New employment incentive scheme

On January 19, 2017, a new measure (Portaria nº 34/2017) came into force giving the employer financial support for the creation of jobs for the unemployed registered with the Instituto do Emprego e da Formação Profissional (employment and professional training institute).

The Contrato-Emprego (Contract-Employment) measure, which aims to encourage hiring, focuses mainly on promoting employment contracts without termination date, although fixed-term contracts for disadvantaged workers are also possible.

The measure also requires that fixed-term contracts have a minimum length of 12 months; encourages the effective creation of jobs after the end of the support measure; introduces payment methods that encourage sustainable employment and reinforces net job creation.

Those who may apply for the measure include: (i) self-employed individuals or private entities/businesses, of a profit- or non-profit making nature; (ii) businesses that have initiated the Special Revitalisation Process within the Insolvency and Business Recovery Code (Código da Insolvência e da Recuperação de Empresas – CIRE); (iii) businesses that have initiated the Extrajudicial Recovery Procedure for Companies (Sistema de Recuperação de Empresas por Via Extrajudicial).

The employer must meet the following requirements: a) be duly registered; b) fulfill the legal requirements to carry out the activity or provide proof of having initiated the applicable process; c) have their tax situation and social security regularised; d) not be in default as regards financial support granted by IEFP; e) have regularised the refund situation in the context of European Social Fund financing; f) have organised accounts; g) not be behind on salary payments, except for businesses undergoing a Special Revitalisation Process or Extrajudicial Recovery Procedure; h) not have been convicted in criminal or administrative proceedings for violation of labour legislation in the last three years.

These requirements are stipulated at the time of registering the job offer and for the duration of the obligations arising from the granting of the financial support.

For employers to be granted financial support, it is necessary: a) to publicise and register the job offer on the IEFP portal www.netemprego.gov.pt, with the intention of applying for the measure; b) to sign an employment contract – full-time or part-time – with the unemployed enrolled in the IEFP; c) to create and maintain employment throughout the period of support; d) provide vocational training for the duration of the support; e) comply with the minimum monthly guaranteed remuneration.

The employment contract can be signed prior to submitting the application, provided that it happens on a date subsequent to the registration of the job offer.

To be eligible under the terms of this measure, the unemployed person must: a) have been enrolled in the IEFP for six consecutive months; b) when, regardless of the time of registration, they are: (i) receiving unemployment benefit; (ii) receiving Social Integration Income; (iii) have a disability or incapacity; (iv) are a single parent; (v) their spouse or partner is also unemployed, enrolled in the IEFP; (vi) a victim of domestic violence; (vii) a refugee; (viii) an ex-prisoner and person who is serving, or has served, custodial sentences or non-custodial measures that do not deprive them of their freedom; ix) a drug addict in rehabilitation; c) has been registered with the IEFP for at least two consecutive months, in the case of a person: i) aged 29 or under; (ii) aged 45 or over; (iii) who has no social security record as an employed or self-employed person for the last 12 consecutive months preceding the date of registration of the job offer; d) belonging to another specific group to be defined by the member of the government responsible for the area of ​​employment; e) when, regardless of the time of enrolment, has completed, in the previous 12 months, internship financed by IEFP.

The contracts signed with the unemployed enrolled in the IEFP may be either (i) employment contracts without termination clause or, in certain situations expressly provided for by law, (ii) short-term employment contracts of a minimum duration of 12 months.

The employer is entitled to a financial support corresponding to: (a) nine times the value of the Social Support Index (Indexante dos Apoios Sociais – IAS) in the case of no-term contracts; (b) three times the value of the IAS in the case of short-term contracts.

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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