by Dr. Eduardo Serra Jorge [email protected]
In his new monthly column, Lawyer Eduardo Serra Jorge from lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., will be addressing legal issues affecting foreign residents in Portugal.
This year’s Law nº3/2012 of January 10 allows employment contracts in which the existing fixed term is due to end on June 30, 2013 to now be extended under the permission of extraordinary renewals.
Example: if on June 30, 2010, both the employer and the employee agreed on a fixed term contract of 12 months, this means that the contract must end after three legal years, or renewals – i.e. on June 30, 2013 – if, of course, the employer doesn’t want to keep employing the worker. Now, under Law nº3/2012, the term of that contract can be extended.
The total duration of extraordinary renewals cannot exceed 18 months, and each renewal cannot be less than one-sixth of the global duration of the fixed term contract (in the case above, six months) or of its real duration, whichever is the lowest.
Labour contracts whose fixed term is extended can only run until December 31, 2014 or otherwise the worker will be considered as a non-fixed term employee.
This new law also creates a new regime regarding the way compensation due at the end of the extended labour contracts must be calculated.
As a consequence, we have to keep in mind two different periods: the one until the first extraordinary renewal and the one after that.
Compensation
In what concerns to the period of time that lasted until the first renewal, the compensation will be calculated according to the legal regime which was in force at the moment the labour contract began.
Once the contract is extended, the due compensation will be calculated according to the rules applicable at that time, which is to say that we will have to take a look at the Law nº53/2011 of October 14.
Please note that the extraordinary renewal of contracts must be done by a written amendment to the existing labour contract, before the deadline when it would normally expire.
Along with these alterations to the Labour Laws in Portugal, much more are expected and which employers and employees must be aware of in order to comply with all obligations.
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