There is no legal distinction between blue-collar and white-collar workers as employment law does not include any classification of workers, although specific provisions or protection are applicable to:
Categories of worker based on the different duties and responsibilities are usually set by collective agreements.
An employment contract is a contract whereby a person undertakes, in return for payment, to work for another person or other persons under its/their authority and direction. Offer and acceptance are traditional elements of contract formation and are rarely a source of disagreement. The acceptance of an offer may be implied (notably by performance) or expressed.
Employment contracts are not subject to any special form unless otherwise provided for by law. However, the following contracts, among others, must be made in writing:
Terms and conditions of employment need not be expressly agreed and are governed by statutory provisions, collective agreements, work regulations or established practices.
Maximum Working Hours
Regular working hours may not be more than eight hours per day or 40 hours per week.
Average working hours rules
By collective agreements, regular working time may be defined as an average, within a reference period. In this case, the limits on working hours may be increased by a maximum of four hours, provided the weekly working time does not exceed 60 hours, not including overtime worked for reasons of force majeure. The average working time is calculated by reference to the period established in the applicable collective agreement, but cannot exceed 12 months, or, if the agreement makes no such provision, by reference to periods of no more than four months.
Exemption from the working hours rules
The exemption from working hours rules may be applicable to some specific jobs, such as managerial positions and commercial jobs, as well as to employees working remotely. A proper written agreement is legally required (this agreement can be part of the employment contract, as recommended).
Employees exempt from the working hours rules are entitled to an additional pay equivalent to no less than one overtime hour per day (general law). The additional pay can be paid separately or included in the monthly remuneration – in the latter case, this has to be specifically addressed in the written agreement (or in the employment contract).
Other flexible arrangements can also be set out in collective bargaining agreements.
A proper written contract is legally required and must contain certain minimum terms. The normal weekly working period is shorter than the one worked by full-time employees. This reduction can be achieved:
Part-time employees are entitled to the same conditions as full-time employees on a pro rata basis, and have the right not to be discriminated against due to their status.
Work done over the maximum weekly and daily limits qualifies as overtime. Overtime work is only admissible when requested by the employer if it is needed to face extraordinary circumstances, an increase in workload or the work is to prevent or repair damage to assets. However, there are some limits depending on the number of employees and type of contract. A collective bargaining agreement (CBA) may establish higher ceilings.
Overtime work entitles the employee to additional pay. This is a rate of 25%, of the ordinary hour, during the first hour and 37.5% during the following hours on the normal working days; and 50% on public holidays and rest days. Overtime worked over 100 hours per year is paid at the rate of 50% for the first hour or part thereof and 75% for each additional hour or part thereof worked on a normal working day; 100% for each hour or part thereof worked on public holidays and rest days. It also entitles them to time off equivalent to one full day in the case of overtime on mandatory rest day (usually Sunday). CBAs may establish a more beneficial treatment for the employee.
There is a minimum national salary (EUR760 for 2023) set by law. Collective labour agreements may set out higher salaries in a specific sector, group of companies and/or company.
In Portugal, there are 14 payments, 12 salaries, one holiday bonus and one Christmas bonus. It is optional to pay variable salaries and companies are free to set out their own terms and conditions as long as they ensure these are objective and non-discriminatory.
Annual Leave (Holidays)
All employees are entitled to a minimum of 22 working days’ annual leave. During the first year of employment, employees are entitled to two working days for each month of the duration of their contract, up to 20 working days, which may be taken after six months’ full performance of the contract.
During holiday periods, employees are entitled to their normal monthly remuneration plus a holiday allowance, typically of the same amount.
Upon the birth of their child, both parents are entitled to initial parental leave of 120 or 150 consecutive days, to be shared between mother and father. The leave can be enjoyed simultaneously by both parents between the 120th and 150th days.
The leave may be increased by 30 days if each of the parents enjoys, exclusively, a period of 30 consecutive days, or two periods of 15 consecutive days, following the mandatory period of six weeks following the childbirth to be enjoyed exclusively by the mother. In case of multiple births (eg, twins), the duration of the initial parental leave is increased by 30 days for each child beyond the first one.
Fathers are entitled to take parental leave after birth of 28 days (consecutive or in interpolated periods of at least seven days), within 42 days of the birth (seven of which must be taken immediately after the birth). The paternity leave may be extended for seven more days provided it is taken at the same time as the mother’s initial parental leave.
During the parental leave, the employer is not obliged to pay remuneration, as the Social Security pays an allowance. This period of leave cannot prejudice the position of the woman concerning any of the remaining entitlements, notably those dependent on attendance at work.
Parents are entitled to extended parental leave, up to three months, to be taken after the initial parental leave. Following this extended leave, parents are also entitled to leave within the first two years of the child’s life to provide assistance to the child. There is no mandatory payment of the employer during these leave periods.
Employees with children under 12 years of age or, irrespective of age, with a disability or chronic illness who live with the employee and are under their care and employees with the status of non-formal caregivers are entitled to work part-time or to work under flexible working hours arrangements.
Employees are entitled to time off from work for illness or injury, which is paid by the Portuguese Social Security protection schemes, provided they meet all the eligibility requirements. The Social Security protection schemes pay sick pay to employees who are absent from work as a result of illness or injury. The employee can receive sick pay for a total of 1,095 days. Sick pay is calculated based on the employee’s remuneration reference for Social Security purposes and varies between 55% and 75% depending on the period of illness.
The sickness leave suspends the employment contract as of 30 days and has no maximum period. Employees have the obligation to communicate absences due to sickness as soon as possible and may be required to present medical documentation proving the sickness. In some cases, CBAs provide specific rules covering employee illness or injury.
Protection of Confidential Information
During the employment relationship, employees are bound by a confidentiality duty. The parties may also agree upon a confidentiality duty after termination.
Portuguese employment law allows restrictive covenants, notably confidentiality, non-competition (and in that context, non-solicitation) and/or minimum stay obligations. The duration of the post-employment non-compete duty cannot exceed two years from the termination of employment.
In cases of employees who hold positions that entail a special level of trust (eg, management positions) or that have access to sensitive information from a competition standpoint, the restricted period can be extended to a maximum of three years. The minimum stay duty can be set at a maximum of three years.
Employees covered by a post-contractual non-compete duty must receive financial compensation during the restricted period. Portuguese law does not set a specific criterion to determine the compensation to be paid during the non-compete period. The Constitutional Court case law follows the understanding that the compensation must be fair, adequate and proportional. This means that the non-compete duty financial compensation must be sufficient to support the employee during the restricted period, taking into account their salary while employed by the company. Although the law leaves the parties some room to establish the time of payment, the purpose of the compensation is to ensure the employee can obtain a suitable income source during the restricted period. It is therefore recommendable that the payment of the compensation be made on a monthly basis during the restricted period.
If any agreement fails to provide for compensation, or if the compensation is considered insufficient, the agreement will be null and void, and thus release the employee from complying with it and the employer from paying the compensation. The amount of compensation may be reduced in cases where the employer has expended large sums on the employee’s vocational training.
The remedies for a non-compete breach are limited to the possibility of seeking compensation from the former employee. The burden of argument, and the quantification and proof of the damage, falls solely on the former employer. In many cases, it is quite hard to quantify the damage as the value of information is difficult to measure. In addition, it is quite difficult to prove damage which arises as a result of the employee’s behaviour. In order to mitigate this risk, it is usual for the parties to agree on a penalty award.
Non-solicitation clauses are null and void under Portuguese employment law. No specific penalty is provided in the law concerning these agreements.
In addition, non-solicitation agreements also constitute a breach of competition law, as this type of agreement is deemed limiting and disruptive to competition and therefore illicit. Companies may be penalised with fines that may amount to 10% of the turnover of the company.
In Portugal, personal data processing is governed by the GDPR and Law 58/2019 of August 8th, which incorporates the GDPR into Portuguese law. When it comes to employees’ personal data, special category data may be collected, processed and used by employers when necessary to meet obligations and exercise rights under employment, social security and social protection law or a CBA.
The Portuguese data protection law establishes that the consent given by an employee does not constitute a legitimate legal basis for processing their personal data if such processing results in a legal or economic advantage for the employees, except as otherwise specified by law. However, the Portuguese supervisory authority (the Comissão Nacional de Proteção de Dados – CNPD) holds that this provision is not compliant with EU law.
Transfers of personal data to third countries in and outside the EU (including Norway, Liechtenstein and Iceland) are only permitted if the conditions set under the GDPR are met. Furthermore, transfers to third countries (outside Europe) are also permitted if appropriate safeguards (eg, binding corporate rules and standard contractual clauses) are provided by the controller or processor of personal data and only if enforceable rights and effective legal remedies are available for the data subject. In any case, the transfer of personal data must observe the main data quality principles established under the GDPR: lawfulness; fairness and transparency principle; purpose limitation principle; data minimisation principle; accuracy principle; storage limitation principle; and the integrity and confidentiality principle.
A proper written contract is legally required when hiring foreign employees, except for citizens from the EU or from a state with which there is a treaty between states. This contract can only be executed after the employee has obtained the proper visa and a copy of that visa must be annexed to the contract – this will not prevent a company from signing an offer letter or a promise of employment contract to be effective after the visa is obtained.
No specific registration requirements apply.
The law allows the full remote working and hybrid regimes (when the employee carries out some days of remote work from their home or co-working space, and on other days they work physically on company premises). As a rule, remote work is implemented by written agreement, which shall contain, most notably, the place of telework, the identification of the owner of any working equipment, as well as responsibility for its installation and maintenance, and the terms and periods the employee should physically attend company premises to work to avoid isolation from the company and their colleagues.
The following categories of employees are entitled to remote work:
The capture and use of images, sound, writing or history, or the use of other means of control that may affect an employee’s right to privacy, are prohibited.
Powers of direction and control over the provision of remote work are exercised, in principle, by means of the equipment and communication and information systems allocated to the employee’s activity, in accordance with procedures previously known by the latter and compatible with respect for their privacy.
The employer is obliged to carry out health examinations at work before the implementation of remote work and, subsequently, annual examinations to assess the employee’s physical and mental aptitude to carry out the activity, the repercussion of the activity and the conditions in which it is provided on the employee’s health, as well as the appropriate preventative measures. Furthermore, the employer has the duty to evaluate and control the health and safety conditions at work in the place where the employee carries out their activity and to ensure that it complies with the health and safety conditions set by law.
Employees are entitled to unpaid leave of over 60 days to attend educational or vocational training. The employer can only refuse to grant such leave in the following cases:
Apart from this case, the employee does not have a legal right to take unpaid leave, which means that it will be up to the employer to decide whether or not to grant the unpaid leave.
The unpaid leave determines the suspension of the employment contract. All the rights, duties and guarantees of the parties that do not presuppose the actual provision of work remain in force and the time of suspension is considered for seniority purposes.
There are no new manifestations to mention for this jurisdiction.
Trade union organisations are entitled to:
The employees of a company may (although it is not mandatory) take the initiative to set up the following representative bodies.
Representatives of employees are entitled to time off to perform their duties and may convene general meetings of employees either outside or within working hours (in the latter case, for a maximum 15 hours a year).
Works councils have information and consultation rights such as:
At the industry level, CBAs are common in almost all sectors. Since CBAs usually provide more favourable employment conditions than the Employment Code, they will prevail. However, there are some specific matters where the law is mandatory and the CBA cannot overrule them. These matters mainly involve termination of employment contracts.
Employment contracts cannot, in principle, provide conditions that are less favourable than the ones established by a CBA. The parties to a collective agreement may agree that a particular provision is one from which there can be no derogation.
The employer may be entitled to terminate the employment contract by dismissal:
In addition, during the trial period, either employer or employee may terminate the contract without prior notice (save if the trial period has lasted more than 60 days, in which case the employer must give prior notice of seven days) or just cause. There is no right to any compensation unless otherwise agreed in writing.
Term contracts lapse at the end of their term provided the employer or the employee respectively notifies the other in writing of the intention to terminate the contract, 15 or eight days prior to the end of the term.
All methods of termination require compliance with specific procedures provided in the law.
The legal grounds for collective dismissals are as follows:
If the dismissal is made on the grounds of redundancy, the employer must notify its intention, in writing, to the works council, if there is one, or otherwise to either the inter-union committee or the union committees. The notice must contain:
At the same time as the employer notifies the workers, it must also send a copy of the letter and the enclosures to the appropriate department of the ministry responsible for employment that deals with collective employment relationships.
Where there are no workers’ representative bodies, the letter must be sent to each of the employees who may be affected by the collective redundancies. Within five business days of the date of receipt of the initial notice, the employees may appoint, from among themselves, a workers’ representative committee of no more than three or five members, depending on whether the dismissal will cover up to or more than five workers. In the 15 days following the date of receipt of the initial notice, the employee and/or the workers’ representatives may issue a non-binding opinion about the dismissal and propose alternative measures.
If employment contracts are to be terminated, the company must, within 20 days after the initial notice has been received, inform each of the workers who are affected, in writing, of the decision to proceed with the redundancies, expressly stating the grounds for termination and the date of termination of the employment contract.
Only employees who are dismissed on grounds of redundancy or on grounds of failure to adapt must be given notice of termination as follows:
Dismissals without just cause are not permitted. In general, any wilful behaviour on the part of the employee, which, given its significance and consequences, makes any continuation of the employment relationship immediately impossible, constitutes just cause for dismissal.
In particular, any of the following conduct by the employee is deemed to constitute just cause for dismissal:
In order to dismiss an employee with just cause, the employer has to begin a disciplinary procedure against the employee.
The procedure starts with the employer addressing a written statement of misconduct to the employee containing a full description of the relevant facts, particularly those that may be considered just cause for dismissal. Within ten working days of receipt of this document, the employee may present a written defence and request that the relevant evidence, such as witness statements, be examined. The employer must accede to the requests made in the written defence, or risk the disciplinary procedure being held invalid.
After conclusion of these proceedings, the employer must make a final decision within 30 days. Should the employer’s decision be of dismissal, the employer pays no compensation to the employee for the termination of the employment contract, except the legal amounts due for such termination and in respect of the pro-rata holiday pay and Christmas bonus due.
Employers and employees may terminate employment contracts by means of a mutual agreement. Termination agreements take the form of a document to be signed by both parties, in two originals, with one to remain with each party. This document should expressly include, at least, the date on which the agreement was signed and the date on which it is effective. The parties may agree on other effects, provided these are not contrary to the law.
Should the parties agree to the employee being paid overall pecuniary compensation, it is assumed that they have included all the credits having matured on the date of the employment contract termination or being payable in reason thereof.
The effects of employment contract termination agreements may be revoked at the employee’s initiative by notice in writing within seven days of the date on which they were signed. The notice of revocation of termination will only take effect if, together with the notice, the employee delivers or in any way places at their employer’s disposal the entire amount of the pecuniary compensation possibly paid pursuant to the agreement or by reason of the termination of their employment contract. The revocation notice provisions do not apply to duly dated employment contract termination agreements when the signatures on them have been certified in the presence of a notary.
Any dismissal of pregnant employees as well as employees who have recently given birth or are breastfeeding and employees with the status of non-formal caregivers always requires the prior opinion of the equal opportunities authority. If this opinion is not in favour of the dismissal, the employer is only permitted to continue with the dismissal following a court finding of just cause.
In addition, the dismissal of any employee who is a workers’ representative is presumed to be made without just cause.
The employee may apply to the Employment Court for a declaration of unlawfulness of the dismissal. The court should declare the unlawfulness of the dismissal in the following situations:
When a dismissal is declared unlawful, employees are entitled to compensation for financial and personal damage arising from the unlawful dismissal, reinstatement without prejudice to their category and length of service, and to the earnings they did not receive from the time they were dismissed until the time the court decision becomes final. Any sums they may have received as a result of the termination of their employment contract, which they would not have received were it not for their dismissal (eg, unemployment subsidy), will be deducted from this compensation.
In lieu of reinstatement, employees may choose to receive a compensatory award, the amount of which is established by the courts and is equivalent to between 15 and 45 days of basic pay and length of service payments for each full year or fraction of a year of service.
If companies have a maximum of ten workers, or if the workers are directors or managers, the employer is entitled to oppose reinstatement provided it can justify that the return of these workers would seriously interfere with and prejudice the normal running of the company. The court must assess the grounds alleged by the employer.
The grounds for anti-discrimination claims include any direct or indirect discrimination that privileges, benefits, wrongs, deprives of any right or exemption from any duty based notably on ancestry, age, sex, sexual orientation, marital status, family situation, genetic heritage, decreased work capacity, handicap, chronic disease, nationality, ethnic origin, religion, political or ideological convictions, or union affiliation.
Employees who seek to enforce discrimination rights may lodge judicial claims. They must indicate the employee with whom they consider themselves to be discriminated against. The employer must prove that the different treatment between the two employees is based on non-discriminatory reasons.
Employees may be entitled to compensation and, to the extent possible, to be placed in an equal position with their colleagues compared with whom they consider themselves to be discriminated against.
There are no new regulations with regards to the digitalisation of employment disputes.
The Portuguese judicial system has specialised courts specifically dedicated to labour and employment cases. Portuguese law does not specifically allow class action cases related to employment and labour cases. However, unions are entitled to represent their affiliate works in judicial proceedings seeking to defend collective rights of employees.
Arbitration is, currently, not possible in Portugal in employment disputes.
Nominal compensation will be awarded to the prevailing party for attorney’s fees incurred, to be paid by the non-prevailing party. This compensation corresponds to 50% of the legal fees and other costs associated with the legal action paid by both parties to the court during the judicial procedure.
Dynamics Impacting the Portuguese Employment Market
The COVID-19 pandemic has had a lasting impact on the Portuguese employment market, as it changed employees’ work–life balance perspectives. Above all, the technical and operational adjustments introduced by many employers to allow remote work during the pandemic led to employees becoming accustomed to a new paradigm in specific sectors, especially remote work. In Portugal, this was one of the factors that led to the regulation of remote work.
In parallel, the number of digital nomads relocating to Portugal has steadily increased.
The pandemic also exacerbated existing inequalities, primarily due to the need for remote working (which was not always possible) and the precariousness of the globally experienced situation. To address the inequalities that were felt, mainly due to the restrictive measures of the pandemic, and to accompany the constantly changing labour market – increasingly focused on the balance between social and professional life, and as remote work gained more and more ground – the Portuguese government developed the Decent Work Agenda.
The Agenda do Trabalho Digno (freely translated to “Decent Work Agenda”) is a package of legislative measures that have made a profound change to Portuguese employment law. To this end, the Labour Code and other rules in force were amended, and two European directives were also transposed.
Although several laws have been amended, the most relevant changes are those made to the Labour Code since it regulates the employer–employee relationship.
According to the Portuguese government, the Decent Work Agenda’s key objectives include combating precariousness, valuing wages, promoting equality at work, creating measures that encourage a complete sharing of family responsibilities, creating conditions for a better balance between personal, family and professional life, and, finally, strengthening inspection mechanisms, namely through data crossing to detect irregular situations. Amendments that recognise artificial intelligence as a hiring mechanism were also introduced, thus regulating its performance.
With this new regulation, the Portuguese labour market’s balance between professional life and family and personal life is increasing.
However, the position of additional effort in which employers may find themselves should not be neglected.
Economically dependent employees
One of the most significant changes introduced relates to economically dependent self-employed workers. These are de facto employees the majority of whose income is paid by the same beneficiary, even though they are formally registered as self-employed individuals. Since May, this type of employee is now entitled to a set of rights that provides them with broader protection.
The said set of rights includes the following:
These changes are mainly related to collective bargaining measures, which provide employees with a high degree of protection, namely because they are under the umbrella of a structure that aims to defend their rights.
This measure is of exceptional relevance from the point of view of the defence of employees since there is a segment of workers with no relevant legal protection: service providers. Thus, the new law equates service providers with subordinate employees whenever the same organisation pays more than 50% of their remuneration. It is an effective way of presuming the employment of a service provider without negatively impacting contractors who do not act in bad faith.
Duty of information
Changes to the rules on the duty of information are particularly relevant because they dictate a shift in the structure of the employment contract. From the beginning of May 2023, the employer has a wide range of information duties that should ideally be included in the employment contract. The employer must provide information on formal requirements for the termination of the agreement; the payment method of remuneration; and its constituent elements.
The employer must also provide information regarding the regime applicable in the case of overtime work and the organisation of shift work. Furthermore, temporary employment agencies must provide the identification of the user company.
Duration and conditions of the trial period must also be explicit, as well as social protection schemes, parameters, criteria, rules and instructions on which algorithms or other artificial intelligence systems are based that may affect decision-making regarding access to and maintenance of employment, as well as profiling and monitoring of professional activity.
These rules are particularly relevant because they may dictate the validity of an employment contract. Therefore, these information duties, amongst others, must be implemented.
Fixed-term employment contracts
In Portugal, fixed-term employment contracts are widely used for positions with high turnover or for fulfilling low-skilled activities. They are a valuable tool for both the employee and the employer and have undergone significant changes with the entry into force of the Decent Work Agenda.
Since May 2023, fixed-term employment contracts must point out the stipulated term or the foreseeable duration of the agreement, depending on whether they are for a fixed or uncertain term.
In addition, the termination of a fixed-term employment contract for a reason not attributable to the employee prevents a new employee from being hired for the same functions under a fixed-term employment contract, a temporary work contract or even the provision of services. This prohibition only ends when at least one-third of the total duration of the terminated contract has elapsed.
If the fixed-term employment contract expires – ie, it is terminated because its due date has passed – the employee is entitled to compensation, which should correspond to approximately 24 days’ pay for each full year of seniority.
Due to changes introduced during the COVID-19 pandemic, the Portuguese government already regulated remote working, also known as teleworking. However, the Decent Work Agenda brings new changes, favouring teleworking in specific situations.
It is crucial to bear in mind that teleworking should be made available to the employee who requests it, but always only when it is compatible with the duties performed and the employer has the means to implement it. Thus, employees with children with disabilities and chronic or oncological diseases are now entitled to telework.
The teleworking agreement should always set a compensation amount to be paid to the employee on account of the increased expenditure resulting from teleworking. This compensation should be exempt from taxation up to the amount defined by government ordinances.
Algorithms and artificial intelligence
The new law also introduced a new modification recognising the use of algorithms and artificial intelligence. A new reality in human resources management, these matters can now be regulated by collective agreement when they dictate more favourable rules for the employee.
In addition, the new law reinforces the right to equality in access to employment and at work, prohibiting discriminatory behaviour – even if it is the outcome of algorithm-based or AI-based decisions.
Since May 2023, caregiver status has been recognised to improve the balance between personal, professional and family life. A caregiver employee is defined as the informal non-primary caregiver of a third party, usually a family member. Recognition of the status requires proof. These employees have a broader set of rights, being granted a specific leave of five working days per year, which must be taken consecutively.
The caregiver also has the right to work part-time, consecutively or interpolated, for four years. The caregiver may also work flexible hours when assistance is needed and can refuse to work overtime. Dismissing a caregiver is contingent on an opinion issued by the Commission for Equality in Labour and Employment. In addition, the dismissal of a caregiver is presumed to be without cause (ie, it is presumed that the dismissal could not have occurred due to a fact attributable to the employee).
Temporary work agencies
In the event the maximum stipulated duration of a temporary employment contract has been completed, the hiring of a temporary employee, a fixed-term employee or a service provider for the same activity is prohibited before a period equal to one-third of the duration of the original contract, including renewals, has elapsed. In the event of a breach of this rule, the contract concluded with the employee is considered without term.
In addition, the temporary, fixed-term employment contract is subject to a maximum limit of four renewals, and the duration of successive employment contracts with the same employer may not exceed four years, failing which the temporary employment contract will become an indefinite employment contract.
Temporary employment agencies are also subject to additional requirements, which must be verified.
The trial period regime has also changed. First, it is essential to emphasise that if the employee is not informed about the duration and other conditions of their trial period, its exclusion is presumed. This means that the employer risks having hired an employee long-term without first determining their suitability for the position.
The trial period of first-time jobseekers and long-term unemployed individuals is reduced, or even excluded, depending on whether the duration of the previous fixed-term employment contract (concluded with a different employee) exceeded 90 days.
It is also determined by the legislative amendment to the Labour Code that, if the trial period has lasted for more than 120 days, to dismiss the employee, the employer is forced to give the employee 30 days’ notice, and the dismissal may not operate without this period being met.
The employer must notify the Commission for Equality in Labour and Employment of the termination of the employment contract of a caregiver employee within five working days of the termination date.
The employer must also notify the Authority for Working Conditions regarding the termination of employment during the trial period for first-time jobseekers and long-term unemployed employees within 15 days of the termination date.
Self-declaration of illness
Another novelty introduced by the new law is the possibility of self-declaration of illness. This declaration operates through the National Health System mobile app and is made under a declaration of honour. This declaration has time limits: three consecutive days, twice a year.
Thus, it is within employees’ power to make a self-declaration of illness, provided that the time requirements are met. This measure is intended to reduce the bureaucracy to which doctors and hospitals are subject to validate short health-related leaves. Since the new law came into force in May 2023, thousands of short-term sick leave requests have been filed.
Payment of overtime
The payment of overtime hours has also changed. From May 2023 onwards, employers must pay special attention to the provision of overtime work, as the payment method has changed significantly.
Thus, from the 100 hours per year, overtime work will be paid at the hourly rate, with some additions. The additions to the hourly rate are set at 50% for the first hour or fraction thereof and 75% per subsequent hour or fraction on a working day, increasing to 100% for each hour or fraction on a weekly rest day or public holiday.
In practice, these changes mean that an employee will receive, on working days, 150% of their hourly wage for the first hour of overtime worked and 175% for subsequent hours. On the other hand, if the overtime work is performed on a rest day or public holiday, it will be paid at 200% of the introductory hourly rate.
Waiver of labour credits
All negotiations involve compromises on both sides. In the case of negotiating the termination of employment, these compromises often involved the employee giving up labour credits. However, the new law imposes limits on such negotiations and prohibits the employee from waiving any labour credits they may have against the employer. As the Decent Work Agenda prohibits an employee from giving up their labour credits in such negotiations, all the employee’s credits arising from an employment contract must be paid, except for any court settlement that may have been concluded.
Update of minimum wage
As of January 2023, the minimum wage in Portugal is set at EUR760. For part-time employees, the minimum monthly salary must be prorated. The new minimum wage prevails over any previously contractually agreed upon lower salary.
The Decent Work Agenda also regulated the actions of the Authority for Working Conditions, which is the government body that supervises, inspects and initiates proceedings for inadequate employment.
One of the concerns of the employment market in Portugal is the presumption of employment in informal scenarios. This recharacterisation occurs when an employee is hired as a service provider, suffering from the lack of protection of the employment regime (for example, the company does not pay any social security deductions, or the employee is not entitled to subsidies or grants). The Authority for Working Conditions now has more strength to act in those situations.
The labour market in Portugal is expected to become increasingly dynamic, mainly due to the combination of two factors. First, employees were given greater security with the approval and entry into force of the Decent Work Agenda. On the other hand, amendments to the law regulating foreigners’ entry, exit and stay within the Portuguese territory were also approved. A specific visa was created to allow foreigners to search for work in Portugal. A new temporary residence permit, usually called the digital nomad visa, was designed for foreigners who wish to work from Portugal for a foreign employer.
The Portuguese employment market is moving towards a critical stage of modernisation, more attentive to the importance of remote work, the implementation of new technologies, and the creation of new regimes to better adjust to the influx of foreign workers.