Portuguese government wants to extend fixed-term contracts

The government wants to extend minimum strike services to nurseries and nursing homes and allow the purchase of up to two days’ holiday in exchange for pay but without the loss of other benefits, Labour Minister Maria do Rosário Palma Ramalho announced on Thursday at the end of the social dialogue meeting.

The employers welcome the changes, while the trade unions are warning against the risk of greater precariousness, with the CGTP, the General Confederation of Portuguese Workers, criticising what it considers to be an “assault on workers’ rights”.

The preliminary draft of the labour reform, approved by the Council of Ministers on Thursday and presented to the employers’ and unions’ confederations, also determines the end of limits on outsourcing after redundancies, the return of the individual bank of hours and the extension of the term of fixed-term contracts, said the minister.

In total, the government is proposing to change “around a hundred rules in the Labour Code and nine complementary pieces of legislation”, revealed Maria do Rosário Palma Ramalho. With regard to strikes, the aim is “to be a little more demanding when it comes to defining minimum services, but without pinching the right to strike; it’s more about making it compatible with other fundamental rights, such as the right to access to healthcare, the right to work and the right to move around”, she explained.

In addition, the essential sectors for which the legislation already provides for compulsory minimum services will be extended. “There is only one new area for the care of children, sick or disabled people, including those in long-term care”, i.e. also linked to ”nurseries and homes” for the elderly, she clarified.

When asked by journalists if mandatory minimum services will now cover primary and secondary schools, as well as nurseries, an official source at the Ministry of Labour replied: “It’s not defined.

The Labour Code presents an indicative list of sectors in which the imposition of minimum services may be justified because of unforeseeable social needs. These include:

• Post and telecommunications;
• Medical services, hospitals and medicines;
• Public health, including funerals;
• Energy and mining services, including fuel supply;
• Water supply;
• Fire services;
• Public services that ensure the fulfilment of essential needs for which the state is responsible;
• Transport, including ports, airports, railway and bus stations, for passengers, animals, spoiled foodstuffs and goods essential to the national economy, including loading and unloading;
• Transport and security of cash.

Extending minimum services to other sectors could be unconstitutional, as Sofia Carneiro Silva, from CCA Law Firm, told ECO: “If the government’s proposal were to allow the imposition of minimum percentages of workers during strikes outside these contexts, it could clash with the right to strike enshrined in the Constitution of the Portuguese Republic. Such a scenario could give rise to a request for a successive review of constitutionality.”

With regard to the possibility of buying holiday days, the Executive’s proposal provides for workers to be able to take justified leave “two more days before or after the normal holiday period with loss of pay but without loss of any other benefits”, she said.

In other words, the worker will be able to take up to two extra days after or before their holiday period with the loss of the corresponding two days’ salary, but without penalising other benefits, such as meal, holiday or Christmas bonuses, and in the counting of time in the contributory career for calculating the old age pension or unemployment benefit.

The document that the minister handed to employers and unions also establishes the reinstatement of the individual bank of hours, but in a different way to in the past, since, in the Executive’s proposal, “it will be subsidised by the hours regime in the collective agreement”, explained Rosário Palma Ramalho. In that sense, it will be possible to institute the bank of hours if collective bargaining provides for it, which is why the president of CIP, the Portuguese Business Confederation, Armindo Monteiro, also criticised the “ties” that remain to the proposal.

Fixed-term contracts will now last three years

There are also changes to the terms of fixed-term contracts. “The proposal is that they should not last less than a year, only in exceptional cases, whereas until now they were six months”. In other words, the minimum will go from six months to one year. The maximum duration will also be extended: in the case of fixed-term contracts, the term “increases from two to three years”, and in the case of uncertain-term contracts, it rises from “four to five years”, he added.

The end of restrictions on outsourcing, for one year, for functions performed by workers who have been made redundant is also part of the list of more than 100 changes to the Labour Code, according to CIP president Armindo Monteiro. “There’s no reason to ban outsourcing, it’s a denial of the specialisation of the Portuguese economy”, he argued.

At issue is an article in the Labour Code, introduced by António Costa’s Socialist government in May 2023, which states that “it is not permitted to resort to the acquisition of external services from a third party in order to meet the needs of a worker whose contract has been terminated in the previous 12 months by collective redundancy or redundancy due to job extinction”. Violation of this rule implies a very serious administrative offence for those who use these services.

The former Ombudsman and now Minister of Internal Affairs, Maria Lúcia Amaral, considered that this restriction goes far beyond the constitutional limits on the exercise of freedom of private economic initiative. The government now wants to drop this brake on outsourcing, as the bosses are demanding. Despite this, this rule has already been backed by the Constitutional Court — in other words, it is armoured from the point of view of Fundamental Law.

Employers applaud proposal and unions criticise attack on workers’ rights

On the employers’ side, the proposal was well received. Armindo Monteiro, from CIP, said it was “a good basis for work”. The leader of the Portuguese Tourism Confederation (CTP), Francisco Calheiros, also considered the document “a good basis for negotiation”.

But the president of the Confederation of Commerce and Services (CCP), João Vieira Lopes, warned of the “need for minimum consensus in social dialogue”, given the geometry of Parliament, with the AD (the coalition that supports the government) not having an absolute majority. In other words, for the tripartite agreement to remain valid, the agreement of at least one trade union confederation is necessary, Vieira Lopes emphasised.

In recent pacts, the CGTP has stayed out, but the General Union of Workers (UGT) has signed the document. However, now the trade union centre has shown itself to be much more critical of the proposal put forward by the government. The general secretary of the UGT, Mário Mourão, believes that the document “weakens workers’ rights”.

“The UGT has always said that changes to labour law are not a priority issue, at a time when the economy is growing and inflation is falling, despite the higher costs for workers”, he said. It should be remembered that the ban on subcontracting after redundancies, which the government wants to eliminate, is one of the red lines for the trade union centre, not least because this measure was included in the social agreement in 2023 on its initiative.

The CGTP has further hardened its stance. “We’re facing an attempted assault on workers’ rights”, said the inter-union’s general secretary, Tiago Oliveira. “Whenever you want to change labour law, the argument is the same, that it aims to respond to the needs of the world of work and companies, and today conditions are getting worse and worse”, he continued.

For the CGTP leader, the Executive’s proposal aims to “condition workers’ lives in terms of deregulating working hours, it is an attack on the right to strike, on trade union law and an attack on collective bargaining”.

Negotiations will resume in September, with at least three more meetings and two more bilateral ones planned, said the Labour Minister. It should be remembered that, as these are changes to labour legislation, they must pass through the Assembly of the Republic.

Since the Democratic Alliance (AD) — the PSD/CDS coalition that supports the Executive — only has 91 MPs, i.e. it doesn’t have an absolute majority of 116 seats, it will need the support of the 60 MPs from Chega or the 58 from PS to approve changes to the labour law, which must be submitted to parliamentary scrutiny.

André Ventura’s party was asked by ECO how it would vote, but did not reply. The Socialists have already raised the red card, positioning themselves above all against the changes to the strike law and the limits on subcontracting.