New Portuguese Labour Code comes into force today

From this Tuesday, there are new employment rules to take into account. A week after the left-wing benches called for constitutionality of the new Labour Code to be reviewed, these legislative changes come into force, including the controversial extension of the trial period for young people looking for their first job and the long-term unemployed and the restriction on fixed-term contracts.

With the new labour law, the probationary period for first-time job-seekers and the long-term unemployed – concluding open-ended contracts – rises from 90 to 180 days. The 180-day period was already provided for in the law for workers holding positions of technical complexity, high level of responsibility or requiring special qualifications.

As for very short term hiring, the maximum duration is increased from 15 days to 35 days, maintaining the maximum annual limit of 70 accumulated days of work performed for the same employer. On the other hand, this type of contract is now available in all sectors, and the company needs only an “exceptional and substantial increase in activity”, provided that it is proven that its annual cycle presents such irregularities.

Another change in this context is that the temporary employment contract now mandatorily includes information on the reason behind the signing of a contract of use between the temporary employment company and the user company that used it.

In the case of fixed-term contracts, the maximum duration is increased from three years to two years, with a limit of three renewals, provided that the total duration does not exceed the period of the original contract. In the case of contracts for an uncertain term, the maximum duration is reduced from six years to four years.

Within the scope of this revision of the Labour Code, an additional contribution to Social Security was also created to be paid by companies that use more fixed-term contracts than the average for the sector in which they operate. The application of this new rate will be guided by a “sectoral indicator”, to be published in the first quarter of each year (from 2020 onwards) by the Government. Taking into account that the calculation of the employers “who are in the conditions” referred to only happens in the first quarter of the following year, companies will only start to pay this turnover rate from 2021 onwards.

13 changes in labour law to take into account

• Fixed-term contracts will have a maximum duration of two years, with a limit of three renewals, provided that the total duration of the renewals does not exceed that of the initial contract period.
• Contracts for an unspecified period will have a maximum duration of four years.
• Fixed-term contracts are no longer admissible simply because the worker to be integrated is a young person looking for his first job or is in long-term unemployment.
• The possibility of fixed-term employment in the event of the launch of a new activity of uncertain duration is limited to companies with less than 250 employees.
• Very short contracts are now for a maximum of 35 days and are extended to all sectors.
• Temporary contracts will have a maximum limit of six renewals.
• All these changes to the contract only apply to contracts entered into as of 1 October, the date of entry into force of this new Labour Code.
• Trial period for first time job seekers and long-term unemployed from 90 days to 180 days.
• Trial period may be “reduced or excluded” depending on the previous fixed-term, temporary or probationary contract for the same activity and for the same employer.
• The individual hours bank is eliminated (those that are currently in force must cease by 1 October 2020).
• A new group hours bank is created, which by referendum can be applied to the entire team. This is if it is approved by at least 65% of the workers.
• Each year, the employee is entitled to a minimum of 40 hours of continuous training or, if hired for a period of three months or more, to a minimum number of hours proportional to the duration of the contract in that year.
• Companies that use more fixed-term contracts than the average for the sector in which they operate will pay an additional Social Security contribution as from 2021.