“It’s undeniable that the proposed changes in the draft introduce greater flexibility in fixed-term hiring by employers, facilitating adaptation to labor market dynamics and business needs,” stated Madalena Caldeira, coordinator of Labor Law at Gómez-Acebo & Pombo’s Lisbon office.
Consequently, she expects “a significant proliferation of fixed-term contractual relationships.”
Joana Carneiro, partner at José Pedro Aguiar-Branco Advogados (JPAB), claims the labor legislation reform draft, known as ‘Trabalho XXI,’ “proposes a comprehensive revision of the Labor Code, significantly impacting fixed-term contracts and worker conditions.”
Considering new rules, “young graduates might have more entry opportunities into the job market, albeit with precarious ties,” the JPAB lawyer notes an increased risk of turnover and less stability since fixed-term contracts do not guarantee continuity.
She warns: “Companies might use this new justification to avoid permanent ties, even in roles that could warrant indefinite contracts.”
Madalena Caldeira points out the “significant changes” in the draft regarding the admissibility, duration, and renewal of fixed-term contracts, highlighting their “practical relevance.”
Notably, companies with 250 or more employees could hire on a fixed-term basis due to uncertain startup activity or company or establishment operations.
The draft extends the maximum duration for definite fixed-term contracts from two to three years and indefinite from four to five years.
Joana Carneiro from JPAB believes “this measure aims to give companies more flexibility, but it might prolong workers’ precarious situations.”
Additionally, fixed-term hiring is extended to those never employed under indefinite contracts.
Gómez-Acebo & Pombo’s lawyer acknowledges, “practically and ultimately, it could permit a worker who’s never had a permanent contract to be repeatedly hired on a fixed-term basis by different employers without needing to justify their hiring based on temporary needs.”
Joana Carneiro remarks this measures “facilitate young people’s job market integration, encouraging first jobs and allowing companies to hire with more flexibility where workers lack permanent employment history.”
She acknowledges the risk that a worker never having an indefinite contract might be repeatedly hired by different companies on fixed-term bases exists but believes it occurs “only in extreme situations.”
“Sincerely, this ‘prolonged precariousness’ risk seems to occur only in extreme situations. It implies a worker never applies or gets a permanent contract, and is always let go after fixed-term contract renewals end,” she elaborates.
“I find it unlikely that such changes could prevent a worker from ever securing a permanent position, being successively hired on fixed-term contracts,” JPAB’s partner adds.
Joana Carneiro emphasizes that “fixed-term contracts should be exceptional, justified by temporary needs, not a rule for certain worker profiles, contradicting the spirit of the Labor Code.” She advocates for “strengthened oversight to prevent companies or groups from abusing these ‘exceptional profiles’ now justifying fixed-term hiring.”
Senior consultant at PLMJ Advogados, Mariana Paiva, admits that “in an extreme situation, a worker might be hired repeatedly for fixed-term roles to meet companies’ permanent needs.” However, she notes that, “as a draft, discussions may occur among social partners for different concepts.”
For instance, she suggests the possible introduction of an age limit – “workers up to a certain age who have never been permanently employed,” emphasizing that “everything is still open.”
