The government’s proposal to amend labor legislation has sparked significant discussion, particularly regarding changes to the hours bank and the purchase of vacation days. What exactly will change?
Hours Bank
Joana Cadete Pires and Soraia Laranjeira from PRA – Raposo, Sá Miranda & Associates explained that “regarding the individual hours bank, we are witnessing the reintroduction of a concept that was removed by the 2019 labor reform, albeit with different rules from the past.”
“According to the proposal presented by the government to amend the Labor Code, it will be possible, by agreement between the employer and the employee, to increase the working hours by up to two daily hours, with a maximum of 50 weekly hours and 150 annual hours, including a reference period that cannot exceed four months,” they stated.
Additionally, “adhesion to the individual hours bank may also occur through adherence to internal regulations.”
“The proposal introduces two important new features: the employer must notify the employee at least three days in advance of the need for additional work, and if there are accumulated hours in favor of the employee that have not been compensated, these must be paid in cash,” the attorneys detailed.
Purchase of Vacation
Regarding the purchase of vacation, the “reality is that the proposed amendment to the Labor Code does not explicitly provide for this possibility, but rather the possibility for the employee to, in anticipation or extension of the vacation period, be absent, justified yet without losing the right to subsidies – up to a maximum – of two days per year, with the employer’s agreement required.”
“These absences must be requested within ten days of the vacation period being scheduled, and the employer may only oppose their enjoyment due to imperative operational needs of the company,” the attorneys explained.
Employment Contracts: What is the Impact?
In terms of employment contracts, the proposal “envisages various changes, particularly concerning the maximum durations of fixed-term and open-ended contracts.”
“For fixed-term contracts, the maximum duration changes from two to three years, while for open-ended contracts, it increases from four to five years. Furthermore, regarding fixed-term contracts, the limitation on the renewal period, which stipulated that renewals should not exceed the initial period of the contract, has been removed,” they explained.
Moreover, “it is now possible to hire on a fixed-term basis for two years in case of opening a new establishment or launching an activity of uncertain duration, no longer applicable solely to companies with fewer than 250 employees.”
Do the Changes Increase or Decrease Labor Flexibility?
The attorneys argue that the “legislative amendment proposed by the government, in its current form, largely restores many of the provisions altered in 2019, date of the last major amendment to the Labor Code and related legislation.”
“In truth, the only change that appears to represent some ‘labor flexibility’ is the ‘simplification’ of dismissal for just cause, where the requirement for presenting evidence and hearing witnesses in disciplinary proceedings for dismissal with just cause is removed, permitting employers to resort to such a mechanism without justification or grounds to terminate longer-lasting employment relationships, leaving the worker entirely unprotected in such situations,” they noted.
They further emphasize that “naturally, the extension of the duration of fixed-term contracts, the removal of renewal period limitations, and the return of the individual hours bank regime will have a direct impact on the labor market and the establishment of more stable and permanent employment relationships.”
