“This regime, although it presents an opportunity for certain retirees wishing to re-enter the workforce or those currently in irregular employment situations, raises social concerns, particularly for those who, due to insufficient income, feel compelled to return to work and thus face different treatment compared to other temporary hires,” commented Madalena Caldeira of the law firm Gómez-Acebo & Pombo (GA-P).
In statements to the Lusa agency, the managing partner of Labour Law at GA-P’s Lisbon office explained that the current regime “only stipulates that when an employee with a permanent contract becomes retired, the contract automatically converts to a fixed-term contract 30 days after both parties are informed, subject to specific rules.”
However, the draft recently introduced by the government, which still requires discussions in social dialogue settings, proposes that it will be allowable to freely hire retirees (whether due to old age or disability) under fixed-term contracts lasting six months, renewable for equal periods without limits on renewals.
The termination of the contract requires only prior notice—60 days by the employer and 15 days by the worker—and does not entitle any compensation.
“This is essentially the regime already in place for a permanent worker who transitions to a retired status. Now, it expressly extends the regime to retirees initially hired on a fixed-term basis,” noted Madalena Caldeira.
She further stated that while “it is true that the regime is essentially what already existed for the conversion situations due to retirement,” the fact is that “the underlying situations are obviously different, and it may not make sense for these new contracts not to include compensation rights.”
Mariana Paiva, a senior consultant at PLMJ Advogados, notes that currently, a worker who retires due to old age or disability within an indefinite-term employment contract sees that contract converted to a fixed-term contract according to Article 348 of the Labor Code.
However, if an employer wanted to hire a worker already retired due to old age or disability, “they could not do so on a fixed-term basis, as the current law does not allow for this situation.”
“With the current regime, there is a clear inequality, having within the same company a long-serving worker now on a temporary basis and a newly hired worker with a permanent contract,” she observed.
Thus, Mariana Paiva considers the proposed change in the draft “seeks to resolve this issue by now allowing any worker in a retirement situation (whether due to old age or disability) to be hired on a fixed-term basis.”
The draft labor law reform approved by the government, which will still be negotiated with social partners, proposes revising “more than a hundred” articles of the Labor Code.
The changes proposed, designated ‘Work XXI’, which the government presented on July 24 as a “profound” overhaul of labor legislation, aim to address areas from parenting (with changes in parental leaves, breastfeeding, and gestational mourning) to flexible work, training within companies, or trial periods for employment contracts, also providing an expansion of sectors covered by minimum services in case of strike.
According to the Minister of Labor, Solidarity and Social Security, Maria do Rosário Palma Ramalho, the aim is to make labor regimes “much more flexible”, in order to increase “the competitiveness of the economy and promote company productivity.”
