Main challenges to the Labour Code revision in new tripartite agreement

Among the most controversial issues raised during the ongoing process of the reform of labour relations were those related to the legal system governing individual dismissals, working time adaptability, articulation between the law and collective agreements, and the expiry of collective agreements. The tripartite agreement for a new system of regulation of industrial relations, employment policy and social protection in Portugal, signed in June 2008, addressed those questions, presenting solutions that will influence the discussion and final parliamentary decision regarding the draft bill on the revision of the labour code, to take place in the second half of September 2008.

The tripartite agreement (PT0807019I) for a new system of regulation of industrial relations, employment policy and social protection in Portugal (Acordo Tripartido para um Novo Sistema de Regulação das Relações Laborais, das Políticas de Emprego e da Protecção Social em Portugal), signed on 25 June 2008, by the government and the social partners represented at the Standing Commission for Social Concertation (Comissão Permanente de Concertação Social, CPCS), but not by the largest trade union confederation, the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), was eventually based on the final government proposal, which introduced a few changes to the government’s initial proposal presented in April 2008(PT0806019I), and also to the recommendations of the White Paper on Labour Relations (Livro Branco das Relações Laborais) (PT0802029I).

The most controversial issues raised in this process, directly related to the revision of the Labour Code, were those on: the legal system governing individual dismissals; working time adaptability; articulation between the law and collective agreements; and the expiry of collective agreements.

One of the main issues at stake was the reform of the legal system regarding redundancies. According to the White Paper’s recommendations, the reform should introduce changes to the labour code regarding disciplinary procedures, make it easier to make redundancies, and make changes to the system governing unfair dismissals, in particular, the introduction of new grounds for individual dismissal with just cause, based on ‘failure to adapt’. Although welcomed by the employers confederations, the proposal for new grounds for individual dismissals faced strong opposition from the trade unions, and eventually the General Workers’ Union (União Geral de Trabalhadores, UGT) made clear that the withdrawal of this proposal was one, if not the main, condition for unions signing any agreement on the reform of labour relations. This was also one of the main reasons why the CGTP strongly opposed the reform. In the end, the government, in the end, withdraw this proposal, therefore creating the conditions for an agreement with the UGT. The agreement introduces changes to disciplinary procedures, but nevertheless withdraws any additional reasons for dismissal, therefore maintaining the present labour code rules.

In relation to working time adaptability the government intended to implement a very ambitious reform, not only by improving and creating new forms of working time adaptability, but also by setting up new forms of regulation i.e. through collective agreements and/or workplace agreements, which in some cases could replace general labour law - for instance by removing from the labour code regulations on the effects of the reduction of the maximum limits of normal working time, as well as the quantitative definition of part-time work. Nevertheless, the government proposal withdrew the more radical recommendations of the White Paper, which centred on eliminating from the labour code any provision regarding the maximum limits of daily working time duration, and pointed to the possibility of direct agreements between individual workers and employers on working time.

The new working time forms envisaged by the government included annual ‘working time accounts’ (banco de horas); ‘concentrated schedules’ (horários concentrados) on certain days of the week, which would increase the number of rest days; and the possibility of working time adaptability based on collective workplace decisions. Furthermore, the measures envisaged consider a shift from the traditional form of monetary compensation schemes, in favour of compensatory time off, which should be defined by collective agreements. Mostly, those proposals were welcomed by the employers but divided the trade union confederations. The CGTP has been against these changes both in substantive and procedural terms; the UGT showed itself to be more open, but nevertheless tried to influence the process in order to limit discretionary behaviour on the part of employers. Despite maintaining some of the ‘core’ proposals, the agreement withdraws some of the government initial intents. Therefore, under to the agreement, the following new forms of working time adaptability shall be implemented:

  • annual ‘working time accounts’ (200 hours);
  • ‘concentrated schedules’ (horários concentrados); and
  • the adaptability at the workplace on the grounds of its acceptance by a large majority of workers (75%), covering all workers.

Nevertheless the labour code will continue to set legal limits, for instance in relation to:

  • the definitions of the duration of working time, breaks and intervals considered as working time and rest periods (articles 155.º, 156.º e 157.º of the labour code);
  • the limits of normal periods of daily and weekly work (articles 158.º, 159.º e 163.º of the labour code);
  • the minimum length of interim daily, weekly and annual rest periods,;
  • the maximum duration of work for night workers;
  • overtime limits;
  • the forecast and the exemption system of working time;
  • individual working time adaptability; and
  • the groups of workers which are exempted from the adaptability system;

In the case of the two other controversial issues – the articulation between the law, collective agreements and individual labour contracts and the expiry of collective agreements – it was expected that the socialist government would make a real difference in relation to the previous right wing government, which had launched the labour code in 2003 ( PT0305101N; PT0501202F; PT0807019I).

In relation to the articulation between the law, collective agreements and individual contracts (revision of article 4. º of the labour code), the employers aimed to maintain the present version of the labour code, according to which collective agreements can contain less favourable rights for the workers than those defined by law, thus subverting the principle of more favourable treatment, which has been part of the Portuguese industrial relations tradition. However, the government incorporated the recommendation of the White Paper on Labour Relations (PT0706059I; PT0802029I) by proposing a new formulation according to which the minimum legal provisions do not apply to the labour contract when collective agreements define more favourable rules for the workers only in relation to ‘core’ domains of employment relations, including:

a) Rights of privacy, equality and non discrimination;

b) Protection of maternity and paternity;

c) Children at work;

d) Workers with reduced capacity for work, including workers who are disabled or chronically ill;

e) Student workers;

f) Employers’ duty of information;

g) Limits to the standard duration of working time;

h) Minimum duration of rest times, including holidays;

i) Maximum duration of night work;

j) Guarantee of remuneration and forms of compliance;

l) Safety, hygiene and health at work;

m) Accidents and occupational diseases;

n) Transfer of the company or establishment 

o) Rights of elected representatives of workers 

Despite considering this formulation a setback, the employer organisations signed the agreement. The UGT welcomed the formulation but that was a further reason for the CGTP not to sign the agreement because it did not fully answer to their demands. Therefore it defends the principle that collective agreements cannot set less favourable conditions than those defined by law should be the rule.

The labour code rules in regard to the expiry of collective agreements were another controversial issue. The 2003 labour code introduced radical changes in this respect, which were at the time criticised by the Socialist Party (then in opposition). Before that, the social partners were obliged to negotiate on a new agreement, but nothing obliged them to reach an agreement, as the previous agreement remains in force if no agreement is reached. Under the 2003 changes, collective agreements expired if no new agreement was reached. In 2006, under the socialist government, changes were introduced by a new law (nº 9/2006, 20 March), which launched the system of obligatory arbitration, in order to overcome the problem of legal vacuum that the expiry of collective agreements might cause. Under this, the principle of expiry of collective agreements on the grounds of employer or trade union refusal to sign new agreements remained untouched.

The agreement signed between the government and the social partners on June 2008 was based on the final government proposal. Therefore, the agreement does not withdraw the basic principles underlying the expiry of collective agreements, contained in the labour code, but envisages some procedural changes in relation to the deadlines, shortening the period for expiry, as well as the period during which the collective agreement remains in force, and also admits the possibility of expiry of a collective agreement even when it provides for its own renewal. In addition, the government proposed the creation of a new system of arbitration which does not solve the problem of obsolescence since it is not intended to avoid it, and actually occurs a year after the expiry if a new collective has not been concluded.

Furthermore, the agreement states that the law should make explicit that individual non-unionised workers can be covered by collective agreements, which is an innovation that has never before been presented during the all the main negotiation rounds. Accepted by both employer confederations and UGT, this proposal is highly controversial from CGTP’s point of view, insofar it might undermine trade union power as well as collective rights.

Maria da Paz Campos Lima, Dinâmia

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