Major changes to the Labour Code

The government’s law proposal 136/XIII will be implemented this year, with a view to making substantial changes to the Labour Code, which were generally approved by the Parliament on July 18, 2018 and are currently being discussed by the Parliamentary Working Committee.
The following changes were proposed in particular:

1 – Short-term contract
■ The maximum duration of fixed-term contracts (which is currently three years, with the possibility of three renewals) will have the maximum limit of two years. The number of three renewals is maintained; however, they cannot be longer than the initial duration of the contract.

■ The maximum duration of non-fixed-term contracts will be reduced from six years to four years.

■ It will no longer be possible to hire young people in search for the first job and those unemployed for a long time under short-term contracts. However, the hiring of those unemployed for more than two years is permitted.

■ Fixed-term hiring is allowed for new companies and establishments with up to 250 employees (instead of the current 750).

■ An annual social security tax up to 2% is applied on companies that abuse the short-term employment contracts. The rate will be applied to the payroll of workers on short-term contracts, being progressive up to 2% and will take into account the average of short-term contracts in each sector of activity. The rate will be applied when companies exceed the short-term contracts forecasted average in each sector. The first payment of the new rate is expected at the end of 2019. The sector averages used as the basis for calculating the rate on the short-term contracts are adjusted annually and the need to maintain the rate will be reassessed. The short-term contracts that are not of the responsibility of the employer are not taken into account for the average, as it is the case of sick leave or parental leave substitutions, for example.

2 – Temporary work and outsourcing
■ Temporary short-term contracts will have a limit of six renewals (currently non-existent in the law), except when the contract is signed to replace a worker absent or temporarily prevented from working.

■ Companies are obliged to inform the temporary worker of the reason for the conclusion of the contract between the user company and the temporary employment agency. If the rules are not fulfilled, the user company is obliged to integrate the worker with an unlimited contract.

■ Reinforcement of the rights for outsourcing workers, matching them with the workers who work alongside them but who depend directly on the company.

3 – Trial period:
■ Extension to 180 days of the trial period of permanent contracts concluded with a worker looking for a first job or in a situation of long-term unemployment.

■ The professional internship prior to the conclusion of the contract will be taken into account towards the trial period.

4 – Contracts of very short duration
■ The maximum duration of very short-term contracts will be extended (from 15 days) to 35 days.

■ This type of contract will be allowed and celebrated in the sectors with seasonal activity or whose annual cycle of activity presents irregularities of a structural or market nature. Thus, they can be celebrated whenever there is an “exceptional and substantial increase of activity within the company” in several sectors (currently only possible in the agricultural and tourist sector), preserving the maximum annual duration of 70 days with the same employer.

5 – Bank of Hours
■ The modality of individual bank of hours will be eliminated. However, the banks of hours already established will remain for a year after the entry into force of the new rules, so as to allow a period of adaptation for companies.

■ In the case of bank of hours through group agreements, it can only be applied if 65% of workers approve, after consultation by secret vote.

■ It will be possible, through the modality of ‘banked hours’ agreed by the group of employees, to increase the normal working period up to two hours a day, with a limit of 50 hours per week and 150 hours per year.

■ If the number of workers is fewer than 10, and in the absence of a representative of the workers, a special consultation scheme under the supervision of the Authority for Working Conditions (ACT) will be provided.

6 – Supplementary Work
■ The principle of more favourable treatment will be extended to the payment of additional work. In practice, the standard provided for in the Labour Code and stipulating how extra work is paid can only be waived by collective agreements if they are more favourable than the law.

7 – Dismissal
■ The proposal facilitates the access of those dismissed to the courts. The rule that today presumes that a dismissal is accepted when the worker accepts the compensation will be revoked.

There is no date yet for the implementation of these measures, but it will certainly take place until the end of this term, i.e. until October 2019.

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.
Faro office at Gaveto das Ruas Pedro Nunes e José de Matos, 5 R/C
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