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25 September 2018

Portugal: draft to change the labour law in first reading through the national parliament

A draft law that aims to change the labour code passed the Portuguese national assembly. Because of the reform the maximum length of fixed-term work contracts is to be reduced from three years to two, and there will be less leeway for renewals.

The maximum length of fixed-term work contracts is to be reduced from three years to two, and there will be less leeway for renewals, the government announced in the spring of 2018 when it presented proposals to alter the labour law. The proposal seeks to find a balance between a company’s temporary needs and the actual length of the fixed-term work contracts. If, for instance, a company enters into a one-year contract with a worker, the next three renewals cannot, in total, be for more than a year. Temporary work will have limited number of times a contract can be renewed. The limitations of the reasons for fixed-term contracts figured already in the government’s election programme. The preparations for the final draft took place in a collaboration between the government, the employers organisations and the unions. Trade union UGT backed up the proposals and said in a statement that the legislation could contribute to the building of a more dynamic and fairer labour market. It demonstrates the reversal of a trend that prevailed during the crisis of gains in competitiveness at the cost of reducing labour costs and workers' rights.

However, opposition came from the right and left wing parties in the parliament and from parts of the trade union movement; the CGTP opposed the plans. The union continued its protest up until the debates in parliament. On the eve of the vote in parliament, the CGTP stated that the new labour package will be a source of imbalance of labour relations and inequalities and that, with the approval of the reform, the precariousness will widen in practice and reduce in statistics.

Before the summer break, the draft of the reform was adopted by the parliament in a first reading. It was adopted, notwithstanding the rejection by the Communist party and the Left Wing Block and the abstention by right wing parties. The reform has to lead to a reduction of precarious work by restricting fixed term employment contract renewals; moreover an excessive use of such contracts will be levied with taxes. In a labour and social security committee paper the objectives are listed:

  • Limitation of the legal possibilities of using fixed-term contracts by reducing the maximum duration of fixed-term contracts and new rules on renewals of fixed-term contracts.
  • The promotion of permanent employment, with the implementation of an additional contribution to Social Security, applicable to employers with an excessive volume of fixed-term employment.
  • The increase of 15 to 35 days of very short-term contracts (contracts not subject to written form), also extending the scope to all sectors beyond those currently provided for in the law.
  • Ensuring greater protection for temporary workers by introducing a maximum of six renewals to the temporary employment contract.

The draft of the legislation is handed over to the responsible committee and will be brought before the parliament for a final approval in a second reading. In this proceeding further amendments are to be expected.

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