Holidays and overtime pay from January 2015

Substantial changes on the payment of overtime and holiday work were introduced this month.

In line with the Financial Assistance Programme for Portugal and according to Law 23/2012 of 25 June, several aspects of the Labour Code changed substantially.

Some of these changes, such as reducing the amounts paid for overtime and holiday work would only be in effect while the Financial Assistance Programme for Portugal was in place.

Under the abovementioned law, the government intended to (i) suspend, initially for two years, any provision of collective labour regulation instruments (IRCT) – which integrates the Collective Labour Agreement (CCT). Thus, for two years, the Labour Code would override what was to be agreed between employers and unions on payment for overtime and holiday work; (ii) after the stipulated two-year period and if the provisions of the CCT governing the matter of overtime and holiday pay were not changed by the social partners, the Labour Code would apply. Thus, the Labour Code rulings would remain in force over the CCT ones on the matter. That is, the pay reduction would remain beyond the two-year period if the CCT did not return to deliberate on the subject.

Judgment 602/2013 of the Constitutional Court ruled the government’s intention to maintain the remuneration of overtime and holiday work, as established in the Labour Code, as unconstitutional, if the CCT did not deliberate differently on the same subject.

Thus, according to the Constitutional Court Judgment, the suspension of the CCT provisions on overtime and holiday pay lasted until December 31, 2014 – due to the extension of the measure within the Law 48-A / 2014 of July 31; otherwise it would have already ceased on August 1, 2014 when the two years initially planned expired.

In conclusion, starting from January 1, 2015:

▪ Employees whose activity is regulated by the Labour Code (meaning the activity does not have CCT applicable and in force) are paid for overtime and holiday work according to the percentages specified in the Labour Code:
a) 25% for the first additional hour or fraction thereof in a working day;
b) 37.5% for subsequent hours or fraction thereof in a working day;
c) 50% per hour worked during a weekly rest day or bank holiday.
▪ Employees whose activity is regulated by CCT providing specific remuneration for additional work must once again receive the payment of overtime and work on a holiday in accordance with the latest revision of the applicable collective agreement.

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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