Christmas and holiday subsidies change in the private sector in 2018

Christmas and holiday bonuses in the private sector will no longer be partially paid (prorate) and will be reinstated in one instalment in 2018 after the approval of a proposal by PCP for the 2018 State Budget.

PCP submitted a proposal to amend the State Budget to eliminate the article requiring private employees to receive half of their Christmas allowance until December 15 and half of the holiday allowance before the holiday period. The other half of each allowance was paid prorate throughout the year. This proposal was approved.

This means that, as of January 2018, the private sector will comply with the Labour Code excluding exceptional cases.

The Labour Law says that the Christmas bonus “must be paid by December 15 of each year” and that, “unless otherwise agreed in writing, the holiday allowance must be paid before the start of the holiday period and proportionately in cases of holidays taken intermittently”.

The change is based on “inequalities” in the treatment of employees that would be created by keeping partial payments in the private sector, when civil servants and pensioners receive full subsidies.

The decision to pay the subsidies partially every month aimed to ‘dilute’ the subsidies in employees’ monthly remuneration, in a context of cuts and wage restrictions.

The rule, now eliminated, allowed private sector employees to receive half of the holiday and Christmas allowance over a 12-month period, being the other half paid in the usual periods foreseen in the law. Anyone who did not want to receive it this way could inform the employer, thus receiving full subsidies on the usual dates. In short term contracts, however, a written agreement was required for the payment to be phased.

The Christmas and vacation allowance, as enshrined in the Labour Code, is a right of the employees, so their payment must be made in full at the times that they are supposed to be used for.

In practical terms, with the elimination of the phased payments, the salary paid monthly will decrease in January 2018 and the holiday and Christmas allowances will be paid in full in June and until December 15, respectively.

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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