Social partners have mixed reactions to first draft of labour law reform

In June 2007, the social partners represented on the tripartite Standing Commission for Social Concertation (CPCS) saw a first draft of the White Paper on labour legislation reform. Their initial reactions suggest that it will be very difficult to reach a consensus on the paper when the final draft is discussed in the CPCS. According to the press, the draft proposes major changes to the current labour legislation.

On 27 June 2007, the White Paper Commission (Comissão do Livro Branco das Relações Laborais) presented a first draft of the White Paper on labour legislation reform (PT0606019I) to the social partners who are represented on the tripartite Standing Commission for Social Concertation (Comissão Permanente de Concertação Social, CPCS). The draft proposes major changes to the existing labour legislation, particularly in relation to the framework law on individual dismissals, working time flexibility and wage flexibility.

Less stringent individual dismissal legislation

The draft envisages a new framework law with the aim of reducing the complexity and administrative costs of individual dismissals. As a result, the individual dismissal process would become shorter and faster; for example, the draft suggests reducing the period during which an appeal may be lodged against a dismissal procedure to six months instead of the current 12 months.

The new framework law also proposes a wider range of situations where individual dismissal will be allowed, thus going a step further in promoting external flexibility: that is, employers’ flexibility in terms of hiring and firing workers. According to the Labour Code 2003 (PT0305101N), one of the justifications for individual dismissal is if an employee is unable inability to adapt to changes in the nature of their work caused by the introduction of new technology or equipment. The employer may terminate the contract in cases where the employee was still completely incapable of performing the tasks involved (following changes introduced in the job at least six months previously and after adequate training and a period allowed for adjustment).

However, these conditions are eliminated in the proposed framework law: it stipulates that an employee’s inability to adapt to any situation of functional change in the nature of work will be considered as a reason for individual dismissal in the future. In addition, the new framework law includes a new reason for dismissal relating to an employee’s ‘inaptitude’ to do his or her work. In this respect, the individual skills of an employee can be the reason for dismissal, regardless of any changes in the work environment.

Greater working time flexibility

With regard to working time flexibility, the first draft of the White Paper introduces major innovations. The legislation will only provide for the maximum number of working hours for the normal weekly and monthly working time. Therefore, the maximum number of daily working hours will be subject to collective bargaining and/or determined by company management, taking into account the suggestions of employee representatives. A concentrated working week will become legal: that is, two or three days of longer working hours followed by two or three days of rest. Currently, a break of one hour is required after five hours of work; this will be shortened to 30 minutes.. Furthermore, the duration of annual leave will also be reduced: currently, an employee’s holidays can total 25 days per year; the new maximum will be set at 23 days.

Greater wage flexibility

The draft White Paper also puts forward important changes in relation to wage flexibility. It provides for the possibility of a temporary wage reduction to accommodate ‘companies’ urgent needs’. Such a wage reduction will have to be agreed between the employer and the worker, and will be monitored by labour inspection. According to the first draft, wage increments based on seniority are considered obsolete and will therefore be eliminated. Moreover, the new legal framework proposes a reduction in the holiday bonus, by excluding all wage complements that are currently taken into account when calculating the amount of the bonus.

Reactions of social partners

The social partners’ first reactions to the draft of the White Paper revealed the very different positions of the trade union confederations and those of employers (PT0708029I).

The General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) and the General Workers’ Union (União Geral de Trabalhadores, UGT) are deeply concerned about the proposals of the first draft of the White Paper on labour legislation reform. The Secretary General of CGTP, Manuel Carvalho da Silva, emphasised that ‘in Portugal, only flexibility is discussed and security is not considered’. The Secretary General of UGT, João Proença, highlighted that the first draft ‘threatens fundamental rights and aims at increasing labour market flexibility without taking into consideration collective bargaining and action against precarious employment situations’.

By contrast, the President of the Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP), Francisco van Zeller, praised the work accomplished by the White Paper Commission. However, he also highlighted that in some areas the commission did not go far enough in proposing new legislation to meet the challenges of a competitive economy, adding that ‘it will be very difficult to have a new balance of labour relations without changing the Constitution’.

At this stage, the social partners have to submit their positions on the proposed labour legislation reform to the government. The White Paper Commission will deliver the final draft version of the paper by November 2007 and, only then, will detailed discussions of the final draft take place at the CPCS.

Maria da Paz Campos Lima and Reinhard Naumann, Dinâmia

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