The proposed changes under the “Trabalho XXI” initiative by the Government are described as a “profound” reform of labor law, amending “more than a hundred” articles in the Labor Code. These changes cover areas from parental leave to dismissals and extend contract terms, affecting sectors covered by minimum services during strikes.
Amidst criticism from union centers, the Government conceded to the UGT by offering a revised proposal. This revised proposal retreats from simplifying dismissals in medium-sized companies but retains the return of individual banking hours and revokes restrictions on outsourcing following dismissals.
The Government has emphasized that it will not completely remove the proposal and aims to preserve its “cornerstones,” although it remains open to dialogue and will grant the union center “more time” to review the new proposal.
The Minister of Labor, Rosário Palma Ramalho, stated that the negotiations within the Social Concertation will not be prolonged indefinitely, indicating that regardless of agreements achieved, the changes will still be deliberated in Parliament.
Summary of Key Proposed Changes to Labor Legislation:
Parental Leave Extension up to Six Months
Under the Government’s proposal, initial parental leave for the birth of a child could extend to six months (180 days) if, after using the mandatory 120 days, both parents opt for an additional 60 days in a shared regime.
Currently, the Labor Code allows parents to take 120 or 150 consecutive days of leave, which they can share after childbirth and can be taken simultaneously by both parents.
The proposed changes allow the initial parental leave to extend to six months if parents opt for an additional 60 days on top of the mandatory 120 days, shared equally between them. Without this shared option, the leave may last up to 150 days, with an optional 30-day addition to the mandatory 120 days.
The current Labor Code already allows initial parental leave to last 180 days if parents use 150 consecutive days, with each parent taking an exclusive period of 30 consecutive days or two periods of 15 consecutive days after the mother’s mandatory leave.
Government Push for Fathers to Take 14 Consecutive Days of Leave
The total exclusive parental leave for fathers remains 28 days, to be taken within 42 days after the baby’s birth. However, the Government proposes fathers take 14 consecutive days immediately after birth, replacing the current seven days.
The draft proposal also removes the rule that required remaining days to be taken in minimum seven-day intervals, eliminating any minimum duration requirement for the taken periods.
Changes to Parental Subsidy
The parental subsidy remains at 100% of the reference remuneration for the first 120 days of leave, but changes apply afterwards.
For the 150-day leave option, the subsidy currently drops to 80%, rising to 100% if shared (each parent taking at least 30 consecutive days or two periods of 15 consecutive days). The proposal reduces this daily amount from 100% to 90% of the remuneration.
For the 180-day leave, currently paid between 83% to 90% of the reference remuneration depending on sharing, the Government intends to pay it at 100% if the additional 60 days are shared equally, or one month for each parent.
Amendments to Breastfeeding Rules
In the latest proposal to the UGT, the Government insists on limiting breastfeeding-related work-hour reduction to two years but retains the current rule of requiring a medical certificate only if breastfeeding extends beyond the child’s first year. This certificate must be submitted every six months under such circumstances.
At present, no certificate is required until the baby is one year old, with no specified periodicity for subsequent verification, leaving it at the employer’s discretion.
Government Intends to Remove Leave for Gestational Grief
In the latest proposal to the UGT, the Government maintains its intention to eliminate leave for gestational grief, integrating it under the pregnancy interruption leave.
Therefore, the mother is “always” entitled to a leave of 14 to 30 days, determined by the doctor, paid at 100%. Meanwhile, the father, who initially had to utilize leave for family member care, will be entitled to up to three consecutive days off.
Currently, the Labor Code allows the mother three days off for gestational loss if not taking pregnancy interruption leave. The father may also take three consecutive days off in such cases if the mother is on pregnancy interruption leave.
Gestational grief leave requires only a declaration from the hospital or health center, while pregnancy interruption leave requires a medical certificate specifying the absence duration.
According to Social Security, entitlement to this leave also depends on the worker having made contributions for at least six months and being in good standing with contributions.
Strike Legislation Amendments
- Extending minimum services to elderly, child, and disabled care (by broadening the concept of “essential social needs”): The Government seeks to include nurseries and nursing homes in minimum services during strikes, as well as food supply sectors and private security services for essential goods or equipment.
- The proposal aims to “be a bit stricter in defining minimum services without eroding the right to strike,” ensuring it is “only limited by other fundamental rights,” namely health, work, or “the right to move freely.”
- Current labor laws require minimum service guarantees during strikes in entities “dedicated to the fulfillment of essential social needs,” including postal and telecommunications, medical services, public safety, fuel provision, water supply, firefighting, essential public services, and transport of perishables or national essential goods.
Changes in the Action of Unions in Non-unionized Enterprises
The Government’s proposal stipulates that in small, medium, and large enterprises without unionized employees, unions may only hold meetings outside working hours “provided their scope covers the company’s workers.” Microenterprises are excluded.
Moreover, regarding union information dissemination, if “no unionized employees” exist, unions may request the employer to post or allow the posting of information. This change limits unions’ ability to distribute independently.
Modifying Contract Duration Terms
- First fixed-term contracts could extend up to a year, moving from the current six-month limit, with potential for three renewals.
- Maximum contract term extension from two to three years for fixed-term contracts.
- Uncertain-term contracts’ duration maximum increases from four to five years.
- In scenarios with inclusion of renewals, fixed-term contracts’ total duration will go from two to three years, while uncertain-term contracts extend from four to five years.
- Adding more situations for fixed-term contracts: The proposal makes fixed-term contracts permissible within first two years of a company’s operation regardless of size, previously applying only to enterprises with under 250 employees. It also extends to hiring a previously uncontracted worker under permanent employment terms, and for recruiting pensioners.
- New rule for contract renewal: The proposal allows three renewals for a fixed-term contract.
- Lower penalty if not preferring term-contracted employees when opening permanent positions.
Changes in Other Employment Contract Systems
For intermittent employment contracts, other job activity incomes during inactivity periods will no longer deduct from the employer’s compensatory remuneration.
In service commission contracts, a worker may terminate the contract within 30 days after the employer ends such commission, entitled to compensation if it lasted at least six years.
Ending Rule Barring Early Retirement Return to Same Employer
The Government aims to abolish the rule that prevents early retirees from re-entering the same company within three years, accommodating a proposal by the CIP.
As per decree-law n.º 187/2007, while combining old-age pension with job income is generally allowed, early retirement prevents subscribing to employment at the same entity for three years from accessing the pension.
Worker Downgrade to Lower Category with Tacit Authorization Subject to Agreement
The Government proposes allowing a worker’s demotion to a lower category with tacit authorization if the Labor Conditions Authority (ACT) does not respond within 30 days, given mutual agreement by employer and employee.
Currently, law permits category changes “by consent” for pressing company or worker needs but requires ACT authorization for pay reduction implications, without a set response deadline.
Individual Time Bank Returns
The Government seeks to reinstate the individual time bank under new terms.
The proposal suggests instituting the individual time bank through employer-employee accord, increasing regular work hours by up to two hours daily, reaching 50 weekly hours. Capped at 150 hours yearly, it includes a four-month reference period maximum.
“The employer must notify the worker at least three days in advance,” states the proposal.
The idea is to support a collectivity-negotiated time bank system, non-existent previously except for adaptability.
The new proposal also repeals the group time bank.
Mandatory Training Hours for Part-time Workers
The Government dropped the reduction of mandatory training hours for microenterprises and clarified proportional training for part-time employees, according to the new proposal submitted to UGT.
Under existing labor laws, all workers have a right to a minimum of 40 hours of annual ongoing training, which employers must ensure regardless of company size.
For fixed-term contracts equal to or exceeding three months, hours are proportional to contract duration.
Dismissal Rule Amendments
- No employer need for reinstating wrongly dismissed workers: Employers may request court exclusion from reemployment due to circumstances adversely affecting company operations.
- Simplifying just-cause dismissals for micro and small businesses, forgoing required proof presented by workers and witness hearings.
- Option for workers to forgo credits when dismissed: Workers may waive due credits upon contract termination or dismissal via notarized written declaration.
- Lifting outsourcing restrictions post-dismissals: Plan to repeal outsourcing constraints (third-party service hiring) within a year post collective or job position dismissals.
- Updating severance pay improvements: Government proposes raising severance compensation from 14 to 15 days per year of company service following collective dismissals.
- False sickness declarations may merit dismissal: Proposal extends justified dismissal to fraudulent health self-declarations.
Employment Quotas for Disabled Individuals
The employment quota system for disabled individuals now includes those with 33% or above incapacity, as opposed to the former 60%, aimed at their hiring by private and public sector entities.
In cases of temporary assignment or employment service agency hiring involving disabled workers, the allocated employee is part of the beneficiary entity’s staff tally.
Freelance Workers
The threshold rises for considering a freelance worker economically dependent: Presently a freelancer is reliant on a client (gaining more benefits) when earning 50% of their income from them, but proposed adjustment elevates this dependence to 80%.
TVDE Digital Platforms
The labor law revision draft incorporates a European directive intended to improve work conditions and personal data protection in platform work.
Labor Code article 12.° already stipulates work contract verification criteria with digital platforms, and the Government intends further adjustments.
Verification requires two simultaneous conditions: regular job activities and the worker’s economic dependence.
Telework Provisions
Easier telework rejection for employers: The revocation of the existing rule where an employer must reject a worker’s telework proposal “in writing with adequate justification,” provided compatibility, enables easier denial.
The revocation of employer-led telework propositions, where worker resistance lacks need for justification nor dismissal, is also proposed.
Legal provisions for telework now apply “with necessary adaptations” to other remote work forms, even absent economic dependence.
Continuous Workday Introduction in Private Sector
The Government aims to introduce continuous workdays in the private sector for employees with children under 12 or with disabilities, chronic illness, or cancer, included in proposals given to UGT.
Currently, the Labor Code doesn’t regulate continuous workdays in the private sector, though some collective agreements do.
In the public sector, law allows uninterrupted work with “a rest break not exceeding thirty minutes,” permitting workers to leave up to an hour earlier in exceptional cases, such as having children under 12, or with disabilities, chronic illness, among other justified situations.
Reinstating Three Additional Attendance-linked Vacation Days
The Government drops the provision for workers to request two additional unpaid vacation days and instead proposes restoring three attendance-linked days eliminated during the ‘troika’ austerity period, enabling the annual leave period to increase from 22 to 25 days given no or justified absences.
Holiday and Christmas Allowances Payable in Installments
Another Government proposal allows employees to once again choose receiving holiday and Christmas allowances via monthly installments or traditional methods, contingent on mutual worker-employer agreement.
Abolition of 180-day Trial Period for First-time Employment
The Government intends to eliminate the mandatory 180-day trial period for first-time job seekers and long-term unemployed in indefinite contracts as set out in the Labor Code.
The current law mandates a 180-day trial for these cases, with potential “reduction or exclusion based on prior fixed-term contract duration over 90 days with a different employer.”
No changes affect the trial periods for fixed-term or service commission contracts.
Decriminalizing Non-communication of Worker Hiring to Social Security
The Government plans to abolish criminal penalties for not communicating worker hirings to Social Security, encompassing domestic services, proposing to rescind a General Tax Infractions Regime (RGIT) article classifying non-communication as a crime since May 1, 2023.
Currently, employers who fail to report a hire within six months beyond the legal deadline (typically 15 days prior to activity start) risk up to three-year incarceration or a fine up to 360 days (up to 180,000 euros).
