Over the years, Portugal’s Labour Code and, more specifically, the legal framework regulating temporary employment have been subject to significant legislative modifications.
The main concerns underlying this legislative task have to do with the particular nature of this legal measure stemming from the decoupling of the employer’s legal sphere from the usual structure of the employment contract and, for that reason, the consequences which could result from the lack of legislation in this area: a lack of transparency, which the flexibility of this framework allows, and the risk of fraudulent practices by the transferors and the users, not only with regards to wage levels but also on the issue of occupational health and safety standards.
Recently, a new legal act was approved which has caused some discussion and controversy. According to this new law, which came into force on September 22, 2016, companies that subcontract services from temporary work agencies (hereinafter designated as “TWAs”) and their administrators, managers and directors can be held directly responsible for failure to comply with the law and for the payment of outstanding wages.
This new legislation thus broadens the field of those responsible for breaching employment regulations and, at the same time, seeks to make life easier for employees, for instance, when demanding payment of outstanding wages.
Accordingly, TWAs and their administrators, managers and directors, who until now were only criminally liable in a few specific circumstances, are now strictly and directly responsible for labour violations.
Therefore, while previously only the company that used the services of a TWA was jointly liable with the latter for the payment of outstanding wages, henceforth the administrators, managers and directors of the company that uses TWA employees shall also be liable for the payment of the credits and fines.
In addition to this, whereas this liability only applied to employees’ credits for the first 12 months of work, the time limit has now been removed.
These recent changes have also led to stricter legislation in the case of subcontracting. While the law used to state that the company contracting a service was jointly liable for the payment of a fine applied to the subcontractor, in the case of very serious infringements, the law now stipulates that this joint liability is also applied not only with regard to the payment of a fine but also as concerns compliance with the law and its infringement and regardless of its severity.
This change has generated a whole range of conflicting views. Several business associations have raised the point that this new legislation does not respect the constitutional principle of presumption of innocence, since the administrator of a company that hires a service from a TWA can be held responsible for employment infringements committed by a subcontracted company, regardless of guilt, and can even be accused and held as a defendant in a labour infringement proceeding.
In order to increase their protection, administrators, managers and directors of a company using TWA employees may alternatively apply other control mechanisms to contracts in order to control whether or not there is a breach of legislation for which they may be liable.
By Dr Eduardo Serra Jorge
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Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987.
In his column, he addresses legal issues affecting foreign residents in Portugal.
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