Changes to the Labor Code and Social Security Code

Law no 93/2019 was published on 4 September 2019, amending the Labor Code, its regulations and the Social Security Contributions Code.
 
On the same day, Law no 90/2019 was also published, amending the Labor Code on protection of parental leave, as well as Decree-Law no 91/2009, of 9 September 2019, on the protection of parental leave within the welfare system.
 
Among the various changes made, we would highlight the following:

•  Fixed-Term Employment Contract

Limitations were created to the range of grounds for entering into fixed-term contracts whereby hiring young persons (18-35) seeking first employment or persons who havebeen in long-term unemployment are no longer allowed as grounds for entering into fixed-term contracts. Only persons who have been in long-term unemployment aged 45 or more and who have been registered as unemployed at the Institute of Employment and Professional Training (Instituto de Emprego e Formação Profissional) for 25 months or more continue to qualify for entry into fixed-terms contracts. On the other hand, fixed-term contracts grounded on the launch of a new activity of uncertain duration or the start of a new business or establishment is now limited to companies with fewer than 250 employees and within the first two years of such
launch/start. The maximum duration of fixed-term contracts was reduced from 3 years to 2 years and the maximum duration of uncertain term contracts was decreased from 6 to 4
years.

The legal regime of fixed-term contracts can no longer be removed by a collective bargaining agreement. Compensation for the end of fixed-terms contracts must be paid, even if termination is a result of their non-renewal.

• Trial Period

The trial period in employment contracts with young persons (18-35) seeking first employment or persons who have been in long-term unemployment can be increased to up to 180 days, in order to compensate the loss of grounds for entry into fixed-term contracts.
The duration of professional internships in the same activity agreed under a subsequent employment contract shall count towards the duration of the trial period. 

• Temporary Agency Employment Contracts

Temporary contracts entered into with temporary employment agencies and employees are now limited to a maximum of 6 renewals, except in those cases where they are justified by the replacement of employees on leave not attributable to the employer (namely in cases of illness, accident, parental leave or other similar cases). The grounds justifying the use of temporary contracts must now be the same as used for the contract entered into between the user and the agency. The user will be liable for the failure to enter into a temporary contract with the employee, which will lead to the employee being entitled to permanent contract with the user.

• Hour banks

Hour banks created by individual agreement between employees and employers are eliminated. For existing hour banks, a transitional arrangement to phase them out of 1 year is allowed. Hour banks created by CBAs are maintained and a new hour banks regime is
established as a group agreement subject to approval by the affected employees of the team, section or unit to be covered. Such scheme depends on the approval by at least 65% of the affected employees.

•  Choice of CBA

The choice of CBA, in case more than one CBA applies, and in case of non-affiliation of employees to a trade union is limited to a period of 3 months from the date of entry into force of the CBA chosen or from the start of the employment contract, whichever is later. The CBA chosen by the employee shall apply for a maximum of 15 months and the employee will only be allowed to choose once during his/her employment contract. 

• Training

The minimum number of training hours to be provided to employees has been increased from 35 hours to 40 hours per year. 

• Employees with Cancer 

Chronically ill employees also include employees with active cancer undergoing treatment.

• Additional Contributions for Excessive Term employment contracts

An additional social security contribution was created for employers that have an annual number of term contracts higher than the annual sector indicator in force, which will be defined in a regulation. 

The rate is progressively applied based on the difference between the annual number of term contracts and the sector’s average, up to a maximum of 2%, given that the increase is also defined in a regulatory decree.

The following situations will not be considered for application of the additional contribution: (i) fixed-term contracts entered into to replace employees on parental leave; (ii) replacement of employees with temporary incapacity due to illness for a period of 30 days or more; (iii) very short term employment contracts; (iv) fixed-term contracts entered into due to legal requirements or due to the constraints inherent to the type of work or the situation of the employee, that is, in situations where, as a result of the type of work or the situation of the employee, the contract needs to be on a term basis. 

• Entry into Force

These amendments will enter into force on 1 April 2019, except for the additional contribution which will enter into force on 1 January 2020, although still depending from regulations.

• Parental Leave when traveling to a healthcare unit located off the island of residence (applicable to the Islands of Azores and Madeira)

A travel leave is granted when the birth needs to take place at a healthcare unit located off the island of residence, due to unavailability of technical or human resources on the island of residence, as well as leave to accompany the pregnant woman who travels to a healthcare unit located off the island of residence. If the leave to accompany the pregnant woman who travels to a healthcare unit located off the island of residence exceeds 30 days a year, it will involve loss of remuneration for the excess days.

•  Initial Parental Leave in the event of hospitalization 

In case of hospitalization of a newborn in need of special care, the initial parental leave is increased by the period of hospitalization, up to 30 days, which will not apply when the delivery occurs before 33 weeks, in which case, the initial parental leave will be increased by 30 days. 

• Leave for medical assisted procreation consultation

The employee is entitled to leave from work for consultations on each cycle of medical assisted procreation treatments, under the same terms as for the other pregnancy consultations. In other words, the employee is entitled to leave from work 3 times without loss of any rights and are considered to be effective work. 

• Father´s Exclusive Parental Leave

The father’s exclusive parental leave is now 20 consecutive or interspersed working days within 6 weeks of birth, 5 of which shall be taken immediately after birth.

After such leave, the father will have 5 working days’ leave, consecutive or interspersed, provided that they are taken at the same time as the mother’s initial parental leave.

• Child Care Leave

Child care leave for the care of chronically ill children now covers cases of children with cancer. The duration of this leave remains 4 years and may be extended for up to 6 years, in situations of need of extended care confirmed by a medical certificate. This limit does not apply to children with long-term terminal illness confirmed by a medical certificate.

• Benefits

The changes to the mentioned parental leaves were also reflected in the applicable welfare benefits. The new benefits created are a travel allowance for trips to the healthcare unit located outside the pregnant woman’s island of residence for the delivery of the child, child care allowance for children with cancer, the exclusive initial parental allowance of the father, etc.

• Entry into force

Leave for medical assisted procreation consultations, initial parental leave in the event of hospitalization, father´s exclusive parental leave and benefits shall enter into force with the State Budget following its publication, on 1 January 2020. With regard to child care leave and travel to healthcare unit located off the island of residence, these will apply from 4 October 2019. 

By FCB Legal, Portugal, a Transatlantic Law International Affiliated Firm.

For more information on this topic, please contact portugallabor@transatlanticlaw.com 

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.