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employment law overview portugal 2019-2020Morais Leitão / Proud Member of L&E GLOBAL

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table of contents.

i. General overview 01II. PRE-EMPLOYMENT CONSIDERATIONS 04III. EMPLOYMENT CONTRACTS 06IV. wORkINg CONDITIONS 08V. ANTI-DISCRIMINATION LAwS 10VI. SOCIAL MEDIA AND DATA PRIVACY 12VII. AuThORISATIONS fOR fOREIgN EMPLOYEES 14 VIII. TERMINATION Of EMPLOYMENT CONTRACTS 15IX. RESTRICTIVE COVENANTS 21X. TRANSfER Of uNDERTAkINgS 23XI. TRADE uNIONS AND EMPLOYERS ASSOCIATIONS 24XII. EMPLOYEE BENEfITS 26


i. general overview

2. Key points•Arelevantreformtolabourlawtookplacein2009and additional changes were introduced after2011.Thesereformshadasignificantimpactonemployeerightsandobligations.

•TwoofthemoststrikingfeaturesofPortugueselaw are probably the variety of its sources andthelevelofprotectionitgrantsemployees.

•Collectivebargainingagreementsareenteredintoa regional, national or industry level, betweenthe unions and employers‘ organisations or oncompanyormultiplecompanylevelsbetweentheunionsandtherelevantemployingcompanies.

•The scope of application defined in a collectivebargaining agreement may be extended, afterits entry into force, by a government extensionact.Insuchcases,theprovisionsoftheextendedcollectiveagreement,dependingontheextensionterms, will apply either in a specific region orat a national level, to all companies operatingin the relevant business sector or industry andemployees at their service (regardless of suchemployeesbeingunionaffiliated).

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3. legal frameworKEmploymentlaw,rulesandguidelinesprevailinginPortugalaremostlybaseduponthefollowinglaws:

•The Portuguese labour and social Constitutionprovisions;

•ThePortugueseLabourCodesubjecttoamajorreform in2009andsubsequentlyamendedandrespectiveimplementingdecree;

•The Social Security Contributory Code andrespective implementing decree [Law no.110/2009, of September 16 (amended by Lawno. 119/2009, of December 30 and Law no.23/2015,ofMarch17)andImplementingDecreeno. 1-A/2011, of January 12 (last amended byImplementing Decree no. 6/2013, of October15)];

•Procedurallegalframeworkonlabourandsocialsecuritymisdemeanours (Law no. 107/2009, ofSeptember14,lastamendedbyLawno.63/2013,ofAugust27);

•Legalframeworkonageandinvalidityretirement(Decree-Law no. 187/2007, of May 10, lastamended by Decree-Law no. 73/2018, ofSeptember17);

•Legal framework on protection in the event ofsickness (Decree-Law no. 28/2004, of February4,lastamendedbyDecree-Lawno.53/2018,July27);

1. introductionPortugueselabourlawishighlyprotectionist.Itsrulesandprinciplesapplybothtoindividualemploymentrelationshipsandtocollectivebargainingagreements,whichendowtradeunionswithan important role,particularly inbusinessareasor industrieswheresaidagreementsareapplicableonabroader scaleasaresultofgovernmentextensionmeasures.In2009theLabourCode(originallyissuedin2003)underwentarelevantreform.Thisresultedinmoreflexiblesolutions,namelyonworktimeorganisationissues.From2011onwards, inviewoftheausteritypackagemeasures,anumberofrelevantchangeswerealso introduced.Reductionstotheseverancecompensationsdue incaseofredundancyandreductionstoextraworkpay.Someofthesemeasureswerechangedin2016underatendencytowithdrawsomeofthepreviouslyappliedausterityprovisions(e.g.nationalholidaysthathadbeensuspendedwereputbackinplacein2016).


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•Legal framework on protection in the eventof parenting (parental leave and respectivesubsidies) [Decree-Law no. 91/2009, of April 9,lastamendedbyDecree-Lawno.53/2018,ofJuly2];

•Legal framework on the Public CapitalisationScheme (Decree-Law no. 26/2008, of February22);

•Legal framework on Safety andHealth atWork(Law no. 102/2009, of September 10, lastamendedbyDecree-Lawno.28/2016,ofAugust23);

•Legal framework on the compensation ofaccidentsatworkandoccupationaldiseases(Lawno.98/2009,ofSeptember4);

•List of Professional Illnesses andNational Tableof Disabilities (Decree-Law no. 352/2007, ofOctober23andImplementingDecreeno.6/2001,ofMay5,amendedbyImplementingDecreeno.76/2007,ofJuly17);

•Social Security’s Disability Verification System(Decree-Law no. 360/97, of December 17, lastamended by Decree-Law no. 126-A/2017 ofOctober6);

•Legal framework on unemployment protectionapplicable to employees (Decree-Law no.220/2006, of November 3, last amended byDecree-Lawno.53/2018,ofJuly2);

•Legal framework on unemployment protectionapplicable to self-employed professionals(whoseservicesaremostlyprovided toasinglecontractingauthority)[Decree-Lawno.65/2012,of March 15, last amended by Decree-Law no.53/2018,ofJuly2];

•Legal framework on unemployment protectionapplicable to self-employed professionals withan entrepreneurial activity and to membersof corporate bodies (Decree-Law no. 12/2013,of January 5, last amended by Decree-Law no.53/2018,ofJuly2);

•Legal framework onWorkCompensation Funds(FundodeCompensaçãodoTrabalhoandFundodeGarantiadeCompensaçãodoTrabalho)[Lawno.70/2013,ofAugust30(amendedbyDecree-lawno.210/2015ofSeptember25)].

In addition to the abovementioned legalsources, employees’ and employers’ contractualrelationships are also governed by the followinginstruments:

•Collective bargaining agreements (convençõescolectivas de trabalho), i.e., agreements

negotiated between one or more trade unionsand one or more employers’ organisations oremployers;

•Employmentcontracts;•Company internal regulatory instruments(regulamentos de trabalho) implemented byeachorganisationtoapplytoitsownemployees;

•Precedentcourtdecisionsarenotlegallybinding.However, the decisions of the ConstitutionalCourt(TribunalConstitucional)andtheSupremeCourt (Supremo Tribunal de Justiça) have incertaincasesgeneralapplication.

4. new developments A relevant reform of labour law in recent yearsoccurred in 2009. This had an important impactontherightsandobligationsofemployees.Moreflexible solutions and measures to safeguardand promote employment, and to protect theunemployed were implemented. In fact, theLabour Code known as the new 2009 Code wasamended in thecontextofseveralpublic reformsthataimedto increasecorporatecompetitivenessandproductivitybyallowinglabourlaw,collectivebargainingagreements,andindividualemploymentcontractstobemoreflexible.

2012alsoregisteredrelevantreformamendmentsin labour law, affecting specific provisions of thePortugueseLabourCodenamelyonseverancepayforcontracttermination.

In2016, followingthenewgovernment that tookoffice, changes occurred / were implemented intheshortrun. Themostrelevantofwhichasfaras private employmentmatterswere an increaseof the minimum wage, which has continuedprogressively, and the reinstatement of numberof suspended national holidays. As far as publicservantsareconcerned,measuressuchastheendofpaycutsandthereinstatementofthe35hoursworking week after working hours of the publicservantshavingbeenincreasedto40hoursaweekinthecontextoftheausteritymeasuresappliedinPortugal,deservesahighlight.

Decree n.º 25/2018, of January 18, set theretirementagein2019at66yearsand5months.

Theyear2018hasbroughtchangestotheregimeoftransferofundertakings.Thechangesessentially



covered the operative concept of economic unit,the duties of information and consultation ofworkers and their representative structures, theright of opposition of theworkers to the changeofemployernaturallyassociatedwiththetransferoftheundertaking,andtherighttoterminatetheemployment contract in certain circumstances incaseoftransfer.


ii. PRE-EMPLOYMENT considerations 1. limitations on bacKground checKsThere are some legal restrictions on conductingbackground verifications on job candidates andemployeessuchasdrugtests,financialandcreditchecks,criminalchecks,academicqualificationsorpreviousemployments.

In what concerns the selection process, forexample, there are some legal restrictions oninformation that may be sought in candidatescreening,includinginformationthatthecandidatemaybeaskedtoprovideataninterview,duringthehiringpracticesandintheemploymentagreement.

Anemployerisnotallowedtorequestinformationonthecandidate’sprivatelifeexceptforinformationthat is strictlynecessaryor relevant toassess thecandidate’s aptitude and abilities for the job. Insuchcases,thespecificreasonsforrequiringsuchinformation must be provided in writing to thecandidatebythepotentialemployer.

The employer is also not allowed to requestinformation about the candidate’s health orpregnancy,exceptwhenrelevantinviewofspecificrequirementsimposedbythenatureofthejobrole.Again, in such case, the potential employermustprovidewritten informationon such requirementtothecandidate.

Inthislattercase,theinformationmustbeprovidedtoadoctorwhowillmerelyinformtheemployeronwhetherthecandidatequalifiesornotforthejob.

In what concerns the possibility of obtainingsupportingdocumentssuchaspreviousemployment

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contracts, educational certificates, past pay slips,andothers,thescreeningofcandidatesupportingdocuments on previous employment experienceandeducationalcertificatesmayberequestedfromthecandidateinsofarastheinformationisrelevantand not excessive for the purpose forwhich it isrequired.

Some legal restrictions also apply to conductinghealthchecksandtoselectingacandidateonthebasisofhealthinformation.

In fact, except for general health exams that arespecifically required to evaluate the candidate’sgeneralphysicalandpsychicconditionstoexercisethe role being engaged and to evaluatepotentialeffects of the activity in question and workingconditions on the employee’s health condition,theemployer isnotallowed to requireanyotherhealth ormedical tests or exam results from thecandidate.

Therearesomeexceptions,however, to this rule,namely:

•exams required for purposes of the employee’sownprotectionorsafetyorthatofathirdparty;or

•exams justifiedby the specificities of the role /activitytobeperformed.

Inbothcasesthepotentialemployermustprovidethecandidatewithdueexplanation,inwriting,onthe reasons for the additionally required tests orexams.

Underdataprotectionlaws,personaldatamustbemaintainedonlyfortheperiodstrictlyrequired.




2. restrictions on application/interview QuestionsRestrictionsorlimitationonapplicationorinterviewquestions are in line with the above referredlimitations on background check information, oninformationaboutthecandidate’sprivate lifeandonthecandidate’shealthorpregnancy.

The Portuguese Labour Code requires employerstokeep the following informationon recruitmentprocesses launched, disaggregated by gender ofcandidates,foraperiodof5years:

•invitationsforavailablepositions;•employment-offeradvertisements;•number of candidates for Curriculum Vitaeappraisal;

•number of candidates called for pre-selectioninterviews;

•numberofcandidatesawaitingrecruitment;•admissionorselectiontestresults;•socialreportsperformedtoassesspossiblegenderdiscrimination in the access to job positions,training,promotionsandworkconditions.


iii. employment contracts1. minimum reQuirementsGenerallyspeaking,theemploymentcontractdoesnotrequireanyspecialformandmay,therefore,beagreed under written form or verbally. However,there are certain situations inwhich the contractor some clauses must be executed in writing,examplesofwhichare:

1)fixedtermemploymentcontract;2)part-timeemploymentcontract;3)temporaryworkcontractorintermittentemploymentcontract;4)teleworkingcontracts;5)singleemployeecontractswithmultipleemployers;6)non-competitionclauses.

Where the law requires written form for certainemploymentcontracts,failureinthisrequirement,does not entail, in principle, the nullity of thecontract.

In fact, what happens in most cases is that thecontract is deemed to be subject to generalemployment rules (e.g.parttimecontractwillbedeemedtobefulltime;temporarycontractswillbedeemedpermanentemployment,etc.).

Inordertosupplytheemployeewithaminimumsetofinformation,theCoderequirestheemployertoprovidetheemployeewithwritteninformationontheemploymentcontractandworkingconditions.

Whenexecuted inwritten form, theemploymentcontracts must be signed by the person orpersons who are authorised to represent thecompany in dealings with third parties accordingto the company’s articles of association or dulyempoweredtodoso.

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There is no legal requirement for employmentcontracts to be executed in Portuguese, thus theuseofotherlanguages(e.g.English)isacceptableprovidedtheemployeeunderstandsthe languageused.Moreover,bilingualversionsmayalsobeused,inwhichcaseitisrecommendedtosetaprevailingversion.Nevertheless,contractsdrawninaforeignlanguage,asarule,willhavetobetranslatedintoPortuguesewhenfiledwithaPortugueseauthorityor official and a translation certificationmay alsoberequired.

2. FixEd-TERM/OPEN-ended contractsUnless otherwise specified by the parties,employmentcontractsaredeemedopen-ended(i.e.permanentemployment).Fixedtermcontractsarepermittedbylawprovidedthattheyareexecutedinwrittenformandprovidedtheyaremeanttofillarolerequiredonthebasisofamerelytemporaryneedoftheemployingcompany.Hence,ifthereisnowrittencontract,theemploymentcontractwillbedeemedtobeanopen-endedcontract.

3. trial periodTrial periods (initial probation) for permanentemployees are 90 days, 180 days for highcomplexity, trust or responsibility roles and 240days formanagement,directorateandequivalentresponsibilityroles.

Fixed and unfixed term temporary contracts aresubject toshorterprobationperiods (i)15days ifagreed for an expected or fixed duration shorterthan6months;and(ii)30daysfordurationsequaltoorlongerthan6months.




During the initial probation/trial period, theemployerandtheemployeearefreetoterminatethe employment. For termination within thecontract trial period by the employer, no priornotice is required within the first 60 days.Terminationduring theprobationperiod requirestheemployertogiveasevenor15-daypriornoticeincaseswheretheprobationperiodhaslastedformorethan60or120days,respectively.

Termination of a labour agreement by either ofthe parties during the probation period doesnot require any grounds of justification and noindemnificationisdue.Themaximumtermsfortheprobation period vary between 15 and 240 days,according to the type of activity and the natureof the agreement (for a permanent employmentcontract,theaverageprobationperiodis90days).Theemployeeisnotsubjecttoanypriornoticetoterminatethecontractduringthetrialperiod.

4. notice periodThe employee is free to resign, subject only tocertainpriornoticeperiods:

For permanent employees: 30 days for contractswhichhavebeenonforceforupto2years;60daysfor contractswhich have been on force formorethan2years;

Forfixed(orunfixed)term(temporary)employmentagreements:15daysforcontracts,whichagreed(orexpected)durationis lessthan6months;30daysforcontracts,whichagreed(orexpected)durationisequalto(orlongerthan)6months.

It is not possible to agree on longer probationperiods than those legally foreseen, but it ispossible to agree on shorter probation periods,as well as to fully exclude probation periods.Companiesoftenpaysalaryinlieuofnoticeperiodinsituationsofcollectivedismissal,butthelegalityof this practice is questionable. Theemployee isallowedtodoitwiththeconsentoftheemployer.Thesalarymustbefullypaiduntilthedateoftheproperterminationofthecontract.


iv. worKing conditions 1. minimum worKing conditionsInPortugal,collectivelabourregulationinstrumentscan determine the minimum working terms andconditions. At the same time, collective labouragreementinstrumentscanonlybesetasidebyalabour contractwhen the latter establishesmorefavourableconditionsfortheemployeeandifthecontrarydoesnotresultfromthecollectivelabouragreementrules.

Workers posted abroad are entitled to localworkingconditionsprovidedbylawandcollectivebargaining agreementswith overall effectiveness,whenever these are more favourable than thosethat generally apply in the place ofwork, on thefollowingsubjectmatters:

•protectionagainstdismissal;•maximumlengthofworkingtime;•minimumperiodsofrest;•holiday;•minimum remuneration and payment ofovertime;

•transfer of workers by temporary employmentagency;

•occasionalprovisionofworkers;•safetyandhealthatwork;•protectionofparenthood;•childlabourprotection;•equaltreatmentandnon-discrimination.

2. salaryThemonthlyminimumwage in Portugal in 2018wasfixedat€580.However, in theAzores islandstheminimumwagewas€609andinMadeiraisland€591.60,inordertocompensateforinsularity.

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3. maximum worKing weeKThe maximum weekly and daily working periodsare set at 40 and 8 hours, respectively.However,subject to certain rules, these limits may beassessed on an average basis measured byreference to four or six month periods. This is asystem known as adaptability and the additionalworkhoursrenderedbytheemployeeonspecificdays or weeks exceeding the aforementioned 40and8hour limitsdonotqualifyandarenotpaidas overtime work but are, instead compensatedbyequivalentreductionofhoursworkedonotherdaysorweeks.

Similarflexibilitymayalsobeobtainedbyresortingtotheso-calledhourbank. Inthiscaseadditionalworking hours may be performed, compensatedbyamonetary compensation, an increaseon thevacationperiodoronareductionofhoursworkedonotherdays.

In general, onlywork rendered between 10 p.m.and 7 a.m. qualifies as night-timework, entitlingtheemployeetoanappropriatesalaryincrease(anincrease of 25% over the payment of equivalentwork rendered during the day). Collectivebargaining agreementsmay, nevertheless, extendor adjust the period that qualifies as night-timework.

4. overtimeTheemployeemayberequiredtoprovideovertimework: (i) when the company has to cope withtemporary increase of work that do not call foradditional employee recruitment; or (ii) in caseof force majeure or when the overtime work isneededtopreventorremedyseriousinjurytothe



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companyor its viability.Overtimework ispaidatthenormalhourlyrateplus:

•25% for thefirsthourorpart thereof, andplus37.5%foreverysubsequenthourorpartthereof,onworkingdays;

•50%forthefirsthourorpartthereof,onweeklyrest,compulsoryorcomplementary,oronbankholiday.

Overtime work rendered on weekly rest entitlestheemployeetoaremuneratedcompensatoryrestday,duringoneofthefollowingthreeworkingdays.

5. health and safety in the worKplace

A. EMPLOYER’S OBLIgATION TO PROVIDE A hEALThY AND SAfE wORkPLACE

The employer has the obligation to permanentlyensure employee health and safety conditionsatwork. To complywith suchduty, theemployermustfollowasetofgeneralprinciplesfocusedonthepreventionofworkaccidentsandprofessionalillnesses,andthustocomplywithseveralduties.Ingeneralterms,theemployermustputinplaceandensure:

•Technicalworkaccidentpreventivemeasures;•Employeetraining,informationandconsultationonworkplacesafety;

•Internalorexternalhealthandsafetyservices.

The employer must implement appropriatecompanyhealthyandsafety(H&S)activityatwork.This includes organising and keeping appropriateH&S services and other preventive measures,like ensuring risk exposure assessments andthe performance of tests and other actions onoccupationalrisksandhealthmonitoring.

At the same time, an insurance to cover workaccidentsriskmustbecontractedbytheemployerforeachhiredemployee.Ontheotherhand,theremightbethenecessitytosetupaninternalserviceofH&Sdependingontheactivityofthecompany(high risk activities), aswell ason thenumberofemployees.

Concurrently,itismandatorytosetupaninternalstructure that ensures first aid, fire-fighting andevacuation activities. Specific measures mustbe defined for adoption in case of emergencyand certain employees must be appointed asresponsible for the implementation of samemeasuresandforcallingthecompetentauthoritiesincaseofemergency.

Moreover,theemployerhastoprovideproperH&Straining to its employees and must identify thepotential occupational risks and try to minimisethem,forinstance,whenchoosingworkequipmentandfacilities,orwhendesigningworkstations.

Ifriskstotheemployeeareassessedinconnectionwithworkfeaturesorrequirements,specificmedicalchecksarealsorequired,andmustbecarriedoutbefore the employee is subject to risk exposure.Employee health surveillance and themonitoringoftheexposuretopotentialoccupationalrisksaremandatory.

Pregnant or lactating employees cannot performsome activities, due to a high-risk exposure tophysical,biologicalorchemicalagentsandactivitiescarriedoutindangerousworkingconditions.



V. ANTi-diSCRiMiNATiON laws1. brief description of ANTi-diSCRiMiNATiON laws There is a subsection in the Labour Code onequalityandnon-discrimination.Employeescannotbe discriminated throughout the duration of theemployment contracts, including access theretoandterminationthereof.

2. extent of protection Discriminationbasedonanygroundsisforbidden.Thelawexpresslyprohibitsdiscriminationgroundedonparentage,age,sex,sexualorientation,genderidentity,maritalstatus,familysituation,economicsituation, education, origin or social conditions,geneticheritage,reducedworkcapacity,disability,chronic disease, nationality, ethnic origin or race,territory of origin, language, religion, political orideologicalbeliefsandaffiliationwithtradeunion,withoutprejudiceofotherdiscriminationgrounds.

3. protection against harassment and remediesA number of reinforced legal measures for theprevention of harassment in labour context havebeeninforceasfromthelastquarter2017providingfornewobligationsonthepartoftheemployer,ofwhichthefollowingmaybehighlighted:

•The presumption of the abusive nature of anydisciplinarysanctionappliedbytheemployertoanemployeethathasreportedharassmentcasesuptooneyearaftertheemployeereportedthe

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case and/or exercised his/her rights resultingfromharassment;

•Recognitionofharassmentassufficientgroundsfor the affected employee to terminate theemploymentcontractwithimmediateeffectandto claim compensation, as a result of an act ofharassment by the employer, conditional to ithavingbeenreportedtotheAuthorityforLabourConditions;

•Liability of the employer for compensation ofdamages resulting from occupational diseasescausedbyharassmentacts;

•The requirement for employers (except thosewithaworkforceoflessthansevenemployeestoadoptcodesofgoodconducttopreventandfightharassmentintheworkplace;and

•The employer’s duty to initiate disciplinaryproceedings when it becomes aware ofharassmentcases.

Inaddition,theLawprovidesthattheAuthorityfortheConditionsofWorkmustprovideanelectronicaddressforthereceptionofharassmentcomplaintsand must include information on harassmentand harassment preventive, fighting and reactionmeasuresinitsInternetsite.

4. employer’s obligation to provide reasonable accommodationsThere is no specific provision or requirementfor employer to provide accommodations toemployees.Incertainsectors,collectivebargainingagreementsmayestablishrulesonaccommodation




provisions or on the payment of allowancesfor the purposes of supporting reasonableaccommodation, particularly in cases where theemployee is temporarilydisplacedtoprovidehis/herwork.

5. remediesDiscriminationandharassmentare forbiddenandemployees who are the object of discriminationorharassmentactsmayclaimindemnificationandcompensation for monetary and non-monetarydamages caused. The liability of the employer tocompensate damages arising from occupationaldiseasecausedbyharassmentissubjecttofurtherregulationyettobeapproved.

6. other reQuirements Genderquotasapplytogoverningandsupervisorybodies of public sector business entities and oflisted companies, for nominations occurring asfromJanuary1,2018.

Public sector companies must have a minimumrepresentation of 33.3% of male and femalemembers inthedifferentgoverningbodiesof thecompany.

In the private sector (i.e. listed companies),companies are required to fulfill aminimum20%quota of each gender, from the first electoralgeneralassemblyheldasofthe1stofJanuary2018.Theminimumquota requirementwill increase to33.3% from the first electoral general assemblyheldasofJanuary1,2020.

The aforementioned limits are to be introducedin the first shareholder meeting held after thementioneddates.Assuch,thesenewrequirementsshallnotapplytoexistingmandates(exceptwhentheyarerenewedorsubstituted).

Public-sectorcompaniesandlistedcompanieswillalso have to draw up, annually, equality plans toachieveeffectiveequaltreatmentandopportunitiesformenandwomen,bypromotingtheeliminationofgender-baseddiscrimination,andpromotingthereconciliationofpersonal, familyandprofessionallives. Thesemustbepublishedon the company’swebsiteandsenttotheCommissionforCitizenship,

andtotheGenderEqualityandtheCommissionforEqualityinLabourandEmployment.

Minimum quotas for disabled workers (disabilitylevels equal or over 60% disability classification)are also applicable to medium and large-sizedenterprises, when engaging and organising theirworkforce.Thequotasapplicablearethefollowing:i)medium-sizedenterprises:1%quotafordisabledworkers; and ii) large-sizedenterprises:2%quotafor disabled workers. These percentages arebasedontheaveragenumberofemployeesinthepreviouscalendaryear.

These are requirements that were introduced inFebruary 2019 and four and five year transitionperiods are in place, depending on whether thecompanyexceeds100personsemployed.


vi. social media and data privacy 1. restrictions in the worKplaceEmployers may dictate the terms for the useof company information technology (IT) andcommunicationmeansbutemployeesareentitledtokeeptheirprivateuseconfidential,includingthecontent of personal emails and Internet access.According to the Portuguese Data ProtectionAuthority, the employermay define the rules ontheadmittedprivateuseofITandcommunicationmeansmadeavailableattheworkplaceandrulesshouldformpartofinternalcompanyregulations.

A. CAN ThE EMPLOYER MONITOR, ACCESS, REVIEw ThE EMPLOYEE’S ELECTRONIC COMMuNICATIONS?

Closed circuit TV (surveillance cameras) in officepremisescannotbeusedtocontroltheemployee’sperformance. In the workplace, surveillancecameras may be used to protect the safety ofpersonsandgoodsorwhenthenatureoftheactivityso requires.Before theGDPR, itsusewassubjectto aprior authorisation from theDataProtectionAuthority,andemployeeworkcouncilshad tobeconsultedatleast10dayspriortotheauthorisationrequest being filed with the competent dataprotection authority. The employer is under theobligationtoinformtheemployeesoftheexistenceofsuchequipment.

As with any other data processing activities,the employer, whilst acting as Controller in theprocessing of data regarding its employees,mustfulfiltheinformationdutiessetbytheGeneralDataProtectionRegulation,aswellasallotherprinciplesanddutiesresultingfortheGDPR.Inthislight,theemployeemust,forexample,beduly informedofthecategoriesofhis/herpersonaldataprocessed

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by the employer, purposes of and legal basis forthe processing, the recipients or categories ofrecipients of such data, and other informationrequiredbyarticles13or14oftheGDPR.Thedatasubject is also entitled to information on his/herrightsofaccesstohis/herdataandontherightstohis/her data correction, erasure andupdates andhowtoexercisesamerights.

Generally,thetransferofpersonalemployeedataoutsidetheEEAcanonlyhappenwhenthecountryofdestinationensuresthesamelevelofprotectionfor the rights and freedoms of the individuals,in relation to theprocessingof their data, as theMemberStatesoftheEEAorifthereisanadequacydecisionfromtheCommissionregardingtheStatewhichwillreceivethedata.

2. employee’s use of social media to disparage the employer or divulge confidential informationAs a general rule, employees are entitled toprivacyinpersonalandfamilylife,includingintheworkplace. The use by the employees of socialmedia communication means, cannot be usedor monitored, when evaluating the employee.The aforementioned principle does not grantthe employee total freedom to do or publishdiscretionarily on social media, this meaningthat, for example, if the employee disparages ordivulges confidential informationofor relating tothe employer, its business, its customers, or itsemployees, sanctions could be pursued for suchbehaviour. The employee is subject to general




loyaltyandrespectdutiestowardtheemployer.Assuch,iftheemployeedoesnotcomplywiththesegeneraldutieshe/shemaybesubjecttodisciplinarymeasuresavailable to theemployer (which rangefroma reprimand toadismissalwith just cause),dependingontheseriousnessoftheviolationandthedamagescausedtotheemployer.


vii. authorisations for foreign employees reQuirement for foreign employees to worK A general principle foresees that expatriatesworking onwork permit are granted equal rightsand obligations as national employees. Writtenform is required for employment contracts withexpatriates working on work permit (non-EU).The employer’s contract copy must have a copyof documents attesting compliance with legalobligationsontheentryandresidenceoftheforeignemployeeinPortugaldulyattachedtoit.Moreover,the contract must include information on theemployee’sresidencevisaorworkpermitrequiredtocarryingoutaprofessionalactivityasemployeeinPortugal.Theemployeemustalsoattachtothecontracttheidentificationandaddressofthelegalbeneficiary(ies)intheeventofdeathresultingfromworkaccidentoroccupationaldisease.Inaddition,theemployermustcommunicatetothePortugueselabourauthorities,throughelectronicform:

•theexecutionoftheemploymentcontractpriortothebeginningofitsentryintoforce;

•Thecontract’stermination,within15daysupontermination.

Inaccordancewiththelaw,companiesmustassurethe candidate holds a residence visa or permitspecificallygrantedforcarryingoutaprofessionalactivity as employee in Portugal. In cases wheretheemployerhastheintentiontoemployaforeigncitizen(non-EU)currentlylivingabroad,astatementconfirmingthattheemploymentofferisincludedinthelegaldefinedquotaorthatnoquotahasbeensetandthatnopreferentialcandidate(Portuguese,EUcitizen)was foundtoperformthe jobshallbeissuedbythePortugueseInstituteofEmploymentand vocational training and delivered to the

candidate for submission together with the visarequest.Forthesamepurpose,theemployershallalso provide the candidate with an employmentcontractorpromiseofemploymentcontract.

Hiring a foreign employee who does not holda residence visa or permit for carrying out aprofessionalactivityasanemployeeinPortugalmaytriggeranemployermisdemeanourandinadditionanordertosuspendtheemployer’sactivitymaybeissued foratime lengthofbetween3monthsupto5years.

Insettingannualoverallquotaofjobopportunitiesavailable for non-EU citizens, the PortugueseGovernment may exclude sectors or activitieswherelabourisnotconsideredasneeded;however,noquotahasbeensetsince2009.

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viii. termination of employment contracts 1. grounds for termination AccordingtoPortugueselaw,theterminationofanemploymentcontractdependsonverystrictrulesthatdemandthegatheringofgroundsandseveralformalprocedures.Thecontractmayterminateinthefollowingsituations:

•Expiry;•Mutuallyagreedtermination;•Dismissalfordisciplinarygroundssubjecttopriorinternaldismissaldisciplinaryprocedure;

•Collective dismissal (for economical, structuralortechnological reasons),subjecttoan internalprocedureandpriornoticeperiodswhichdependon the seniority of the employees affected bydismissal;

•Dismissalforextinctionoflabourpositionsubjecttoaninternalprocedureandpriornoticeperiodsinwhichthenoticeperiodwillalsovaryaccordingtotheseniorityoftheemployee;

•Dismissal for employee’s failure to adapt toa working position, also subject to internalformalitiesandpriornoticeperiods.

Thecontractexpiresinoneofthesesituations:(i)onceitstermelapses;(ii)superveningimpossibility,absoluteanddefinitive,oftheemployeerenderingworkoftheemployerreceivingsuchwork;and(iii)withtheemployee`sretirementforageordisability.

2. collective dismissalsTheclosingdownofacompanyorofoneormoreofitsdepartmentsandthereductionofpersonnelbased on market, structural, or technologicalgroundsallowsforacollectiveemployeedismissaltotakeplace,providedthegroundsaffectatleasttwoorfiveemployees,dependingonwhetherthe

companyhaslessthan50employeesormorethanthat.

Employees subject to collective dismissal areentitled to compensation which calculation basisvaries.

The procedure for collective dismissal beginswith a written communication addressed to theWork Council or, if there is no such council, tothe company union or inter-union representativestructureinthecompany.

If none of these structures exist, the affectedemployees will be informed, in writing, of theintention to perform a collective dismissaland employees will be invited to nominate aRepresentativeCommittee(orupto5employees)that will act as representative structure for thatpurpose.

In the above-referenced communication, theemployee representative structures will beprovidedwiththefollowinginformation:

•descriptionofthelegalgroundsfordismissal;•thelistofthecompany’spersonnel,organisedbysectorsofactivity;

•the criteria thatwill determine the selectionofemployeestobedismissed;

•the number of employees to be dismissed andtheirprofessionalcategories;

•periodduringwhichthecollectivedismissalwilltakeplace;and

•criteria for any possible general compensationtobegrantedtotheinvolvedemployeesbesidesthe specific compensation set forth by law orcollectiveagreement.

At the same time, a copy of the communicationand the annexed documents shall be sent to thecompetentdepartmentofthePortugueseMinistryofEmployment.




Within a 5-day period following the initialcommunication, a phase of information andnegotiation between the company and theemployees’ representatives must be initiatedin order to try to reach an agreement on thedimension and effects of themeasures taken, aswellastodecideonpossiblealternativemeasuresthat could reduce the number of dismissedemployees, namely: (i) suspension of work, (ii)reduction of work, (iii) professional reconversionandreclassificationand(iv)earlyretirement.

After a minimum of 15 days after the initialcommunication, or as soon as an agreement hasbeen reached, the employermay send a writtencommunication to each one of the dismissedemployees, containing the dismissal decision,expressly indicating the motives and date of thedismissal, the amounts of the compensation andthelabourcredits,aswellasthemanner,momentandplaceoftheirpayments.

On the date on which the decision is sent tothe employees, the employer shall send to thecompetentdepartmentofthePortugueseMinistryofEmployment(i)theminutesofthenegotiationsmeetings, as well as (ii) a list containing thename of each employee, address, date of birthand of admission to the company, social securitysituation, profession, category and salary, aswellas the individual measure applied and the dateforeseenforitsimplementation.Onthesamedate,acopyofsuchlist isaddressedtotheemployee’srepresentatives.

Untiltheterminationdate,theemployermustpaythedismissedemployeethecompensationthat isduebylawaswellasallotherexistinglabourcredits.Theterminationoftheemploymentcontractmustbecommunicatedwiththefollowingpriornotice:

•15-daypriornoticeperiod,foremployeeswhoseseniorityislessthan1year;

•30-daypriornoticeperiod,foremployeeswhoseseniority is of between 1 year and less than 5years;

•60-daypriornoticeperiod,foremployeeswhoseseniorityisofbetween5yearsandlessthan10years;

•75-day prior notice period, for an employeewhoseseniorityisequaltoorexceeds10years.

3. individual dismissalsExtinction of a labour position is applicable onlywhenthecompanylacksgroundstoproceedwithacollectivedismissalasa resultofan insufficientnumberofemployees involved(i.e., thecompanyhas more than 50 employees and the closing ofthe section affects only three employees) in aredundancycausedbytheabove-referredmarket,structuralortechnologicalmotives.

Ifthereareatleasttwosimilarworkpositionsthatmay be extinct, the employer must comply witha sequence of non-discriminative legal criteria(startingwith theworst performance assessmentcarried out on the basis of previously disclosedparameters), in order to select which employeeswill be affected by the extinction. Employeessubject to the extinction of their labour positionareentitledtocompensationequaltothatsetforcollectivedismissalsituations.

Evenwhenthegroundsoccur,extinctionoflabourposition may only determine the termination oftheemploymentcontractshouldthemaintenanceof the employment relationship prove to beimpossible,intermsoftheemployerfailingtohaveanalternativejobpositionthatiscompatiblewiththeaffectedemployee’sprofessionalcategory.

Furthermore, it is mandatory that the employerhas no fixed termemployees executing functionscorresponding to the labour position to beterminated.

Whentherearemoreequivalentjobpositionsthanthenumberofthepositionstobeterminated,theidentification of the labour position to eliminatehastobemadeinaccordancewiththecriteriasetforthbythelaw:

•worst performance evaluation, according to anappraisalsystemandcriteriapreviouslyknowntoalltheaffectedemployees;

•biggerburdenintermsofcostsforthecompany;•lessexperienceinthejob;•lessseniorityinthefirm.

Employees who have been transferred to thelabour position to be extinguished less than3 months before termination are entitled toreoccupytheformerposition(ifexisting),withno



loss of remuneration. Procedural requirementsalsoapplyinthiscase.Theintentiontoterminatetheemploymentcontractbasedontheextinctionof the labour positionmust be communicated inwriting to the employees’ representatives and toeachemployeeinvolved.

Together with the communication the employermust indicate the grounds for the extinction oftheaffectedlabourpositions,identifytherelevantsectiontheybelongto,provideanexplanationontheneed todismissand indicate theprofessionalcategories of the employees affected by the jobextinction.

The employees involved and the employees’representatives have a 10-day period from theinitialcommunication’sdatetoopposeinwritingtotheextinctionmeasure,notablyallegingthelackofgroundsorthattheemployerhasfailedtocomplywiththerequirementsdescribedabove.

Within 3 business days counted from the initialcommunication’sdate,employees’representativesand employees may request the competentdepartment of the Portuguese Ministry ofEmployment to issue a report on whetherthe employer has complied with the referredrequirements.

Followingatleast5dayscountedfromthetermofthe10-dayperiodreferredtoinaboveorfromthereport’sreception,theemployermaycommunicateto the employees thedecision to terminate theiremployment agreementsbasedon theextinctionoftheirlabourpositions.

A copy of the decision must be sent to theemployees’representativesandtothecompetentdepartment of the Ministry of Employment. Thedecisionmustbeformalisedinwritingandinclude:

•thegroundsfortheextinction;•confirmation of the existence of the abovedescribedrequirements;

•proof that the legal selection criteria for thedeterminationofwhichpositiontoextinguishhasbeenfollowed;

•anindicationoftheamountsofduecompensationandalllabourcreditsdue,aswellasthemanner,momentandplacetheirpaymentwilloccur;and

•the date onwhich the employment agreementwillterminate.

Finally, the compensation (severance pay) towhich the employees are legally entitled and themandatory prior notice are the ones describedunderthecollectivedismissalregime.

The employer may also terminate the labouragreementif:

•theemployee’sproductivityandqualitydecreasescontinuously,

•repeated technical problems in the resourcesaffectedbythelabourposition,

•risks to the safety andhealth of the employee,otheremployeesorthirdpersonsor

•theemployeedevelopingmanagementfunctionsor functions of technical complexity has failedto comply with objectives previously agreed inwriting,providedthatitimpliestheimpossibilitytomaintainthelabourrelationship.

The grounds above depend on the cumulativeverificationofthefollowingrequirements:

•the introductionofnewproductionprocedures,technologies or equipment within the labourposition,

•the employee having been given adequateprofessionaltrainingtoadapttothechanges

•theemployeehavingbeengiventime,atleast30days,toadapttothenewtechnologies

•no other position in the firm is available andcompatiblewiththeemployee’scategory.

It is also possible to dismiss an employee in acase where no modifications were made to theposition,aslongasthefollowingrequirementsarecumulativelyverified:

a) the employee’s work level has modifiedsubstantially in such a way that foreseeably itwill lead to continuous productivity and qualitydecrease, repeated technical problems in theresources affected by the labour position, risksto the safety and health of the employee, otheremployeesorthirdpersons;

b) the employer informs the employee, with acopyoftherelevantdocuments,withadescriptionof the facts and evidence of the substantivemodification to the manner the work has beenperformed,aswellasinformingthatananswertothiscommunicationcanbegivenin5workingdays.



c) After the answer, the employer mustcommunicateordersandinstructionsadequatetotheexecutionoftheposition’sfunctions,withtheintentionofcorrectingthem.

d) b)andc)abovehavebeenverified.

The employer must send a copy of thecommunication and the documents to theemployee’srepresentativesand,iftheemployeeisaunionrepresentative,tothecorrespondingtradeunion.

Employees who have been transferred to thelabourpositiontobemaderedundantlessthan3monthsbeforeareentitledtoreoccupytheformerposition(ifexisting),withnolossofremuneration.Moreover,thedismissalcanonlytakeplaceifthecompensation and all other labour credits aremadeavailabletotheemployee.

Employees subject to the termination of theiremployment agreement for failure to adapt areentitled to compensation equal to that set forcollectivedismissalsituations.Inordertoformalisethe dismissal proceeding, the employer mustcommunicatetotheemployee,andiftheemployeeis a union representative, to the correspondingtradeunion:

•the intention to dismiss and the grounds fordismissal;

•themodifications introduced in the position orthesubstantialmodification intheperformanceofthetasksoftheposition;

•the results of the professional training and thefollowingadaptionperiod.

Within 10 days following the previouscommunication,theemployeeisentitledtorequirediligence to gather evidence, and the employerhas to inform the employee, the employee’srepresentatives and the corresponding tradeunion,iftheemployeeisaunionrepresentative,ontheresultofsuchdiligence.Anyof thesepeople/structuresmaysendtheemployertheiropiniononthe grounds of the dismissal. The employer thenhas30daystoproceedwiththedismissal,throughagrounded,writtendecisionstating:

•themotivesorthedismissal;•confirmation of the requirements set for thedeterminationofthefailuretoadapt;

•theamountdueorthecompensationandforthelabourcredits,aswellasthemeans,momentandplaceoftheirpayment;

•thedateofthetermination.

Theterminationoftheemploymentcontractmustbecommunicatedtotheemployee,theemployeerepresentatives,thetradeunion,iftheemployeeisaunionrepresentative,andthecompetentserviceof the Employment Ministry, with the followingpriornotice:

•15-daypriornoticeperiod,foremployeeswhoseseniorityislessthan1year;

•30-daypriornoticeperiod,foremployeeswhoseseniorityisbetween1yearandlessthan5years;

•60-daypriornoticeperiod,foremployeeswhoseseniority is between 5 years and less than 10years;

Foremployeeswhoseseniorityisequaltoorlongerthan 10 years a prior notice period of 75-daysapplies. A disciplinary proceeding must precededismissalbytheemployerondisciplinarygrounds.Such dismissal is only lawful if the employee isguiltyofcommittingaseriousbreachinhisdutiesasemployee(justcause).

Termination under these circumstances requiresthe existence of just cause, which means aguilty behaviour that due to its seriousness andconsequencesmakesitimmediatelyandpracticallyimpossible for the labour relationship to subsist.A disciplinary process must be set in motion,involving:

•previousinquiryintothematterwhennecessary;•accusation note, which must state the factsthat justify the dismissal and may or not beaccompanied by the employee’s preventivesuspension;

•theemployeehas10workingdaystorebuttheaccusation;

•the employer must undertake an investigationand take into consideration any evidence theemployeemayhaverequestedinhis/herrebuttal;

•decision of dismissal or non-dismissal (e.g.application of an alternative disciplinarymeasure).

Inaddition,theemployerisobligedtodeliverthedecisioninwriting,explainingthefactsandgroundsonwhichthedecisionisbased.Thedecisionmust



becommunicatedtotheemployeeandtotheworkcommittee or trade union, if the employee is aunionrepresentative.

A. IS SEVERANCE PAY REquIRED?

Employeessubjecttocollectivedismissal,dismissalresulting from job extinction or failure to adaptto the job position are entitled to compensationwhich calculation basis varies, depending on theseniorityperiodunder considerationanddateonwhichthecontractwasinitiallyexecuted,between1month,20,18or12daysbasesalaryandsenioritypremiumsperyearofservice(fractionsofseniorityaretobecalculatedonaproportionalbasis).

Boththelabourcreditsandanycompensationthatmay be due to the employee must be expresslyrecognisedinthedecisionofdismissal.Theamount,as well as the means, moment and location ofpaymenthavetobeincludedinthecommunicationgivingpriornotice.

Should the basis for the decision to dismiss anemployeebenon-existentorshouldtheemployerfail to comply with the procedural requirements,theterminationofthelabouragreementisunlawfulandtheemployeeisentitledtothepaymentofhis/hersalaryfromthedateofdismissaluntilthefinalcourt decision. The employee is also entitled tochooseoneoftworemedies:his/herreinstatementinto the companyorpaymentof a compensationfordismissaltobesetbythecourt.Theindemnitymayvarybetween15and45days’basesalaryplusthe senioritypremiums for each year (or fractionof a year) of seniority, with aminimum of threemonths’remuneration.

If the dismissed employee’s role involvedmanagement responsibilities or if the companyhas less than 10 employees, the employer mayopposetohis/herreinstatementinthejobpositionon the grounds that this would seriously affecttheemployerorganisation. If thecourtdecides infavouroftheemployer,rulingagainstreintegration,the indemnitytobegrantedtotheemployeewillbecalculatedbetween30and60days’basesalaryplus the seniority premiums for each year (orfractionofayear)ofseniority,withaminimumofsixmonths’remuneration.

4. separation agreements

A. IS A SEPARATION AgREEMENT REquIRED OR CONSIDERED BEST PRACTICE?

Employee and employer may freely agree toterminate an employment agreement in writtenform. An employee may revoke the terminationagreement within seven days from the date theemployeesignstheterminationagreement,exceptwhentheagreementwassignedinthepresenceofanotary.

In a number of cases, even when other groundscould support dismissal, separation agreementsare considered a best practice. Only in specificcaseswhereagreementsaremade in thecontextof company restructuring or based on the samegrounds that allow collective dismissal (andsubjecttocap limitsofthenumberofemployeesinvolved in separation agreements within eachtriennial period will the employee be entitledto unemployment allowance. This sometimesrestricts the availability of employees to proceedwithseparationagreements.

B. whAT ARE ThE STANDARD PROVISIONS Of A SEPARATION AgREEMENT?

In general terms, separation agreements addresstheagreedcompensationpayabletotheemployeeas a consequence of the termination; othermonetarycompensationsorrightsthataredue,iftheywere,orwhen theyarepaid, and ifnothingelse is reciprocally due, may be claimed on thebasis of the agreement, and of the employmentrelationship,aswellastheagreedeffectivedatefortheseparation.

Itisalsostandardpracticetoincludeprovisionsondocumentshandedtotheemployee,e.g.1)aworkcertificate;and2)otherlegallyrequireddocuments,such as, for instance, the social security form forunemploymentallowance.



It is also fairly standard to findprovisions on thereturn of documents, information and assetsbelonging to the employer by the employee andconfidentiality provisions. Non-compete clausesare sometimes included, subject always to timelimitsandappropriatecompensation.

C. DOES ThE AgE Of ThE EMPLOYEE MAkE A DIffERENCE?

A separation agreement may be celebrated atany time, and age makes no difference. Thereare, however, alternatives to pure separationagreementsforemployeesover55yearsprovidedbythesocalledpre-retirementagreements.Theseallowforanagreementtoreduceorsuspendtheprovision of work, by agreement between theemployerandanemployeeof55ormoreyearsofage,fromthetimetheagreementisexecutedtothedate on which the employee reaches retirementage (and retires, or earlier if the employmentcontractismeanwhileterminated).

5. remedies for employee seeKing to challenge wrongful terminationEmployeesmay not be dismissedwithout a validmotiveorforpoliticalorideologicalreasons.

In the case of collective dismissal, extinctionof labour position or failure of employee toadapt, employees are entitled to a pecuniarycompensation.

Pregnant women that have given birth in thelast 120days and thosebreastfeeding, aswell asany employee on paternity license, enjoy specialprotection.Forthisreason,dismissalofanyofthesecategoriesofemployee`s is illegalwithoutapriorfavourableopinion from thecompetentauthorityin the area of equality of opportunities betweenmen andwomen (Comissão para a Igualdade noTrabalhoenoEmprego-CITE).

IftheCITE’sopinionisunfavourable,theemployercan only proceedwith dismissal of theprotectedemployeesbyobtainingacourtdecisionrecognising

the existence of a valid motive in a lawsuit thatmaybefiledupto30daysaftertheunfavourableopinionhasbeenissued.

Ifthedismissal isconsideredillegal,theemployercannotopposetothereintegrationoftheemployee(exceptifeitherofthepartiesrequiresthepaymentof extra compensation instead of reintegration),buttheemployeemaychoosebetweentherighttoreintegrationandtherighttocompensation.

6. whistleblower laws ThePortuguesedata protection authority (CNPD)addressed the specificmatterof “WhistleblowingHotlines” in a guideline decision in 2009,containing the authority’s official guidelines forWhistleblowingprocedures,whichshouldbetakeninto accountwhen an employerwishes to set-upandmanagesuchlines.Aswithothermattersthatconcernpersonaldata, theapplicable lawforthistypeofprocessingactivityisnowtheGDPR.Assuch,GDPR principles and duties must be fulfilled bytheemployerwhendevelopingandimplementingwhistleblowinghotlinesandsimilarmechanisms.


ix. restrictive covenants 1. definition of restrictive covenantsThe Portuguese Labour Code has a subsectionon clauses that limit the freedomofwork. Theseinclude, among others, provisions on non-competitioncovenantsandminimumpermanencedurationagreement.

Agreements to restrict the activity of employeesduring employment or after contract terminationareallowedundercertaintermsandconditions.

Exclusivityclausesduringemploymentareallowedasarenon-competeagreementtoproduceeffectsaftertheterminationofthecontract.

2. types of restrictive covenants

A. NON-COMPETE CLAuSES

Non-compete agreements (after termination) areonlylegaliftheactivityoftheemployeeislikelytocauseharmtotheemployerandpaymentofanon-competition compensation amount is agreed andcompliedwith.

Asageneral rule, thenon-competitioncovenantsare subject to a maximum duration period of 2years. However, if the employee in questionwasallocatedarole involvingspecialtrustnaturethatentails a special relationship with the companyor a role that granted the employee access toparticularly sensitive information that is relevantfor competitors, the duration of the agreementmaybeincreasedtoupto3years.

It is alsopossible for theemployee to agree to anon-terminationcovenant,bywhichtheemployee

undertakesnottoterminatethecontract,subjectto a maximum period of 3 years, as a way tocompensate the employer for high expensesincurredwiththeemployee’sprofessionaltraining.Theemployeemayinanycaseanticipatetheendofthisperiodbyreimbursingtheemployerfortherelevantexpensesincurred.

B. NON-SOLICITATION COVENANTS

Althoughitiscommontofindcompaniesincludingnon-solicitation covenants in their outsourcing,service provision and joint venture agreements,among others, these restrictive covenants areactuallynotenforceableunderPortuguese labourlaws.

3. enforcement of restrictive covenants — PROCESS ANd REMEdiESToenforce restrictivecovenantsafter terminationof employment, the agreementmust stateeitherthe amount of the compensation due to theemployeeorthecriteriaforitsdetermination.Thiscompensationcanbepaid in fractionsduring thetermoftheagreementoritcanbepaidallatonce.

The parties may agree on contractual penaltiesthatmay be claimed in case of breach of agreedrestrictive covenants. Damages caused by breachofsuchcovenantsmaybeclaimedfromthepartyat fault.

4. use and limitations of garden leaveWhen resigning or when having been served apriornoticefordismissal(e.g.collectivedismissal)




employersfrequentlychoosetogranttheaffectedemployeeapaidleave.Employerscannotactuallyinstruct the employee to stay away if he/shechoses to continue performing his/her work roleuntilthepriornoticeperiodiscompleted.Theonlypossibilitygiventotheemployeristoinstructtheemployeestouseanyunusedholidayperiodduringthefinalpartofthepriornoticebeingservedand,therefore,inpracticalterms,toactuallyleavebeforetheendofthepriornoticeperiod.Gardenleavesinthecontextofpendingdisciplinaryproceedingsareallowedparticularlyaftertheaccusationnotehasbeenservedtotheemployee.


x. transfer of undertaKings 1. employees’ rights in case of a transfer of undertaKingWhen proceeding to the business transfer thatinvolvesthetransferofundertaking(oneormorebusiness units or parts of business units, i.e.,organised means pursuing an economic activity)transferor and transferee must consult withemployee representatives and provide relevantinformationontheplannedtransfer.Theemployeeis entitled tomaintain his job position previouslyheldwith thepredecessor,withall existing termsand conditions, with the successor, once thetransferoftheundertakingoccurs.

Theemployeeisentitledtomaintainhisjobpositionpreviously held with the predecessor, with allexistingtermsandconditions,withthesuccessor,oncethetransferoftheundertakingoccurs.

Theemployeehastherighttoopposethetransferoftheemployer’spositioninhisemploymentcontractwhen (i) the transfermay cause seriousdamagestotheemployee,or(ii)iftheorganisation’spolicydoesnotmerittheemployee’strust.

If the employee wishes to oppose the transferof theemployer, he/shemustdo so inwriting tothe transferor, identifying himself, the contractedactivityandthegroundsforopposition–thismayresult in the maintenance of the employmentrelationwiththetransferor.

Inthe30daysfollowingthedaytheworkergainedknowledgeofthetransfer,theemployeemayalsoterminate the employment contract by writtenlettertotheemployer. Inthiscase,theemployeewill have the right to the compensationprovidedforacollectivedismissal.

During the 2 years subsequent to the businesstransfer, the transferor is jointly liable with thetransferee for employee credits arising from thetransferred employment agreements, whichbecameduepriortothebusinesstransferdate.

2. reQuirements for predecessor and successor partiesPriortotransfer,employeerepresentatives(WorksCouncilandtradeunionrepresentatives)or,intheirabsence, employeesdirectlyhave tobe informedinwritingpriortothetransferaboutthetransfer’sdate, motives and legal, economic and socialconsequences, as well as measures envisagedin relation to the employees. Where there areemployee representatives and special measuresareputinplaceasresultofthetransfer,employeerepresentativeshave tobeconsultedprior to thetransfer. These obligations encumber both thetransferor and the transferee, in relation to theirrespectiveemployeesortheirrepresentatives.



xi. trade unions and employers associations 1. brief description of employees’ and employers’ associations TradeunionsarerecognisedinPortugueseLawandits respective regime, but are primarily ruled bythe Portuguese Republic Constitution and by theLabourCode.

Portuguese law recognises each employee´s freerighttoaffiliation,whichmeanshe/shemaybecomeamemberand leaveanytradeunion.Portuguesetradeunionscoveralmostallexistingprofessionalactivities. In theory, therefore, all employeescould be unionised, despite of unionisation ratesbeing quite low. There are twomain tradeunionfederations in Portugal: UGT and CGTP. Althoughformallyindependenttheyarestronglyconnectedor close to left wing political parties, mainly thesocialist (PS) and the communist (PCP) party.Employers are legally prevented from interferingwith union activities, even with the purpose ofpromoting, supporting or financing trade unions.Thereareseveralcollectivebargainingagreementsrulingalldifferentkindsofactivities.

2. rights and important of trade unions Theemployeesareentitledassociatewithunionsfor the purpose of defending and promotingtheir social and professional interests. Theunion associations of employees cover unions,federations,leaguesandconfederations.

3. types of representation The unions are entitled to negotiate collectivelabour agreements, render economic or socialservices to their members, participate in thepreparation of labour legislation, initiate andintervene in legal and administrative proceedingsconcerningtheinterestsofitsmembers,takepartin undertaking restructuring processes, establishrelationshipormembershipininternationalunionassociations,andothers.

A. NuMBER Of REPRESENTATIVES

The following maximum number of unionrepresentatives apply: 1member in undertakingswith less than 50 unionisedworkers, 2membersinundertakingswith50to99unionisedworkers,3membersinundertakingswith100to199unionisedworkers, 6members in undertakingswith 200 to499 unionised workers and in undertakings with550 or more unionised workers the number ofrepresentatives istheresultoftheformula6+[n–500):200],wherenisthenumberofunionisedemployees.

4. tasKs and obligations of representativesThetasksandobligationsonunionrepresentativesandofmembersofWorksCouncilsaresimilar,andinmanycircumstancesoverlap.



There tasks and obligations are essentiallyconnected with (i) information and consultationrights in a number of labour related subjectmatters (such as redundancies or restructuringmeasures);(ii)rightstobeinformedandconsultedin disciplinary procedures involving unionrepresentative employees; (iii) involvement inredundancyproceedings. Unionrepresentatives,incontrasttoworkscouncilrepresentatives, may also be involved in thenegotiationofcollectivebargainingagreements.

5. employees’ representation in managementEmployeesdonothaveanyparticular right tobepartofthecompany’ssocialbodies.

Theemployees’representationinthemanagementisassuredbytheobligationthattheemployerhastoconsulttheworkers’representativebodies inanumber of matters that regard the managementof the company, namely the organisation ofthe company’s workers’ structure, careers andpromotions, bankruptcy procedures, dismissalsandcompanyrestructuring.

Workers’councilshavetheright tomeet,at leastonceamonth,withthemanagementbodyofthecompanytoassessissuesrelatedtotheexerciseoftheirrights.

6. other types of employee representative bodies Forpurposesof collectivedefenceandpursuit oftheirrightsandinterests,theemployeescancreateworkers´councils/committeesandsub-committeesandtakepartinEuropeanworkcouncils.

In each undertaking, employees have the rightto create a workers’ committee to defend theirinterestsandexerciseconsultationandinformationrightsandotherlegallyforeseeninterests.

Themaximumnumberofemployeerepresentativeswithin the committees depends on the numberof employees employed within the undertakingat a certain time: 2members in employees withup to 9 employees, 3members inmedium sizedundertakings,3to5membersinlargeundertakingswith between 201 to 500 employees, 5 to 7membersinlargeundertakingswithbetween501to1000employeesand7to11inlargeundertakingswithmorethan1000employees.



xii. employee benefits 1. social securityIn Portugal, the right to social protection isenshrined in the Constitution and is affectedmainly by the Social Security System. Severalsectorialcompensationfundsmostlyincorporatedduringtheseconddecadeofthetwentiethcenturyand inanationwidebasisareat theoriginof thePortugueseSocialSecuritysystem.Theseinsurancefundswere included intheSocialSecuritySysteminthe70s,givingrisetotheunifiedSocialSecuritySystem. However, the General Retirement Fund,established in 1929 to ensure the protection ofcivil servants, maintained its autonomy, allowingemployees of public administration benefit fromaspecialregime.Theemployerandtheemployeeare subject to social insurance contributions,whichmustbepaidonamonthlybasis.Theglobalcontributory rate is 34.75% of the contributionbase.Theemployerisinchargeof23.75%andtheemployeeof11%.Nevertheless,theemployerhasto deduct the employee’s contributions from itsgrosswageandtodeliverthemtoSocialSecurity.Civil servants have a specific welfare protectionschemealsosubjecttocompulsorycontributions.

At the same time, the scope of social protectiongrantedtodependentemployeescoverstheeventsofsickness,parenting,unemployment,professionalillnesses,invalidity,old-ageanddeathaswellasapaymentofanadditional1%mustbecontributedfor the Work Compensation Funds (Fundo deCompensaçãodoTrabalhoandFundodeGarantiadeCompensaçãodoTrabalho).Theemployermaybearthecostsofcontributingeitherunderapubliccapitalisation scheme or under a supplementaryscheme for voluntary personal insurance (in theformofpensionsavingsplans,lifeassurance,etc.)toanyparticularemployeeorgroupofemployees.

Furthermore,thereisapubliccapitalisationschemeunder which one can voluntarily complement itsold-age pension amount through the payment ofadditional contributions duringworking age, thatare converted into retirement certificates. The

duevalueofcontributionmaybe2.4or6%(thelatteronlyifthesubscriberisover50yearold)ofthecontributionbase(assettledoutinthecontextof compulsory contributions), according to thesubscriber’schoice.

The total amount of contributions and incomegenerated by the capitalisation will be availableat the date of the subscriber’s retirement, whomay also choose to convert it into an annuityor to transfer it tochildrenor spouse, if theyaresubscriberstoo.

In general, the contribution base comprises allthe remunerations,whether inmoneyor in kind,paid to an employee in exchange for the workrendered, as established in the employmentagreement,inthecollectivebargainingagreement,laworpractices(i.e.baseremuneration,senioritypayments, holiday and Christmas allowances). Atthesametime,bonusespaidarealsoreflected inthecontributionbaseiffrequentlypaideveryfiveyearsorlessandtheemployeeisentitledtoreceivethem in accordance with objective and generalcriteria.Thelawexpresslyexcludessomebenefitsfromthecontributionbase,suchasvaluesassignedto complement social security benefits, familybenefitsorreimbursementofmedicalexpenses.

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

24hoursbeforetheemploymentagreementtakeseffect,theemployershall reportthehiringoftheemployee and themain contractual terms to theSocial Security Office through its official website(Segurança Social Directa). The employer mustalso inform on the termination or suspension ofthe employment agreement and respectivemainreasons, aswell as on any changeon the agreedtype of contract (permanent or fixed-term, part-time,andothers.)



The employee is deemed to have startedrenderingworkonthesixthmonthprecedingtheinfringement’sdate.Thisassumptionisrebuttableiftheemployergivesevidenceofthedateinwhichtheemployeeactuallystartedtorenderwork.TheemployeeisconsideredtocontinuetorenderworktotheemployerwhiletheSocialSecurityOfficeisnotinformedontheterminationorsuspensionoftheemploymentcontract,thuscontinuingthedutyofpayingcompulsorysocialcontributions.

Once the employer reports the hiring of a newemployeetotheSocialSecurityOfficethefollowingmainobligationsariseandmustbecompliedwithonamonthlybasisandregardingeachemployee:(i) reporting the remuneration that comprisesthe contributionbase, theworkingtime, and theapplicable contributory rate; (ii) payment of thevaluedueasmandatory contributions, borneoutbythecompany(23.75%)andtheemployee(11%):thedeadlineforpaymentisbetweenthe10thand20th of themonth after the onewithwhich thecontributionsreferto.

2. healthcare and insurancesTheemployerdoesnothaveadutytoprovideanyspecific fringe benefits to an employee, such ashealth insurance, life insurance, etc. In a numberof cases, nevertheless, this type of benefit isestablished in collective bargaining agreementsandwillbe requiredandapplyaccordingly. Somecompanies also provide these benefits underagreementsindividuallyagreedtowithemployees,or certaingroupsofemployees,or inaccordancewith benefit policies issued and adopted by thecompany or group of companies, to which theemployerbelongs.Ifprovided,thosefringebenefitsmay, in some cases, be subject to social securitycontributions paidmonthly by the employer andemployee. All employers are required to retaininsurancefortheprotectionofemployeesagainstworkrelatedaccidents.

3. reQuired leave

A. hOLIDAYS AND ANNuAL LEAVE

Employeesareentitledto22businessdaysofpaid

vacationperyear.Inthecaseoftemporarycontractslastingupto6months,theemployeeisgranted2workingdaysofholidayforeachcompletedmonthof service, and in the case of those lasting up to12monthsorendingintheyearsubsequenttotheyearofhiring,theemployeeisentitledtoaholidayleaveperiodproportionateto thedurationof thecontract.

B. MATERNITY / PATERNITY LEAVE

Parental leaves granted for the birth of a childare provided under Portuguese law. These maybe shared between the parents (in which casethetotalparental leaveperiodmaybe180days).Themothermay also enjoy up to 30 days of theparentalleavebeforedelivery.

Theemployedmotherwill,inanycase,beentitledtoaminimummandatoryperiodofleave(sixweeksfollowingthebirth).

Thefatherhasaspecificmandatorypaternityleaveof15days,tobeusedinthe30daysfollowingbirth(5 suchdaysmustbeused immediately followingthedateofbirth).

Incaseofadoptionofachildundertheageof15,the adopting employeehas the right to a licenseequaltotheInitialParentalLeave.

Thefatherandmotherareentitledtosupplementaryparentalleavesforchildcare(nomorethan6yearsofage).

The father and mother can enjoy any of thefollowing types of regimes consecutively or upto 3 interpolated periods. One parent may notoverlaphis/herrightwiththeotherparent’sright.Duringtheenjoymentofanyofthefollowing,theemployee cannot carry out employed work forother entities or activities that implies absencefromhis/her’susualresidence:

a)Extendedparentalleavefor3months;b)Part-timeworkfor12months;c)Interimperiodsofextendedparentalleave andpart-timework(thetotaldurationofabsencemustbeequaltothenormalworkingperiodof3months);

d)Interpolatedabsencesfromworkwithadurationequal to normal working periods of up to 3months.




The employee who wishes to enjoy any of theabovemustinformthecompanyinwritingatleast30daysinadvance.

C. SICkNESS LEAVE

Employees are entitled to receive a sicknessallowance from the social security system whentemporarily unable to work due to illness. Thesicknessleavesuspendstheemploymentcontractasof30daysandhasnomaximumperiod.

Employees have the obligation to communicateabsencesduetosicknessassoonaspossibleandmayberequiredtopresentmedicaldocumentationattesting the sickness (employer may requestmedical, hospital or health service declarationwithin15daysfromthecommunicationofabsence).Theemployermayalsoask fordocumentation toverifytemporaryorpermanentincapacitiesrelatedtotheemployee,whoisonsickleave

The employer must continue to pay the salaryduring the first 3 days of absence, after which,payment of the sickness allowance falls to SocialSecurity. Most employees are entitled to 1095daysofpaid sick leave, independentworkersandresearch fellows to 365 days of paid sick leave.The amount of the sick leave allowance dependsonseveralfactorsandwillrangebetween55%and100%oftheworker’sreferenceremuneration.

D. DISABILITY LEAVE

Therearetwotypesofdisabilityleaveandbenefitsin Portugal: 1) Disability pension and 2) Specialprotection indisability.Thedisabilitypension isabenefitattributedtopersonswhoarepermanentlyincapacitatedforwork.Thepermanent incapacitycanbepartial – thebeneficiary cannotobtain anamount corresponding to more than a third ofhis remuneration from thenormalexerciseofhisprofession,andispresumednottobeabletorecoverwithin3yearsfromthecorrespondingsicknessoraccidentleave,morethan50%oftheremuneration– or absolute – definitively and permanentlyincapacitated for any occupation or work wherethe beneficiary does not have remaining earningcapacity,norishe/sheexpectedtorecoverbeforereachingthelegalageforretirement.

The special protection in disability is aimed atpeople who are incapacitated for work with aprognosisofrapidevolution,toasituationoflossofautonomywithanegativeandirreversible impactontheprofessiontheycarryout,causedbyspecificdiseases(familialparamiloidosis,Machado-Josephdisease, AIDS - virus human immunodeficiencyvirus (HIV),multiple sclerosis, cancer of the skin,amyotrophic lateral sclerosis, Parkinson’s disease,Alzheimer’s disease and rare diseases or otherdiseasesofnon-professionalorthirdpartyliability,suddenonsetorearlyonset).

E. ANY OThER REquIRED OR TYPICALLY PROVIDED LEAVE(S)

After the right toa supplementaryparental leavehasbeenexhaustedinanyoftheaforementionedmodalities, the parents are entitled to leave forchildcare. This license canbe taken consecutivelyorinterpolatedandlastsforamaximumof2yearsor3years,inthecaseofupto2childrenormore,respectively.Duringtheenjoymentofthislicense,the employee cannot carry out anywork activityforotheremployersoractivitythatimpliesabsencefromhis/her’susualresidence.

Parents are entitled to leave for up to 6months(extendableupto4years)forassistancetoachildsufferingfromdisabilityorchronicillness.Ifthechildis12yearsofageorolder,theneedforassistancemustbeconfirmedbymedicalcertificate.

Other licenses or leaves of absence are providedforinthefollowingsituations:

•Exemption from work by a pregnant orbreastfeedingemployee, inordertoprotecthersafetyandhealth;

•Waiverforprenatalconsultation;•Exemptionforevaluationforadoption;•Waiver (reduction of working hours) forbreastfeeding;

•Waiver from some forms of working timeorganisation;

•Exemptionfromtheprovisionofovertime;•Exemptionfromnightwork.



4. pensions: mandatory and typically provided The typically provided pension, besides thosepreviously mentioned for illness and disabilitycases, is theold-age retirementpension,which iscomprised of a monthly amount paid to protectthe beneficiaries of the general social securityscheme, in the old-age situation, replacing theremunerationofwork.In2018,theretirementagewassetat66yearsand4months,and,as statedintheintroduction,itincreasedbyonemonthfor2019,being66yearsand5months.Ifthepersoninquestionisyoungerthantheaforementionedages,theymaybeeligibleforoneofthefollowing:i)earlyretirement due to long-term unemployment; ii)early retirementundertheageflexibilityscheme;andiii)specialschemesforanticipatingtheageofaccesstotheold-agepension-exerciseofactivityincertainprofessions.Ingeneral,employeesmusthaveaminimumof15calendaryearsofworkwithrecords of remunerations, or 144 months withrecords of remuneration - beneficiary covered byvoluntarysocialinsurance.

PedroPardalGoulão,PartnerMorais Leitã[email protected]+351210091765

HelenaTappBarroso,PartnerMorais Leitã[email protected]+351213817455


mailto:pgoulao%40mlgts.pt%20?subject=

mailto:htb%40mlgts.pt%20%20?subject=

Morais Leitão,Galvão Teles, Soares da Silva (MoraisLeitão) isa leadingPortuguese full-servicefirmwithoffices in Lisbon,Oporto and Funchal (Madeira). Toaddressthegrowingneedsofitsclientsthroughouttheworld,particularly inPortuguesespeakingcountries,MoraisLeitãohasestablishedtheMLGTSLegalCircle,whichconsistsofanetworkofsolidassociationsandallianceswithleadingofficesandlawfirmsinAngola,MozambiqueandMacau(China).

Morais Leitão has a highly reputed labour andemploymentpractice,bothinaconsultancycapacityand in litigation before labour courts. MoraisLeitão provides daily assistance to a vast numberof companies, including many multinationals, in allareaspertaining to labour relations. The labourandemployment team has extensive and consolidatedexperience in themost importantandcurrentareasoflabourrelations,suchastheprotectionofindustrialand intellectual property, the conventions onconfidentialityandnon-competition,andthemodelsof assistanceprovision and complementary benefitsasestablishedbythepublicsystemofsocialsecurity.Morais Leitão is recommended foremployment lawbyBestLawyers,ChambersEurope(Band1)andTheLegal500(Tier1),amongstothers.

This memorandum has been provided by:

MoraisLeitão,GalvãoTeles,SoaresdaSilva(MoraisLeitão)RuaCastilho,1651070-050Lisboa–PortugalP+351213817400www.mlgts.pt

morais leitÃo l&e GloBal portuGal


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