Olhanense - VARZIM photo 17-2-16 penalty.jpg

Companies could pay less in redundancy packages

In a bid to make the labour force more flexible and help attract foreign direct investment, the Government is planning to make it cheaper to make staff redundant.

Under current generous severance terms, considered among the best in Europe, companies who make staff redundant have to pay 30 days of salary for every year of service.

That means that an employer with 20 years’ service on €1,600 a month would receive a total redundancy package worth €32,000.

Now the Government plans to reduce that compensation to 20 days of salary, while the total amount payable, which until now had no ceiling, will have a maximum one of 12 months.

Under the new regime, which has yet to be taken to Parliament, that same employee would receive €15,360 in severance –half of what he or she would get at present.

The Employment Minister, Helena André, said on Monday that the new compensation rules – which also include mass redundancies – are in line with labour legislation practices in Spain.

She added that Portugal would still continue to have one of the most generous severance regimes in Europe.

But Arménio Carlos of workers union CGTP called the Government’s proposals “a palace coup on the most basic of worker’s rights”.