Background for Portugal

Between 2012 and 2022, Portugal’s gross domestic product (GDP) grew by 19.86%, which was a higher rate of growth than the EU average growth rate of 15.29% for the same period. In 2022, the unemployment rate in Portugal reached 6%; however, youth unemployment stood at 19%, 4.5 percentage points higher than the EU average (14.5%).

The female employment rate in 2022 stood at 74.4%, higher than the EU average of 69.5%. The total employment rate in 2022 was 76.4%, slightly above the EU average for the same year, which was 74.5%.

The main pieces of legislation in force in Portugal that cover the employment relationship and industrial relations are the Labour Code (Código de Trabalho; Law 7/2009 of 12 February), which regulates the private sector, and the General Labour Law in Public Functions (Lei Geral do Trabalho em Funções Públicas; Law 35/2014 of 20 June), which regulates the public sector.

The 2009 Labour Code was subject to seven amendments between 2011 and 2014.

In the political cycle of 2015–2019, the Socialist Party (Partido Socialista, PS) government made a wide range of legislative changes. In 2017, Resolution 82/2017 established new rules on the extension of collective agreements, with the criteria of representativeness/representation of employer associations replaced with new criteria focusing on inclusiveness and a reduction of inequality. Also introduced in 2017, Law 73/2017 reinforced the legal framework regulating harassment at work in the private and public sectors. In 2018, Law 60/2018 introduced measures to promote the equality of remuneration between women and men, including regularly providing information on the differences in remuneration per company, occupation and qualification level, and transparency rules to prevent wage discrimination.

In 2018, Law 14/2018 established that, in the case of the transfer of a business or an establishment, the workers retain all contractual and acquired rights, namely remuneration, seniority, professional category and functional content, and social benefits. This legal regime was extended by Law 18/2021 to situations of transfer by adjudication of service provisions through public tender, direct agreement or any other means of selection, in both the public and the private sectors, namely the provision of surveillance, food, cleaning or transport services.

In 2019, Law 93/2019 introduced significant changes to the Labour Code (Campos Lima and Perísta, 2020; Campos Lima, 2021). This legislation introduced new rules to combat labour market segmentation, reducing the duration of fixed-term contracts to a maximum of two years and of three renewals; restricted their use to only temporary needs; and created an ‘additional contribution for excessive turnover’ to be applied to companies with an annual proportion of fixed-term contracts higher than the sector average turnover. However, two measures introduced by this law created potential risks of precariousness: (1) the extension of the trial period from 90 to 180 days for those seeking their first job and those in long-term unemployment when hired in open-ended contracts and (2) the extension of fixed-term contracts of very short duration from 15 to 35 days, allowing their use beyond agricultural and tourism activities. This legislation also introduced changes to the collective bargaining framework and working time regulation (see the section ‘Working time regulation’) (Campos Lima and Perísta, 2020; Campos Lima, 2021).

In 2021, a new phase of legislative change emerged, which came about as a result of the discussion in a green paper on the future of work (Moreira and Dray, 2022). Following this debate, the government presented a package of measures designated as the Agenda for Decent Work (Agenda do Trabalho Digno), which opened up a debate on new labour law reforms. The debate initiated in 2021 was interrupted by the general elections, but continued in 2022; only on 23 February 2023 did the Portuguese parliament approve the legislation (Portuguese government, 2023a; Portuguese parliament, 2023), and it came into force on 3 April 2023.

One of the topics addressed by the green paper was the regulation of telework. The urgent need to improve the legal framework, beyond temporary measures, in the context of widespread teleworking during the pandemic (Eurofound, 2021a, 2022) accelerated the amendment to the Labour Code on telework introduced by Law 83/2021, which came into force in January 2022. The new regime, introduced by this law, defines telework as the provision of work under the legal subordination of the worker to an employer in a location not determined by the latter, using information and communication technologies.

This amendment states that the favor laboratoris principle applies to ‘working conditions under the regime of telework’, preventing collective agreements and individual labour contracts from setting less favourable conditions than those set by the Labour Code (Article 3). The amendment also includes ‘working conditions under the regime of telework’ in the list of matters that must be regulated by collective agreements (Article 492). It strengthens the rights of workers with children and with informal care responsibilities to opt for telework (Article 166); expands the range of workers’ expenses that employers have to pay (Article 168); expands the protection of workers’ privacy, preventing the risk of hypervigilance (Article 170); ensures better conditions for workers’ connection with the company’s premises; and establishes the ‘employer obligation to abstain from contacting the worker outside the working time hours’ (dever de abstenção de contacto), a rule that applies not only to workers under the telework regime, but to all workers (Articles 169(B) and 199(A)). It also improves the regulations concerning workers’ rights to information, representation and participation and improves the conditions for their interaction with trade unions and workplace representative structures (Articles 169 and 465).

According to this amendment, the implementation of telework will always require a written agreement, either concomitant with the initial employment contract or independently of it (Article 166). The telework agreement defines the regime of permanence or alternation between periods of distance work and face-to-face work. It must mention the following aspects: the place where the employee will habitually carry out their work; the normal period of daily and weekly work; working hours; the contracted activity and corresponding category; the remuneration to which the employee will be entitled, including complementary and accessory benefits; the ownership of the work instruments and the person responsible for their installation and maintenance; and the frequency and manner of carrying out face-to-face contact. The teleworking agreement can be signed for a fixed or an indefinite duration. When it is for a fixed period, it cannot exceed six months, and it will automatically renew for equal periods if neither party revokes the agreement in writing up to 15 days before it is due to expire.

The new regime of telework extends some of the rules applying to telework under labour contracts (subordinate employment relationships) to those who are self-employed whenever they are considered to be economically dependent on the beneficiary of the activity (Article 165). These rules include those concerning the equipment and systems necessary to carry out the work and for worker–employment interactions (Article 168); the organisation, direction and control of work (Article 169(A)); any special obligations of employers and workers (Article 169(B)); the privacy of workers under the telework regime (Article 170); and health and security at work (Article 170(A)). Self-employed workers are considered to be economically dependent when 50% or more of their yearly income is paid by the same entity.

In Portugal, industrial relations democratic institutions emerged in the context of the revolutionary transition to democracy after 1974. After almost half a century of dictatorship and the longest authoritarian corporatism in Europe, the new democratic state played a major role in the 1970s in improving labour standards and in the configuration of the system of industrial relations. The political influence of trade union and employer confederations was strengthened by the institutionalisation of tripartite concertation, a process that started in 1984 and gained increasing relevancy (Campos Lima and Naumann, 2011). In the late 1980s and in the 1990s, tripartite social pacts played a central role in conditioning collective bargaining towards wage moderation, although the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses – Intersindical Nacional, CGTP-IN) – the most representative trade union confederation – did not sign them. In contrast, the General Union of Workers (União Geral de Trabalhadores, UGT) signed all of those social pacts.

The 2003 Labour Code (Law 99/2003 of 27 August), a centre–right government initiative, reversed the principle of favor laboratoris and introduced mechanisms to speed up the termination of collective agreements and reduce their period of validity after expiring. It paved the way for employers to withdraw unilaterally from existing collective agreements, but, due to loopholes in the law, this did not apply to some particularly important agreements. Collective bargaining entered into crisis in 2004, with a sharp decline in the renewals of collective agreements and in their coverage (only 600,000 workers).

During the PS government mandate (2005–2009), the recovery of collective bargaining was facilitated by a medium-term tripartite agreement in 2006 on the trajectory of the minimum wage signed by all social partners. By 2008, when the global financial crisis occurred, around 1,800,000 workers were covered by collective agreement renewals, representing around 65% of all employees (excluding public administration). The 2009 Labour Code (Law 7/2009 of 12 February), a socialist government initiative, introduced significant changes in the collective bargaining framework: it partially re-established the favor laboratoris principle, introduced the possibility of non-union negotiations at firm level based on a trade union mandate and further facilitated the unilateral ‘caducity’ of collective agreements and reduced their validity, removing the obstacles to withdrawal from agreements (Campos Lima, 2019).

The [Memorandum of Understanding on Specific Economic Policy Conditionality](file:///C:/Users/Miguel%20Lima/Documents/PAZ/Irec2014/2011-05-18-mou-portugal_en.pdf), MoU, (in force between May 2011 and May 2014), imposed in Portugal various policy measures of extreme austerity and in-depth changes in labour market institutions and legal framework, as a condition for the financial bailout of the country (Costa and Caldas, 2013; Pedroso, 2014). The MOU was signed on 17 May 2011 by the Troika institutions – European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) – and the interim government of the Socialist Party (PS). However, it was the government resulting from the following elections, the centre right coalition of the Social Democratic Party (Partido Social Democrata, PSD) and CDS – People’s Party (CDS – Partido Popular), in power since 21 June 2011, that was to implement the policy requirements of the Troika. The measures and legislation imposed in 2011–2014 during the centre–right coalition PSD/CDS in line with MoU (and beyond) reduced even more drastically the bargaining power of trade unions. Legislation gave more room for non-union representatives to negotiate at firm level. The period of survival of collective agreements was reduced even more, encouraging employers to withdraw unilaterally from existing agreements. Stricter conditions (based on the representativeness of employer organisations) were required for the extension of collective agreements. It became possible to proceed to the suspension (derogation) of collective agreements for companies in crisis. All of these changes combined with the economic crisis led to a dramatic decline in collective agreement renewals and in the number of workers covered, which reached the lowest historical levels in 2012, 2013 and 2014 (Campos Lima and Abrantes, 2016; Campos Lima, 2019).

Since 2015, there have been positive developments in economic growth and employment and a number of pro-labour and social measures have been introduced, including the regular increase of the minimum wage launched by the PS government in alliance with Portugal’s left-wing parties: the Left Bloc (Bloco de Esquerda, BE), the Communist Party (Partido Comunista, PCP) and the Ecologist Green Party (Partido Ecologista ‘Os Verdes’, PEV). All of this has contributed positively to industrial relations. These developments and new rules have facilitated the extension of collective agreements (see the section ‘Extension mechanisms’) and contributed to some recovery of collective bargaining, although collective bargaining has not returned to the levels observed before the global financial crisis. Tripartite concertation also regained importance through the tripartite agreements signed in 2016, 2017 and 2018, with the latter two encompassing a large range of measures.

Following the tripartite agreement on combating precarious work and labour market segmentation and promoting greater dynamism in collective bargaining signed in 2018, Law 93/2019 amending the Labour Code (which came into force on 1 October 2019) reconfigured the collective bargaining framework in relation to the expiry of collective agreements, although it did not reverse the possibility of unilateral caducity (see the section ‘Expiry of collective agreements’). In addition, it created a new challenge for collective bargaining by allowing ‘group working time accounts’ to be decided and implemented either by collective agreements or by company referenda organised by the employers (see the section ‘Working time regulation’).

Ongoing contentious issues remain in relation to labour legislation and the collective bargaining legal framework, which have been stressed by the CGTP-IN, the largest trade union confederation. In particular, the CGTP-IN claims that an in-depth revision of the legal framework of collective bargaining is required in order to fully re-establish the principle of favor laboratoris and to allow collective agreements to expire only following a joint decision of the signatory parties. So far, those claims have not resulted in a successful revision.

In the public sector, the PS government reversed nominal wage cuts and re-established the 35-hour week, turning the page on austerity, but no major outcomes in collective bargaining have been achieved in terms of wages (which have been frozen for almost a decade). The pressure from trade unions intensified in the final quarter of 2018 and during 2019, without success. Restrictions on public expenses have been playing an important role in the government’s justification of the deadlock.

The pandemic prompted the implementation of temporary measures that had the potential to have an impact on collective bargaining. In 2020, during the state of emergency, the right to strike was limited in essential sectors, including the health public service (Eurofound, 2021a); on the other hand, in 2021, the government responded to the critical situation as regards collective bargaining by suspending the deadlines concerning the survival and expiry of collective agreements for a period of 24 months (Law 11/2021 of 9 March 2021). The measure aimed to prevent the emergence of gaps in collective bargaining coverage (Eurofound, 2022).

The social dialogue agenda for 2021–2022 was very demanding in terms of the broad range of issues to be addressed by the government and the social partners in the framework of the Economic and Social Council (Conselho Económico e Social, CES) and the tripartite Social Concertation Standing Committee (Comissão Permanente de Concertação Social, CPCS). These included the discussion of the resilience and recovery plan (Ministry of Planning, 2021) and a debate on the green paper on the future of work (Moreira and Dray, 2022) and on the agenda for decent work. Furthermore, in 2022, the pressure induced by escalating inflation, in the context of the war in Ukraine, placed wage-setting policy at the centre of the debate. The government proposal for an agreement on competitiveness and incomes led to a tripartite medium-term agreement for improving income, wages and competitiveness for 2023–2026 (CES, 2022a), concluded on 9 October 2022, which was followed by a bipartite agreement between the government and public sector trade unions (Portuguese government, 2022), concluded on 24 October 2022 (see the section ‘Tripartite and bipartite bodies and concertation’).