinwritingtothecandidatebythepotentialemployer.

Theemployerisalsonotallowedtorequestinformationaboutthecandidate’shealthorpregnancy,exceptwhenrelevantinviewofspecificrequirementsimposedbythenatureofthejobrole.Again,insuchcase,thepotentialemployermustprovidewritteninformationonsuchrequirementtothecandidate.

Inthislattercase,theinformationmustbeprovidedtoadoctorwhowillmerelyinformtheemployeronwhetherthecandidatequalifiesornotforthejob.

Inwhatconcernsthepossibilityofobtainingsupportingdocumentssuchaspreviousemploymentcontracts,educationalcertificates,pastpayslips,andothers,thescreeningofcandidatesupportingdocumentsonpreviousemploymentexperienceandeducationalcertificatesmayberequestedfromthecandidateinsofarastheinformationisrelevantandnotexcessiveforthepurposeforwhichitisrequired.

Somelegalrestrictionsalsoapplytoconductinghealthchecksandtoselectingacandidateonthebasisofhealthinformation.

Infact,exceptforgeneralhealthexamsthatarespecificallyrequiredtoevaluatethecandidate’sgeneralphysicalandpsychicconditionstoexercisetherole


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ii. hirinG practicEs

beingengagedandtoevaluatepotentialeffectsoftheactivityinquestionandworkingconditionsontheemployee’shealthcondition,theemployerisnotallowedtorequireanyotherhealthormedicaltestsorexamresultsfromthecandidate.

Therearesomeexceptions,however,tothisrule,namely:

• examsrequiredforpurposesoftheemployee’s ownprotectionorsafetyorthatofathirdparty; or• examsjustifiedbythespecificitiesoftherole/ activitytobeperformed.

Inbothcasesthepotentialemployermustprovidethecandidatewithdueexplanation,inwriting,onthereasonsfortheadditionallyrequiredtestsorexams.

Itisalsoimportanttonotethatwithinthelimitsofadmittedbackgroundverifications,consentisgenerallyrequiredtotheextentthatitinvolvescandidate’spersonaldatathatisqualifiedassensitivedata,insteadofnon-sensitivedata.

Therearesomecompliancerequirementsorrestrictionsrelatedtotheemployee’spersonaldataprotectionandprivacywhileconductingbackgroundchecks.

ThegeneralruleunderPortugueselawisthatthecontrolleroritsrepresentativemustnotifythelocalDataProtectionAuthority(DPA)beforecarryingoutanyprocessingoperationofpersonaldata(includingdatatransfer).

TheDPA’spriorauthorizationisrequirediftheprocessing(andtransfer)involvessensitivedata.Thecandidatemustbeinformedofanydatasharingwithothercompaniesandmusthavegivenconsentforsuchsharing,exceptifotherprocessinglawfulnessgroundsapply.

TransfersoutsidetheEuropeanUnion(EU)aresubjecttopriorauthorizationfromthelocaldataprotectionauthority,exceptifthetransferisperformedunderthetermsofanagreementbetweenthetransferor

andthetransfereedrawninaccordancewiththestandardcontractualclausesforthetransferofpersonaldataapprovedbytheEUCommissionDecisionsoriftransfereeislocatedinastatethathasbeenconsideredbyDecisionoftheEUCommissionasproviderofanadequatelevelofprotectionforpersonaldatatransferredfromtheEU.

Underdataprotectionlaws,personaldatamustbemaintainedonlyfortheperiodstrictlyrequired.

Althoughdataprotectionlawdoesnotfixanyspecificdatastorageperiods,thePortugueseLabourCoderequiresemployerstokeepthefollowinginformationonrecruitmentprocesseslaunched,disaggregatedbygenderofcandidates,foraperiodof5years:

• invitationsforavailablepositions;• employment-offeradvertisements;• numberofcandidatesforCurriculumVitae appraisal;• numberofcandidatescalledforpre-selection interviews;• numberofcandidatesawaitingrecruitment;• admissionorselectiontestresults;• socialreportsperformedtoassesspossiblegender discriminationintheaccesstojobpositions, training,promotionsandworkconditions.


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iii. EmploymEnt contracts

1. MinimumRequirements

Generallyspeaking,theemploymentcontractdoesnotrequireanyspecialformandmay,therefore,beagreedunderwrittenformorverbally.

However, there are certain situations in which thecontractorsomeclausesmustbeexecuted inwriting,examples of which are: 1) fixed term employmentcontract; 2) part-time employment contract; 3)temporarywork contract or intermittent employmentcontract; 4) teleworking contracts; 5) single employeecontractswithmultipleemployers;6)non-competitionclauses.

Where the law requires written form for certainemploymentcontracts,failureinthisrequirement,doesnotentail,inprinciple,thenullityofthecontract.Infact,whathappensinmostcasesisthatthecontractisdeemed tobe subject togeneralemployment rules(e.g. part time contract will be deemed to be fulltime; temporary contractswill bedeemedpermanentemployment,etc.).

In order to supply the employeewith aminimum setof information, the Code requires the employer toprovidetheemployeewithwritteninformationontheemploymentcontractandworkingconditions.

When executed in written form, the employmentcontractsmustbesignedbythepersonorpersonswhoare authorized to represent the company in dealingswiththirdpartiesaccordingtothecompany’sarticlesofassociationordulyempoweredtodoso.

In what concerns official language, there is no legalrequirementforemploymentcontractstobeexecutedinPortuguese,thustheuseofotherlanguages(e.g.English)is acceptable provided the employee understands thelanguage used.Moreover, bilingual versions may alsobe used, in which case it is recommended to set aprevailingversion. Nevertheless,contractsdrawn inaforeign language, as a rule,will have to be translatedintoPortuguesewhenfiledwithaPortugueseauthorityor official and a translation certification may also berequired.

2. Fixed-term/Open-endedContracts

Unlessotherwisespecifiedbytheparties,employmentcontracts are deemed open-ended (i.e. permanentemployment).

Fixedtermcontractsarepermittedbylawprovidedthatthey are executed in written form and provided theyaremeanttofillarolerequiredonthebasisofamerelytemporaryneedoftheemployingcompany.

Hence,ifthereisnowrittencontract,theemploymentcontractwillbedeemedtobeanopen-endedcontract.

3. TrialPeriod

Trialperiods(initialprobation)forpermanentemployeesare 90 days, 180 days for high complexity, trust orresponsibility roles and 240 days for management,directorateandequivalentresponsibilityroles.

Fixedandunfixedtermtemporarycontractsaresubjectto shorter probation periods (i) 15 days if agreed foran expectedor fixedduration shorter than 6months;and(ii)30daysfordurationsequaltoorlongerthan6months.

During the initial probation/trial period, theemployerandtheemployeearefreetoterminatetheemployment.

Forterminationwithinthecontracttrialperiodbytheemployer,nopriornoticeisrequiredwithinthefirst60days.

Termination during the probation period requires theemployertogiveasevenor15-daypriornoticeincaseswheretheprobationperiodhaslastedformorethan60or120days,respectively.

Termination of a labour agreement by either of thepartiesduringtheprobationperioddoesnotrequireanygroundsofjustificationandnoindemnificationisdue.

The maximum terms for the probation period varybetween15and240days,accordingtothetypeofactivityand the nature of the agreement (for a permanent


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employmentcontract, theaverageprobationperiod is90days).

The employee is not subject to any prior notice toterminatethecontractduringthetrialperiod.

4. NoticePeriod

Theemployeeisfreetoresign,subjectonlytothefollowingpriornoticeperiods:

Forpermanentemployees:

• 30daysforcontractswhichhavebeenonforcefor upto2years;• 60daysforcontractswhichhavebeenonforcefor morethan2years;

Forfixed(orunfixed)term(temporary)employmentagreements:

• 15daysforcontracts,whichagreed(orexpected) durationislessthan6months;• 30daysforcontracts,whichagreed(orexpected) durationisequalto(orlongerthan)6months.

Itisnotpossibletoagreeonlongerprobationperiodsthanthoselegallyforeseenbutitispossibletoagreeonshorterprobationperiods,aswellastofullyexcludeprobationperiods.

Companiesoftenpaysalaryinlieuofnoticeperiodinsituationsofcollectivedismissalbutthelegalityofthispracticeisquestionable.Theemployeeisallowedtodoitwiththeconsentoftheemployer.Thesalarymustbefullypaiduntilthedateoftheproperterminationofthecontract.


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iv. workinG conditions

1. MinimumWorkingConditions

InPortugal,collectivelabourregulationinstrumentscandeterminetheminimumworkingtermsandconditions.

At the same time, collective labour agreementinstrumentscanonlybesetasidebyalabourcontractwhenthelatterestablishesmorefavourableconditionsfor the employee and if the contrary does not resultfromthecollectivelabouragreementrules.

Workers posted abroad are entitled to local workingconditions provided by law and collective bargainingagreementswithoveralleffectiveness,wheneverthesearemorefavourablethanthosethatgenerallyapplyintheplaceofwork,onthefollowingsubjectmatters:

a)protectionagainstdismissal;b)maximumlengthofworkingtime;c)minimumperiodsofrest;d)holiday;e)minimumremunerationandpaymentofovertime;f)transferofworkersbytemporaryemploymentagency;g)occasionalprovisionofworkers;h)safetyandhealthatwork;i)protectionofparenthood;j)childlabourprotection;l)equaltreatmentandnon-discrimination.

2. Salary

ThemonthlyminimumwageinPortugalin2016wasfixedat€530.However,intheAzoresislandstheminimumwagewas€556.50andinMadeiraisland€540.60,inordertocompensatetheinsularity.

3.MaximumWorkingWeek

Themaximumweeklyanddailyworkingperiodsaresetat40and8hours,respectively.However,subjecttocertainrules,theselimitsmaybeassessedonanaveragebasismeasuredbyreferencetofourorsixmonthperiods.Thisisasystemknownasadaptabilityandtheadditionalworkhoursrenderedbytheemployeeonspecificdaysorweeksexceedingthe

aforementioned40and8hourlimitsdonotqualifyandarenotpaidasovertimeworkbutare,insteadcompensatedbyequivalentreductionofhoursworkedonotherdaysorweeks.

Similarflexibilitymayalsobeobtainedbyresortingtotheso-calledhourbank.Inthiscaseadditionalworkinghoursmaybeperformed,compensatedbyamonetarycompensation,anincreaseonthevacationperiodoronareductionofhoursworkedonotherdays.

Ingeneral,onlyworkrenderedbetween10p.m.and7a.m.qualifiesasnighttimework,entitlingtheemployeetoanappropriatesalaryincrease(anincreaseof25%overthepaymentofequivalentworkrenderedduringtheday).Collectivebargainingagreementsmay,nevertheless,extendoradjusttheperiodthatqualifiesasnighttimework.

4. Overtime

The employee may be required to provide overtimework:(i)whenthecompanyhastocopewithtemporaryincreaseofworkthatdonotcallforadditionalemployeerecruitment;or(ii)incaseofforcemajeureorwhentheovertimeworkisneededtopreventorremedyseriousinjurytothecompanyoritsviability.

Overtimeworkispaidatthenormalhourlyrateplus:

• 25%forthefirsthourorpartthereof,andplus 37.5%foreverysubsequenthourorpartthereof,on workingdays• 50%forthefirsthourorpartthereof,onweekly rest,compulsoryorcomplementary,oronbank holiday

Overtime work rendered on weekly rest entitles theemployee to a remunerated compensatory rest day,duringoneofthefollowingthreeworkingdays.

5. Holidays

Employeesareentitledto22businessdaysofpaidvacationperyear.


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Inthecaseoftemporarycontractslastingupto6monthstheemployeeisgranted2workingdaysholidayforeachcompletemonthofserviceandinthecaseofthoselastingupto12monthsorendingintheyearsubsequenttotheyearofhiringentitletheemployeetoaholidayleaveperiodproportionatetothedurationofthecontract.

6. Employer’sObligationtoProvideaHealthyandSafeWorkplace

Theemployerhastheobligationtopermanentlyensureemployeehealthandsafetyconditionsatwork.

Tocomplywithsuchduty,theemployermustfollowasetofgeneralprinciplesfocusedonthepreventionofworkaccidentsandprofessionalillnesses,andthustocomplywithseveralduties.Ingeneralterms,theemployermustputinplaceandensure:

• Technicalworkaccidentpreventivemeasures;• Employeetraining,informationandconsultation onworkplacesafety;• Internalorexternalhealthandsafetyservices.

Theemployermustimplementappropriatecompanyhealthyandsafety(H&S)activityatwork.ThisincludesorganizingandkeepingappropriateH&Sservicesandotherpreventivemeasures,likeensuringriskexposureassessmentsandtheperformanceoftestsandotheractionsonoccupationalrisksandhealthmonitoring.

Atthesametime,aninsurancetocoverworkaccidentsriskmustbecontractedbytheemployerforeachhiredemployee.Onotherhand,theremightbethenecessitytosetupaninternalserviceofH&Sdependingontheactivityofthecompany(highriskactivities),aswellasonthenumberofemployees.

Concurrently,itismandatorytosetupaninternalstructurethatensuresfirstaid,fire-fightingandevacuationactivities.Specificmeasuresmustbedefinedforadoptionincaseofemergencyandcertainemployeesmustbeappointedasresponsiblefortheimplementationofsamemeasuresandforcallingthecompetentauthoritiesincaseofemergency.

Moreover,theemployerhastoprovideproperH&Strainingtoitsemployeesandmustidentifythepotentialoccupationalrisksandtrytominimizethem,

forinstance,whenchoosingworkequipmentandfacilities,orwhendesigningworkstations.

Ifriskstotheemployeeareassessedinconnectionwithworkfeaturesorrequirements,specificmedicalchecksarealsorequired,andmustbecarriedoutbeforetheemployeeissubjecttoriskexposure.Employeehealthsurveillanceandthemonitoringoftheexposuretopotentialoccupationalrisksaremandatory.

Pregnantorlactatingemployeescannotperformsomeactivities,duetoahigh-riskexposuretophysical,biologicalorchemicalagentsandactivitiescarriedoutindangerousworkingconditions.


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V. Anti-DiscriminAtion LAws

1. BriefDescriptionofAnti-DiscriminationLaws

ThereisasubsectionintheLabourCodeonequalityandnon-discrimination.Employeescannotbediscriminatedthroughoutthedurationoftheemploymentcontracts,includingaccesstheretoandterminationthereof.

2. ExtentofProtection

Discriminationbasedonanygroundsisforbidden.Thelaw expressly prohibits discrimination grounded on:parentage,age,sex,sexualorientation,genderidentity,marital status, family situation, economic situation,education,originorsocialconditions,geneticheritage,reduced work capacity, disability, chronic disease,nationality, ethnic origin or race, territory of origin,language, religion, political or ideological beliefs andaffiliationwithtradeunion,withoutprejudiceofotherdiscriminationgrounds.

3. ProtectionsAgainstHarassment

Discrimination and harassment are forbidden andemployees who are the object of discriminationor harassment acts may claim indemnification andcompensation for monetary and non-monetarydamagescaused.

4. Employer’sObligationtoProvideReasonableAccommodations

There is no specific provision or requirement foremployertoprovideaccommodationstoemployees.Incertain sectors, collective bargaining agreements mayestablishrulesonaccommodationprovisionsoronthepaymentofallowancesforthepurposesofsupportingreasonableaccommodation,particularlyincaseswherethe employee is temporarily displaced to provide his/herwork.


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Employersmaydictatethetermsfortheuseofcompanyinformationtechnology(IT)andcommunicationmeansbut employees are entitled to keep their private useconfidential, including the content of personal emailsandInternetaccess.

AccordingtothePortugueseDataProtectionAuthority,the employer may define the rules on the admittedprivate use of IT and communication means madeavailableattheworkplaceandrulesshouldformpartofinternalcompanyregulations.

Closed circuit TV (surveillance cameras) in officepremises cannot be used to control the employee’sperformance.

Intheworkplace,surveillancecamerasmaybeusedtoprotect the safety of persons and goods orwhen thenatureoftheactivitysorequires.ItsuseissubjecttoapriorauthorizationfromtheDataProtectionAuthority.Employeeworkcouncilsmustbeconsultedat least10dayspriortotheauthorizationrequestbeingfiledwiththecompetentdataprotectionauthority.

The employer is under the obligation to inform theemployeesoftheexistenceofsuchequipment.

Theprocessingofemployeepersonaldataissubjecttopriorregistrationwiththelocaldataprotectionauthority(ComissãoNacionaldeProtecçãodeDados–CNPD).

In the case of sensitive data the authority’s priorauthorization is required. The processing of a limitednumberofemployeedatacategories,forpayrollandHRmanagementpurposes,isexemptfrompriorregistrationorauthorizationwiththeCNPD. Theemployeemustbedulyinformedofthecategoriesof his/her personal data processed, purposes ofprocessing and identity of the processing controller.Thedatasubject isalsoentitledto informationonthecategories of data recipients and on the employee’srightsofaccesstohis/herdataandontherightstohis/her data correction, erasure and update and how toexercisesamerights.

Legitimateprocessingofemployeedatamustbebasedeitherontheemployee’sconsent(thisbeingtheruleforsensitivedata)oronprocessingrequiredtocomplywiththeemploymentagreementoftofulfillegalobligations.

ThetransferofpersonalemployeedataoutsidetheEEAisnotallowed,unlessthecountryofdestinationensuresan adequate level of protection for the rights andfreedomsoftheindividualsinrelationtotheprocessingoftheirdata.TheCNPD’sauthorizationisnotrequiredifthecontrollerhasexecutedthe‘StandardContractualClauses’approvedbytheEuropeanCommission.

vi. social mEdia and data privacy


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Ageneralprincipleforeseesthatexpatriatesworkingonworkpermitaregrantedequalrightsandobligationsasnationalemployees.

Written form is required for employment contractswithexpatriatesworkingonworkpermit(non-EU).Theemployer’scontractcopymusthaveacopyofdocumentsattestingcompliancewithlegalobligationsontheentryandresidenceoftheforeignemployeeinPortugaldulyattached to it. Moreover, the contract must includeinformationon theemployee’s residencevisaorworkpermitrequiredtocarryingoutaprofessionalactivityasemployeeinPortugal.

The employee must also attach to the contract theidentification and address of the legal beneficiary(ies)in theeventofdeath resulting fromworkaccidentoroccupationaldisease.

In addition, the employer must communicate to thePortugueselabourauthorities,throughelectronicform:

• theexecutionoftheemploymentcontractpriorto thebeginningofitsentryintoforce;• Thecontract’stermination,within15daysupon termination.

Inaccordancewiththelaw,companiesmustassurethecandidateholdsa residencevisaorpermit specificallygranted for carrying out a professional activity asemployee in Portugal. In cases where the employerhas the intentiontoemploya foreigncitizen (non-EU)currentlylivingabroad,astatementconfirmingthattheemploymentofferisincludedinthelegaldefinedquotaorthatnoquotahasbeensetandthatnopreferentialcandidate(Portuguese,EUcitizen)wasfoundtoperformthe job shall be issued by the Portuguese Institute ofEmployment and vocational training and delivered tothe candidate for submission together with the visarequest.

Forthesamepurpose,theemployershallalsoprovidethecandidatewithanemploymentcontractorpromiseofemploymentcontract.

Hiringaforeignemployeewhodoesnotholdaresidencevisa or permit for carrying out a professional activityas an employee in Portugal may trigger an employermisdemeanourandinadditionanordertosuspendtheemployer’sactivitymaybe issued foratime lengthofbetween3monthsupto5years.

In setting annual overall quota of job opportunitiesavailable for non-EU citizens, the PortugueseGovernment may exclude sectors or activities wherelabourisnotconsideredasneeded;however,noquotahasbeensetsince2009.

vii. authorizations for forEiGn EmployEEs


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viii. tErmination of EmploymEnt contracts1. GroundsforTermination

According to Portuguese law, the termination of anemploymentcontractdependsonverystrictrulesthatdemand the gathering of grounds and several formalprocedures.Thecontractmayterminateinthefollowingsituations:

• Expiry;• Mutuallyagreedtermination;• Dismissalfordisciplinarygroundssubjecttoprior internaldismissaldisciplinaryprocedure;• Collectivedismissal(foreconomical,structuralor technologicalreasons),subjecttoaninternal procedureandpriornoticeperiodswhichdepend ontheseniorityoftheemployeesaffectedby dismissal;• Dismissalforextinctionoflabourpositionsubjectto aninternalprocedureandpriornoticeperiodsin whichthenoticeperiodwillalsovaryaccordingto theseniorityoftheemployee;• Dismissalforemployee’sfailuretoadapttoa workingposition,alsosubjecttointernalformalities andpriornoticeperiods.

Thecontractexpiresinoneofthesesituations:(i)onceitstermelapses;(ii)superveningimpossibility,absoluteand definitive, of the employee rendering work ofthe employer receiving such work; and (iii) with theemployee`sretirementforageordisability.

2. CollectiveDismissals

Theclosingdownofacompanyorofoneormoreofitsdepartmentsandthereductionofpersonnelbasedonmarket, structural,or technologicalgroundsallows foracollectiveemployeedismissaltotakeplace,providedthe grounds affect at least two or five employees,depending onwhether the company has less than 50employeesormorethanthat.Employeessubjecttocollectivedismissalareentitledtocompensationwhichcalculationbasisvaries.

The procedure for collective dismissal begins with awrittencommunicationaddressedtotheWorkCouncil

or,ifthereisnosuchcouncil,tothecompanyunionorinter-unionrepresentativestructureinthecompany.

Ifnoneofthesestructuresexist,theaffectedemployeeswillbeinformed,inwriting,oftheintentiontoperforma collective dismissal and employees will be invitedto nominate a Representative Committee (or up to 5employees)thatwillactasrepresentativestructureforthatpurpose.

Intheabove-referencedcommunication,theemployeerepresentative structures will be provided with thefollowinginformation:

• descriptionofthelegalgroundsfordismissal;• thelistofthecompany’spersonnel,organizedby sectorsofactivity;• thecriteriathatwilldeterminetheselectionof employeestobedismissed;• thenumberofemployeestobedismissedandtheir professionalcategories;• periodduringwhichthecollectivedismissalwill takeplace;and• criteriaforanypossiblegeneralcompensationtobe grantedtotheinvolvedemployeesbesidesthe specificcompensationsetforthbylaworcollective agreement.

At the same time, a copy of the communication andtheannexeddocumentsshallbesenttothecompetentdepartmentofthePortugueseMinistryofEmployment.

Withina5-dayperiodfollowingtheinitialcommunication,a phase of information and negotiation between thecompanyandtheemployees’ representativesmustbeinitiatedinordertotrytoreachanagreementonthedimensionandeffectsofthemeasurestaken,aswellastodecideonpossiblealternativemeasuresthatcouldreduce the number of dismissed employees, namely:(i) suspension of work, (ii) reduction of work, (iii)professional reconversion and reclassification and (iv)earlyretirement.

After a minimum of 15 days after the initialcommunication, or as soon as an agreement has


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been reached, the employer may send a writtencommunicationtoeachoneofthedismissedemployees,containing the dismissal decision, expressly indicatingthemotivesanddateofthedismissal,theamountsofthecompensationandthelabourcredits,aswellasthemanner,momentandplaceoftheirpayments.

On the date on which the decision is sent to theemployees, theemployershallsendtothecompetentdepartmentofthePortugueseMinistryofEmployment(i) the minutes of the negotiations meetings, as wellas (ii) a list containing the name of each employee,address,dateofbirthandofadmissiontothecompany,socialsecuritysituation,profession,categoryandsalary,aswellastheindividualmeasureappliedandthedateforeseenforitsimplementation.

Onthesamedate,acopyofsuchlistisaddressedtotheemployee’srepresentatives.

Untiltheterminationdate,theemployermustpaythedismissed employee the compensation that is due bylawaswellasallotherexistinglabourcredits.

The terminationof theemployment contractmustbecommunicatedwiththefollowingpriornotice:

• 15-daypriornoticeperiod,foremployeeswhose seniorityislessthan1year;• 30-daypriornoticeperiod,foremployeeswhose seniorityisofbetween1yearandlessthan5years;• 60-daypriornoticeperiod,foremployeeswhose seniorityisofbetween5yearsandlessthan10 years;• 75-daypriornoticeperiod,foranemployeewhose seniorityisequaltoorexceeds10years.

3. IndividualDismissals

Extinctionofa labourposition isapplicableonlywhenthecompanylacksgroundstoproceedwithacollectivedismissal as a result of an insufficient number ofemployees involved (i.e., the companyhasmore than50employeesandtheclosingofthesectionaffectsonlythreeemployees)inaredundancycausedbytheabove-referredmarket,structuralortechnologicalmotives.

Ifthereareatleasttwosimilarworkpositionsthatmaybeextinct,theemployermustcomplywithasequenceof non-discriminative legal criteria (starting with theworstperformanceassessmentcarriedoutonthebasis

ofpreviouslydisclosedparameters), inorder to selectwhich employees will be affected by the extinction.Employees subject to the extinction of their labourpositionareentitledtocompensationequaltothatsetforcollectivedismissalsituations.

Even when the grounds occur, extinction of labourposition may only determine the termination of theemployment contract should the maintenance of theemployment relationship prove to be impossible, intermsoftheemployerfailingtohaveanalternativejobpositionthatiscompatiblewiththeaffectedemployee’sprofessionalcategory.

Furthermore,itismandatorythattheemployerhasnofixedtermemployeesexecutingfunctionscorrespondingtothelabourpositiontobeterminated.

When there are more equivalent job positions thanthe number of the positions to be terminated, theidentificationofthelabourpositiontoeliminatehastobemadeinaccordancewiththecriteriasetforthbythelaw:

• Worstperformanceevaluation,accordingtoan appraisalsystemandcriteriapreviouslyknownto alltheaffectedemployees;• Biggerburdenintermsofcostsforthecompany;• Lessexperienceinthejob;• Lessseniorityinthefirm.

Employees who have been transferred to the labourpositiontobeextinguished less than3monthsbeforeterminationareentitledtoreoccupytheformerposition(ifexisting),withnolossofremuneration.

Proceduralrequirementsalsoapplyinthiscase.

The intention to terminate the employment contractbased on the extinction of the labour position mustbe communicated in writing to the employees’representativesandtoeachemployeeinvolved.

Togetherwith the communication the employermustindicate thegrounds for theextinctionof theaffectedlabour positions, identify the relevant section theybelong to, provide an explanation on the need todismissand indicatetheprofessionalcategoriesoftheemployeesaffectedbythejobextinction.

The employees involved and the employees’representatives have a 10-day period from the initial


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communication’s date to oppose in writing to theextinctionmeasure,notablyallegingthelackofgroundsor that the employer has failed to comply with therequirementsdescribedabove.

Within 3 business days counted from the initialcommunication’sdate,employees’representativesandemployees may request the competent departmentof the PortugueseMinistry of Employment to issue areportonwhethertheemployerhascompliedwiththereferredrequirements.

Followingatleast5dayscountedfromthetermofthe10-dayperiodreferredtoinaboveorfromthereport’sreception, the employer may communicate to theemployeesthedecisiontoterminatetheiremploymentagreements based on the extinction of their labourpositions.

Acopyofthedecisionmustbesenttotheemployees’representatives and to the competent department oftheMinistryofEmployment.

Thedecisionmustbeformalizedinwritingandinclude:

• thegroundsfortheextinction;• confirmationoftheexistenceoftheabovedescribed requirements;• proofthatthelegalselectioncriteriaforthe determinationofwhichpositiontoextinguishhas beenfollowed;• anindicationoftheamountsofduecompensation andalllabourcreditsdue,aswellasthemanner, momentandplacetheirpaymentwilloccur;and• thedateonwhichtheemploymentagreementwill terminate.

Finally, the compensation (severance pay) to whichtheemployeesare legallyentitledand themandatorypriornoticearetheonesdescribedunderthecollectivedismissalregime.

Theemployermayalsoterminatethelabouragreementif:

• theemployee’sproductivityandqualitydecreases continuously,• repeatedtechnicalproblemsintheresources affectedbythelabourposition,• riskstothesafetyandhealthoftheemployee,other employeesorthirdpersonsor

• theemployeedevelopingmanagementfunctionsor functionsoftechnicalcomplexityhasfailedto complywithobjectivespreviouslyagreedinwriting, providedthatitimpliestheimpossibilitytomaintain thelabourrelationship.

The grounds above depend on the cumulativeverificationofthefollowingrequirements:

• theintroductionofnewproductionprocedures, technologiesorequipmentwithinthelabour position,• theemployeehavingbeengivenadequate professionaltrainingtoadapttothechanges• theemployeehavingbeengiventime,atleast30 days,toadapttothenewtechnologies• nootherpositioninthefirmisavailableand compatiblewiththeemployee’scategory.

Itisalsopossibletodismissanemployeeinacasewherenomodificationsweremadetotheposition,aslongasthefollowingrequirementsarecumulativelyverified:

a) theemployee’sworklevelhasmodifiedsubstantiallyinsuchawaythatforeseeablyitwillleadtocontinuousproductivity and quality decrease, repeated technicalproblems in the resources affected by the labourposition,riskstothesafetyandhealthoftheemployee,otheremployeesorthirdpersons;

b) the employer informs the employee, with a copyof the relevant documents, with a description of thefacts and evidence of the substantivemodification tothemanner theworkhasbeenperformed, aswell asinformingthatananswertothiscommunicationcanbegivenin5workingdays.

c) Aftertheanswer,theemployermustcommunicateorders and instructions adequate to the execution oftheposition’sfunctions,withtheintentionofcorrectingthem.

d) b)andc)abovehavebeenverified.

Theemployermustsendacopyofthecommunicationand thedocuments to theemployee’s representativesand, if theemployee is aunion representative, to thecorrespondingtradeunion,.

Employees who have been transferred to the labourposition to be made redundant less than 3 months

beforeareentitledtoreoccupytheformerposition(ifexisting),withnolossofremuneration.

Moreover, the dismissal can only take place if thecompensation and all other labour credits are madeavailabletotheemployee.

Employees subject to the termination of theiremploymentagreementforfailuretoadaptareentitledtocompensationequaltothatsetforcollectivedismissalsituations.

In order to formalize the dismissal proceeding, theemployer must communicate to the employee, andif the employee is a union representative, to thecorrespondingtradeunion:

• theintentiontodismissandthegroundsfor dismissal;• themodificationsintroducedinthepositionorthe substantialmodificationintheperformanceofthe tasksoftheposition;• theresultsoftheprofessionaltrainingandthe followingadaptionperiod.

Within10daysfollowingthepreviouscommunication,theemployeeisentitledtorequirediligencetogatherevidence,andtheemployerhastoinformtheemployee,theemployee’srepresentativesandthecorrespondingtradeunion,iftheemployeeisaunionrepresentative,on the result of such diligence. Any of these people/structuresmaysendtheemployertheiropiniononthegroundsofthedismissal.

The employer then has 30 days to proceed with thedismissal,throughagrounded,writtendecisionstating:

• themotivesorthedismissal;• confirmationoftherequirementssetforthe determinationofthefailuretoadapt;• theamountdueorthecompensationandforthe labourcredits,aswellasthemeans,momentand placeoftheirpayment;• thedateofthetermination.

The termination of the employment contract mustbe communicated to the employee, the employeerepresentatives, the trade union, if the employee is aunionrepresentative,andthecompetentserviceoftheEmploymentMinistry,withthefollowingpriornotice:

• 15-daypriornoticeperiod,foremployeeswhose seniorityislessthan1year;• 30-daypriornoticeperiod,foremployeeswhose seniorityisbetween1yearandlessthan5years;• 60-daypriornoticeperiod,foremployeeswhose seniorityisbetween5yearsandlessthan10years;

For employees whose seniority is equal to or longerthan10yearsapriornoticeperiodof75-daysapplies.

Adisciplinaryproceedingmustprecededismissalbytheemployerondisciplinarygrounds.Suchdismissalisonlylawfuliftheemployeeisguiltyofcommittingaseriousbreachinhisdutiesasemployee(justcause).Termination under these circumstances requires theexistenceofjustcause,whichmeansaguiltybehaviourthatduetoitsseriousnessandconsequencesmakesitimmediately and practically impossible for the labourrelationshiptosubsist.

Adisciplinaryprocessmustbesetinmotion,involving:

• Previousinquiryintothematterwhennecessary;• Accusationnote,whichmuststatethefactsthat justifythedismissalandmayornotbeaccompanied bytheemployee’spreventivesuspension;• Theemployeehas10workingdaystorebutthe accusation;• Theemployermustundertakeaninvestigationand takeintoconsiderationanyevidencetheemployee mayhaverequestedinhis/herrebuttal;• Decisionofdismissalornon-dismissal(e.g. applicationofanalternativedisciplinarymeasure).

In addition, the employer is obliged to deliver thedecision in writing, explaining the facts and groundson which the decision is based. The decision mustbe communicated to the employee and to the workcommitteeor tradeunion, if the employee is a unionrepresentative.

a. is sEvErancE pay rEquirEd?

Employees subject to collective dismissal, dismissalresulting from job extinction or failure to adapt tothe job position are entitled to compensation whichcalculation basis varies, depending on the seniorityperiod under consideration and date on which thecontractwasinitiallyexecuted,between1month,20,18or12daysbasesalaryandsenioritypremiumsperyearofservice(fractionsofseniorityaretobecalculatedonaproportionalbasis).


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Boththelabourcreditsandanycompensationthatmaybeduetotheemployeemustbeexpresslyrecognizedinthedecisionofdismissal.Theamount,aswellasthemeans, moment and location of payment have to beincludedinthecommunicationgivingpriornotice.

Shouldthebasisforthedecisiontodismissanemployeebenon-existentorshould theemployer fail tocomplywith the procedural requirements, the termination ofthelabouragreementisunlawfulandtheemployeeisentitledtothepaymentofhis/hersalaryfromthedateofdismissaluntilthefinalcourtdecision.Theemployeeis also entitled to choose one of two remedies: his/her reinstatement into the company or payment of acompensationfordismissaltobesetbythecourt.Theindemnitymayvarybetween15and45days’basesalaryplusthesenioritypremiumsforeachyear(orfractionofayear)ofseniority,withaminimumofthreemonths’remuneration.

Ifthedismissedemployee’sroleinvolvedmanagementresponsibilities or if the company has less than 10employees, the employer may oppose to his/herreinstatement in the jobpositionon thegrounds thatthiswould seriously affect the employer organization.If the court decides in favour of the employer, rulingagainst reintegration, the indemnity to be granted tothe employee will be calculated between 30 and 60days’basesalaryplusthesenioritypremiumsforeachyear(orfractionofayear)ofseniority,withaminimumofsixmonths’remuneration.

4.SeparationAgreements

Employeeandemployermayfreelyagreetoterminateanemploymentagreementinwrittenform.Anemployeemay revoke the termination agreement within sevendaysfromthedateonwhichtheterminationagreementwas entered into, except when the agreement wassignedinthepresenceofanotary.

Inanumberofcasesthisisconsideredabestpractice.Onlyinspecificcaseswhereagreementsaremadeinthecontextoftheemployeesrestructuringorbasedonthesamegroundsthatallowcollectivedismissalandsubjectto cap limits of employees with whom separationagreements have been executed triennially will theemployeebeentitledtounemploymentallowance.Thissometimes restricts the availability of employees toproceedwithseparationagreements.

5.Remediesforemployeesseekingtochallengewrongfultermination

Employeesmaynotbedismissedwithoutavalidmotiveorforpoliticalorideologicalreasons.

Inthecaseofcollectivedismissal,extinctionof labourpositionorfailureofemployeetoadapt,employeesareentitledtoapecuniarycompensation.

Pregnantwomen thathavegivenbirth in the last120daysandthosebreastfeeding,aswellasanyemployeeon paternity license, enjoy special protection. Forthis reason, dismissal of any of these categories ofemployee`sisillegalwithoutapriorfavourableopinionfrom the competent authority in the area of equalityofopportunitiesbetweenmenandwomen (ComissãoparaaIgualdadenoTrabalhoenoEmprego-CITE).

IftheCITE’sopinionisunfavourable,theemployercanonlyproceedwithdismissaloftheprotectedemployeesbyobtainingacourtdecisionrecognizingtheexistenceofavalidmotiveinalawsuitthatmaybefiledupto30daysaftertheunfavourableopinionhasbeenissued.

If the dismissal is considered illegal, the employercannot oppose to the reintegration of the employee(exceptifeitherofthepartiesrequiresthepaymentofextra compensation instead of reintegration), but theemployeemaychoosebetweentherighttoreintegrationandtherighttocompensation.


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iX. rEstrictivE covEnants

1. DefinitionofRestrictiveCovenants

ThePortugueseLabourCodehasasubsectiononclausesthat limit the freedomofwork.These include,amongothers, provisions on non-competition covenants andminimumpermanencedurationagreement.

Agreementstorestricttheactivityofemployeesduringemploymentoraftercontractterminationareallowedundercertaintermsandconditions.

Exclusivity clauses during employment are allowed asare non-compete agreement to produce effects aftertheterminationofthecontract.

2. TypesofRestrictiveCovenants

Non-compete agreements (after termination) areonlylegaliftheactivityoftheemployeeislikelytocauseharmto the employer and payment of a non-competitioncompensationamountisagreedandcompliedwith.

As a general rule, the non-competition covenantsare subject toamaximumdurationperiodof2years.However, if theemployee inquestionwas allocatedaroleinvolvingspecialtrustnaturethatentailsaspecialrelationshipwiththecompanyorarolethatgrantedtheemployee access to particularly sensitive informationthat is relevant for competitors, the duration of theagreementmaybeincreasedtoupto3years.

It is also possible for the employee to agree to anon-termination covenant, by which the employeeundertakesnottoterminatethecontract,subjecttoamaximumperiod of 3 years, as away to compensatethe employer for high expenses incurred with theemployee’sprofessionaltraining.Theemployeemayinanycaseanticipatetheendofthisperiodbyreimbursingtheemployerfortherelevantexpensesincurred.

Although it is common to find companies includingnon-solicitationcovenantsintheiroutsourcing,serviceprovisionandjointventureagreements,amongothers,theserestrictivecovenantsareactuallynotenforceableunderPortugueselabourlaws.

3. EnforcementofRestrictiveCovenants—processandremedies

To enforce restrictive covenants after termination ofemployment, the agreement must state either theamountof the compensationdue to theemployeeorthecriteriaforitsdetermination.Thiscompensationcanbepaidinfractionsduringthetermoftheagreementoritcanbepaidallatonce.

The parties may agree on contractual penalties thatmaybeclaimedincaseofbreachofagreedrestrictivecovenants.Damagescausedbybreachofsuchcovenantsmaybeclaimedfromthepartyatfault.

4. UseandLimitationsofGardenLeave

Whenresigningorwhenhavingbeenservedapriornoticefordismissal(e.g.collectivedismissal)employersfrequentlychoosetogranttheaffectedemployeeapaidleave.Employerscannotactuallyinstructtheemployeetostayawayifhe/shechosestocontinueperforminghis/herworkroleuntilthepriornoticeperiodiscompleted.Theonlypossibilitygiventotheemployeristoinstructtheemployeestouseanyunusedholidayperiodduringthefinalpartofthepriornoticebeingservedand,therefore,inpracticalterms,toactuallyleavebeforetheendofthepriornoticeperiod.

Gardenleavesinthecontextofpendingdisciplinaryproceedingsareallowedparticularlyaftertheaccusationnotehasbeenservedtotheemployee.


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X. riGhts of EmployEEs in casE of a transfEr of undErtakinG1.Employees’Rights

Whenproceedingtothebusinesstransferthatinvolvesthetransferofundertaking(oneormorebusinessunitsorpartsofbusinessunits,i.e.,organizedmeanspursuingan economic activity) transferor and transferee mustconsult with employee representatives and providerelevantinformationontheplannedtransfer.

The employee is entitled tomaintain his job positionpreviously heldwith the predecessor,with all existingterms and conditions, with the successor, once thetransferoftheundertakingoccurs.

During the year subsequent to the business transfer,the transferor is jointly liable with the transfereefor employee credits arising from the transferredemployment agreements, which became due prior tothebusinesstransferdate.

2.RequirementsforPredecessorandSuccessorParties

Prior to transfer, employee representatives (WorksCouncil and trade union representatives) or, in theirabsence, employees directly have to be informed inwritingprior to the transferabout the transfer’sdate,motivesand legal,economicandsocialconsequences,as well as measures envisaged in relation to theemployees.Wherethereareemployeerepresentativesandspecialmeasuresareput inplaceas resultof thetransfer,employeerepresentativeshavetobeconsultedpriortothetransfer.

Theseobligationsencumberboththetransferorandthetransferee,inrelationtotheirrespectiveemployeesortheirrepresentatives.


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Xi. tradE unions and EmployErs associations1. BriefDescriptionofEmployeesandEmployersOrganizations

Trade unions are recognized in Portuguese Law andits respective regime, but are primarily ruled by thePortuguese Republic Constitution and by the LabourCode.

Portuguese law recognizes eachemployee´s free rightto affiliation, which means he/she may become amember and leaveany tradeunion. Portuguese tradeunions coveralmostall existingprofessional activities.Intheory,therefore,allemployeescouldbeunionized,despite of unionization rates being quite low. TherearetwomaintradeunionfederationsinPortugal:UGTand CGTP. Although formally independent they arestronglyconnectedorclosetoleftwingpoliticalparties,mainlythesocialist(PS)andthecommunist(PCP)party.Employers are legally prevented from interferingwithunions‘activities,evenwiththepurposeofpromoting,supportingorfinancingtradeunions.Thereareseveralcollective bargaining agreements ruling all differentkindsofactivities.

2.RightsandImportanceofTradeUnions

The employees are entitled associate with unions forthe purpose of defending and promoting their socialand professional interests. The union associations ofemployees cover unions, federations, leagues andconfederations.

3.TypesofRepresentation

The unions are entitled to negotiate collective labouragreements, render economic or social services totheir members, participate in the preparation oflabour legislation, initiate and intervene in legal andadministrative proceedings concerning the interestsof itsmembers, takepart inundertaking restructuringprocesses, establish relationship or membership ininternationalunionassociations,andothers.

4.NumberofRepresentatives

Thefollowingmaximumnumberofunionrepresentativesapply: 1 member in undertakings with less than 50unionisedworkers,2membersinundertakingswith50to 99 unionised workers, 3 members in undertakingswith 100 to 199 unionised workers, 6 members inundertakingswith200to499unionisedworkersandinundertakingswith550ormoreunionizedworkers thenumberofrepresentatives istheresultoftheformula6+[n–500):200],wherenisthenumberofunionisedemployees.


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Forpurposesofcollectivedefenceandpursuitoftheirrightsandinterests,theemployeescancreateworkers´councils/committeesandsub-committeesandtakepartinEuropeanworkcouncils.

Ineachundertaking,employeeshavetherighttocreateaworkers‘committeetodefendtheirinterestsandexerciseconsultationandinformationrightsandotherlegallyforeseeninterests.

Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs

Themaximumnumberofemployeerepresentativeswithinthecommitteesdependsonthenumberofemployeesemployedwithintheundertakingatacertaintime:2membersinemployeeswithupto9employees,3membersinmediumsizedundertakings,3to5membersinlargeundertakingswithbetween201to500employees,5to7membersinlargeundertakingswithbetween501to1000employeesand7to11inlargeundertakingswithmorethan1000employees.


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Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfitsIn Portugal the right to social protection is enshrinedin theConstitutionand isaffectedmainlyby theSocialSecuritySystem.

SeveralsectorialcompensationfundsmostlyincorporatedduringtheseconddecadeofthetwentiethcenturyandinanationwidebasisareattheoriginofthePortugueseSocial Security system. These insurance funds wereincludedintheSocialSecuritySysteminthe70s,givingrisetotheunifiedSocialSecuritySystem.However, theGeneralRetirementFund,establishedin1929toensuretheprotectionofcivilservants,maintaineditsautonomy,allowingemployeesofpublicadministrationbenefitfromaspecialregime.

InadditiontotheSocialSecurityContributoryCodeandrespective implementing decree [Lawno. 110/2009, ofSeptember16],therearesomescatteredsocialsecurityrules.

The employer and the employee are subject to socialinsurancecontributions,whichmustbepaidonamonthlybasis.

Theglobalcontributoryrateis34.75%ofthecontributionbase. The employer is in charge of 23.75% and theemployee of 11%. Nevertheless, the employer has todeducttheemployee’scontributionsfromitsgrosswageandtodeliverthemtoSocialSecurity.Civilservantshavea specific welfare protection scheme also subject tocompulsorycontributions.

Atthesametime,thescopeofsocialprotectiongrantedtodependentemployeescovers theeventsofsickness,parenting, unemployment, professional illnesses,invalidity, old-age and death as well as a payment ofan additional 1% must be contributed for the WorkCompensation Funds (Fundo de Compensação doTrabalho and Fundo de Garantia de Compensaçãodo Trabalho). The employer may bear the costs ofcontributingeitherunderapubliccapitalisationschemeorunderasupplementaryschemeforvoluntarypersonalinsurance (in the form of pension savings plans, lifeassurance,etc.) toanyparticularemployeeorgroupofemployees.

Furthermore, there is a public capitalisation schemeunder which one can voluntarily complement its old-agepensionamountthroughthepaymentofadditionalcontributionsduringworkingage,thatareconvertedintoretirement certificates. The due value of contributionmaybe2.4or6%(thelatteronlyifthesubscriberisover50yearold)ofthecontributionbase(assettledoutinthecontext of compulsory contributions), according to thesubscriber’schoice.

Thetotalamountofcontributionsandincomegeneratedbythecapitalisationwillbeavailableatthedateofthesubscriber’sretirement,whomayalsochoosetoconvertitintoanannuityortotransferittochildrenorspouse,iftheyaresubscriberstoo.

In general, the contribution base comprises all theremunerations, whether in money or in kind, paidto an employee in exchange for the work rendered,as established in the employment agreement, in thecollective bargaining agreement, law or practices (i.e.base remuneration, seniority payments, holiday andChristmasallowances).At thesametime,bonusespaidarealso reflected in thecontributionbase if frequentlypaideveryfiveyearsorlessandtheemployeeisentitledtoreceivetheminaccordancewithobjectiveandgeneralcriteria.

The law expressly excludes some benefits from thecontributionbase,suchasvaluesassignedtocomplementsocialsecuritybenefits,familybenefitsorreimbursementofmedicalexpenses.

The Social Security System covers (i) sickness, (ii)maternity, paternity and adoption, (iii) unemployment,(iv) professional diseases, (v) disability, (vi) old ageand(vii)death.

24hoursbeforetheemploymentagreementtakeseffect,theemployershallreportthehiringoftheemployeeandthemaincontractualtermstotheSocialSecurityOfficethroughitsofficialwebsite(SegurançaSocialDirecta).The employermust also inform on the termination orsuspensionoftheemploymentagreementandrespectivemain reasons, aswell as on any changeon the agreed

typeofcontract(permanentorfixed-term,part-time,andothers.)

The employee is deemed to have started renderingwork on the sixthmonth preceding the infringement’sdate.Thisassumptionisrebuttableiftheemployergivesevidence of the date in which the employee actuallystartedtorenderwork.

The employee is considered to continue to renderworktotheemployerwhiletheSocialSecurityOfficeisnot informed on the termination or suspension of theemploymentcontract,thuscontinuingthedutyofpayingcompulsorysocialcontributions.

OncetheemployerreportsthehiringofanewemployeetotheSocialSecurityOfficethefollowingmainobligationsariseandmustbecompliedwithonamonthlybasisandregardingeachemployee:(i)reportingtheremunerationthatcomprisesthecontributionbase,theworkingtime,andtheapplicablecontributoryrate;(ii)paymentofthevaluedueasmandatorycontributions,borneoutbythecompany(23.75%)andtheemployee(11%):thedeadlineforpaymentisbetweenthe10thand20thofthemonthaftertheonewithwhichthecontributionsreferto.


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Morais Leitão is a leadingPortuguese full servicefirmwithofficesinLisbon,OportoandFunchal(Madeira).Toaddressthegrowingneedsofitsclientsthroughouttheworld, particularly in Portuguese speaking countries,Morais Leitão has established theMorais Leitão LegalCircle,whichconsistsofanetworkofsolidassociationsand alliances with leading offices and law firms inAngola,MozambiqueandMacau(China).

Morais Leitão has a highly reputed labour andemployment practice. Both in a consultancy capacityand in litigation before labour courts. Morais Leitãoprovidesdailyassistancetoavastnumberofcompanies,including many multinationals, in all areas pertainingto labour relations.The labourandemployment teamhas extensive and consolidated experience in themost important and current areas of labour relations,such as the protection of industrial and intellectualproperty, the conventions on confidentiality and non-competition, and the models of assistance provisionandcomplementarybenefitsestablishedbythepublicsystemofsocialsecurity.MoraisLeitãoisrecommendedforEmploymentLawbyBestLawyers,ChambersEurope(Band1)andTheLegal500(Tier1),amongstothers.

www.mlgts.pt

This memorandum has been provided by:MoraisLeitãoRuaCastilho,1651070-050Lisboa–PortugalP+351213817400

morais lEitão l&E GloBal portuGal

contact usFor more information about L&E Global, or an initialconsultation,pleasecontactoneofourmemberfirmsor our corporate office.We look forward to speakingwithyou.

L&EGlobalAvenueLouise221B-1050,BrusselsBelgium+3226432633www.leglobal.org

Thispublicationmaynotdealwitheverytopicwithinitsscopenorcovereveryaspectofthetopicswithwhichitdeals.Itisnotdesignedtoprovidelegalorotheradvicewithregardtoanyspecificcase.Nothingstatedinthisdocumentshouldbetreatedasanauthoritativestatementofthelawonanyparticularaspectorinanyspecificcase.Actionshouldnotbetakenonthisdocumentalone.Forspecificadvice,pleasecontactaspecialistatoneofourmemberfirmsorthefirmthatauthoredthispublication.Thecontentisbasedonthelawasof2017.

L&EGlobalCVBAisacivilcompanyunderBelgianLawthatcoordinatesanallianceofindependentmemberfirms.L&EGlobalprovidesnoclientservices.Suchservicesaresolelyprovidedbythememberfirmsintheirrespectivejurisdictions.Incertaincircumstances,L&EGlobalisusedasabrandorbusinessnameinrelationtoandbysomeorallofthememberfirms.

L&EGlobalCVBAanditsmemberfirmsarelegallydistinctandseparateentities.Theydonothave,andnothingcontainedhereinshallbeconstruedtoplacetheseentitiesin,therelationshipofparents,subsidiaries,agents,partnersorjointventures.Nomemberfirm,northefirmwhichauthoredthispublication,hasanyauthority(actual,apparent,impliedorotherwise)tobindL&EGlobalCVBAoranymemberfirminanymannerwhatsoever.

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2017

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