Government proposes Labour Code

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In July 2002, the Portuguese government issued a draft Labour Code, which would replace most current labour legislation by bringing existing provisions together in a single text. At the same time, current provisions would be amended in a variety of areas, including fixed-term employment contracts, dismissals, collective bargaining, working time and absence from work. While employers welcome the proposal as introducing more flexibility, trade unions are strongly opposed, fearing a full-scale liberalisation of the employment relationship.

At the end of July 2002, the Minister of Social Security and Labour in the coalition government of the centre-right Social Democrat Party (Partido Social Democrata PPD/PSD) and the right-wing People's Party (Partido Popular, CDS/PP) issued the text of a preliminary draft for a Labour Code (Código do Trabalho) - Portugal currently has no such codified set of labour legislation. The Code has been presented as a step forward in the progress and modernisation of Portuguese labour law, bringing it more into line with that in other European countries. The document has already been approved by the cabinet and will be debated in public over the next few months.

The new draft Code takes a wider approach than a draft that was considered at some length by the previous Socialist Party (Partido Socialista, PS) government. It aims to replace over 60 laws, some of which date from the 1960s. The new Code aims to bring together in one document a large number of aspects of labour law, while amending a number of them, including the following:

• employment contracts. The draft Code would allow for the maximum duration of fixed-term contracts to rise from three years to five in certain circumstances (in the case of activities with an irregular annual production cycle), and for them to be renewed up to three times - at present only two renewals are permitted;

• working time. The reference period during which normal working time may be varied while respecting an average would rise from four to six months, and to one year through collective bargaining. Normal working time would remain at 40 hours a week and eight hours a day;

• night work. The definition of night work would be changed to work between 23.00 and 07.00, a shorter period than at present, thus making night work cheaper for employers;

• absence and holiday regulations;

• dismissal. The draft Code would extend the grounds considered as just cause for dismissal, adding 'fraudulent absence though sickness' and over 12 repeated and unjustified late arrivals at work of over 30 minutes during the course of a year, while reducing the number of unjustified absences from work considered as giving just cause for dismissal from six to four;

• sickness absence. In order to combat 'absenteeism', there would be increased monitoring of sick leave, making it possible for company doctors to monitor sick employees;

• maternity/paternity and parental leave. Paternity leave would be increased from 14 to 30 days in the case of the mother's death, and the maximum period during which employees may work part time to help raise a child up to six years of age (including adopted children) would increase from six months to one year;

• collective agreements. The Code would set a two-year limit for the expiry of collective agreements. This would mean that the content of agreements would no longer be valid after this period, unless a new agreement is reached. This provision would put an end to the principle that there should be no 'social regression'- ie that previously negotiated rights cannot be called into question, even where these are laid down in old agreements;

• dispute resolution. The Code would introduce the possibility of compulsory arbitration where no agreement can be reached in labour disputes;

• rules on individuals combining management roles in trade unions or employers' organisations with the leadership of political parties; and

• employee participation. There would be a reduction in the number of hours of paid time off for members of workers' commissions.

Employers' organisations believe that the Labour Code as now proposed by the government will help increase company competitiveness and productivity, by making labour law and collective bargaining more flexible.

The trade unions fear that the proposed Labour Code will involve a full-scale liberalisation of the employment relationship, with collective bargaining and trade unions increasingly sidelined. The General Workers' Union (União Geral de Trabalhadores, UGT) believes that the proposed Code will increase employers' power, thus tilting the balance of power in their favour, and regards some aspects as very negative. It is threatening a general strike within three months if there are no significant changes to the wording of the draft Code. The General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) hopes that the public debate will result in major changes to the wording of the draft Code, stating that the Portuguese economy cannot be built on the 'sacrifices of employees', but rather must be based on increased training and improved qualifications.