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LAYOFF

(Literally, "suspension of the contract of employment for reasons relating to the enterprise", but the English term is also used in the relevant Portuguese legal texts.) Under Article 5(1) of the 1983 Suspension of the Employment Contract Act, employers may suspend the contracts of some of their employees when "cyclical market circumstances, economic or technological reasons, or disasters or other occurrences which have seriously affected the enterprise's normal activity" make such a measure essential in order to ensure the viability of the enterprise and to preserve jobs. It is not necessarily an actual instance of the material impossibility of fulfilling the work performance, since the enterprise may continue to operate. If this is the case, only some employees will be laid off, and it represents a way of coping with a situation of crisis and enabling the enterprise temporarily to reduce the costs arising from a surplus of labour. The Act makes provision for layoff as an alternative to short-time working : it may be resorted to only when the adoption of short-time working is inappropriate or insufficient to ensure the viability of the enterprise.

Layoff was originally made subject to a complicated procedure which discouraged its use. In 1989 this procedure was greatly simplified, the most notable change being the removal of the need to obtain official authorization. The employer provides the appropriate employee representative body with detailed proposals and reasons. If after this agreement cannot be reached, the employer may lay employees off unilaterally. The employees, employee representatives and the Ministry of Employment are notified. While employees are laid off, those rights and obligations of the parties which do not presuppose the actual performance of work continue unchanged. In addition the Act established a series of rights for employees during temporary layoff: a) they are entitled to defined layoff pay; b) they retain all non-pay benefits and social security allowances; and c) they may engage in gainful employment elsewhere (the value of any such earnings in another enterprise is added to their layoff pay for the purposes of determining its minimum and maximum values). The obligations on the employer are: to ensure prompt payment of layoff pay and social security contributions in respect of the pay actually received by employees on layoff, and not to distribute profits, increase the pay of the enterprise's management bodies, or hire any new employees or renew any fixed-term contracts in cases where the jobs concerned can be filled by the employees on layoff.

These special provisions for layoff do not apply to those instances of the closure of an enterprise or establishment where the suspension of employees' contracts cannot be conceived as a measure which is "essential in order to ensure the viability of the enterprise and to preserve jobs". In all such instances, their suspension is the direct result of the closure itself, insofar as it gives rise to the supervening and temporary impossibility of their performing work. A further distinction must be made between instances of this latter type where the closure is due to a circumstance imputable to the employer or reasons connected with his or her interests, and those where it is due to a chance event or force majeure .

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