The Government’s draft labor legislation reform proposes the free-term hiring of retirees, raising some concerns about its implications.
PRA Advogados notes that this legislation “allows the hiring of a retired worker due to old age or disability, determining that the contract is subject to the regime of any worker who retires during the duration of the employment relationship.”
What changes in practice?
According to Madalena Caldeira, partner at GA-P’s Lisbon office, the current regime states that “when a worker with an indefinite-term contract retires, the contract automatically converts to a fixed-term contract 30 days after both parties are notified, subject to specific rules.”
The new proposal predicts that retirees (due to old age or disability) can freely enter into a term contract lasting six months, renewable indefinitely. The contract termination only requires prior notice – 60 days by the employer or 15 days by the worker – and does not grant any compensation.
“This essentially is the existing regime for permanent workers who become retirees. Now the regime explicitly extends to retirees hired on a fixed-term ‘ab initio,'” remarks Madalena Caldeira.
She adds that while the regime largely resembles the existing one for contract conversion due to retirement, the foundational situations differ, and “it might not make sense that new term hires do not have the right to compensation.”
Is there inequality?
Mariana Paiva, a senior consultant at PLMJ Advogados, notes that currently, a worker retiring under an indefinite-term contract sees it converted to a fixed-term contract, as per Article 348 of the Labor Code. However, an employer could not hire a retiree on a fixed-term basis because it was not legally provided.
“This situation creates a clear inequality, with a long-serving employee in a temporary status, and a newly hired worker on a permanent contract,” observes Mariana Paiva.
Paiva believes the proposed change intends to rectify this by allowing any retiree (due to old age or disability) to be hired on a fixed-term basis.
“Opportunity” or reason for concern?
Experts view this move as an “opportunity” for retirees wishing to return to the workforce, addressing existing inequalities but also raising “social concerns.”
“Though this regime offers an opportunity for certain retirees wanting to re-enter the workforce, or those working under irregular conditions, it still poses social concerns, especially for those compelled by insufficient income to return to work,” states Madalena Caldeira from Gómez-Acebo & Pombo (GA-P).
