New Labour Code comes into force in wake of controversy

On 17 February 2009, Portugal’s new Labour Code came into force, after some controversy. It was due to come into effect on 1 January; however, the Portuguese president asked the Constitutional Court to examine the rule extending the trial period for most employees to 180 days. The court claimed that this rule infringed constitutional requirements. As a result, the article concerning the rule was modified and a revised version of the code was voted on again in parliament.

Background

The tripartite agreement for a new system of regulation of industrial relations, employment policy and social protection in Portugal was signed on 25 June 2008 by the Portuguese government and all of the social partners, with the exception of the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) (PT0807019I). Following this agreement, the socialist government presented the draft bill (No. 216/X) on the revision of the Labour Code (LC) to the parliament.

The revision of the LC was approved, in general, by the parliament in September 2008. After the parliamentary discussion on each article of the code, the final text (Decree No. 255/X) was approved on 7 November 2008, but only with the assenting votes of the Socialist Party (Partido Socialista). The centre-right-wing parties abstained from voting. The left-wing parties as well as four deputies from the Socialist Party voted against the revision of the LC.

According to the text approved, the new LC was expected to come into force on 1 January 2009.

Main changes to new LC

The revised version of the LC approved in November 2008 by the Portuguese parliament through Decree No. 255/X introduced changes to the 2003 LC (PT0305101N), in line with the tripartite agreement signed in June 2008 (PT0809019I). It also included new proposals from the Socialist Party, which provide for new rights and obligations in relation to work-life balance and gender equality.

Link between law, collective agreements and individual contracts

Decree No. 255/X provides for a revision of Article 4 of the 2003 LC, according to which collective agreements cannot set less favourable conditions than those defined by minimum legal provisions, but only in relation to specific ‘core’ domains of employment relations.

Expiry of collective agreements and ‘required arbitration’

The revised LC maintained the principle of expiry of collective agreements on the grounds of employer or trade union refusal to sign new agreements. Decree No. 255/X focuses on the period of expiry and on the concept of ‘required arbitration’ (arbitragem necessária). It defines that the expiry of those collective agreements, which include a clause providing for their successive renewal such that they only expire when replaced by another agreement, takes place six and a half years after the last published full text. The required arbitration is a tool that can be activated by employees or by employer organisations if no new collective agreement is concluded within two months of the previous agreement’s expiry. A new agreement must be activated in the subsequent 12 months.

Working time flexibility

The principle of weekly working time duration of 40 hours is maintained, but working time flexibility is reinforced.

In relation to individual adaptation at the workplace, the new code provides that the company and the employee may set an agreement to reduce down to six hours or to increase up to 10 hours the daily working time, on the condition that, on average, the weekly working time is respected. Working time can be concentrated – through ‘concentrated schedules’ – in four days a week. Workers have a period of two weeks to express their position on the matter, and if 75% of workers accept their employer’s proposal, the scheme will apply to all staff.

Collective agreements can extend the daily working time to 12 hours, as long as the average weekly working time over a two-month period does not exceed 50 hours. In this case, if 60% of the workers accept this arrangement, the scheme will apply to all staff. Collective agreements can concentrate the working week in less than four days, as long as workers receive two consecutive days off. Finally, the annual ‘working time accounts’ – of up to 200 hours – can only be established through collective agreements. These accounts can be used by workers when they need to stay off work, as well as when the company has a peak in production, in which case the work provided is not paid as overtime work.

Facilitating dismissal procedures

Although the reasons for dismissal remain unchanged, the decree provides for significant changes in terms of deadlines, steps involved and consequences related to dismissals.

In the event of dismissal, the employer still has to explain the reasons for dismissal and send a ‘disciplinary note’ to the worker. However, during the disciplinary proceedings, the employer will choose whether or not to hear the witnesses listed by the employee – except in the case of pregnant women or workers on parental leave. Moreover, procedural errors will be considered irrelevant, provided that the cause for dismissal is justified, and the employer will no longer be obliged to reintegrate the employee. The time available to employees to contest the dismissal decision will be reduced from 12 months to two months. Employees will not be obliged to take legal action requiring a lawyer, as was previously the case, and it will be sufficient to put forward a claim.

Limiting fixed-term contracts and controlling independent work

The concept of an employment contract will change to facilitate the identification of false independent work. Companies that rely on this form of work will be penalised: in the case of recurrent use of this form of work, companies can lose their allowances and benefits granted by the state and their activities may be suspended for two years.

The decree extends the restrictions on the use fixed-term employment contracts. In this regard, a job cannot have been previously occupied by another short-term or temporary worker, or by a services provider. The maximum duration of fixed-term contracts is to be reduced from six to three years, and this limit also applies to temporary contracts or service agreements with the same employer. In addition, the use of fixed-term contracts will be restricted when launching new activities or creating new companies. Furthermore, open-ended employment contracts will be encouraged, through the reduction of employers’ deductions for social security payments.

Extension of trial period for workers

The 2003 LC provides for a trial period of three months for new workers. Under the new decree, the trial period was to be increased to six months for the majority of workers, without exception. After a four-month trial period, the employer is obliged to issue the worker with a warning 15 days before revoking the contract. However, workers who have had several precarious contracts with the same company may have the trial period reduced or eliminated.

Improving gender equality and work–life balance

The number of days granted to workers to care for family members is being increased from 45 to 60 days a year: 30 days to care for children younger than 12 years and 15 days in order to provide assistance to older family members. In addition, workers are entitled to have 15 days to give assistance to other relatives, such as partners, parents and siblings. Workers are also permitted to work part time until their children are 12 years old – previously, the age limit for children in this regard was 10 years of age.

The decree sets out other measures also related to these concerns, as well as to health at work. For instance, pregnant women or mothers who are breastfeeding, along with young people under the age of 18 years and employees with a chronic illness or disability are exempted from ‘concentrated schedules’ and ‘working time accounts’ schemes.

Constitutional Court evaluates decree

Decree No. 255/X received a mixed reaction from the social partners. As expected, the General Workers’ Union (União Geral de Trabalhadores, UGT) welcomed the revision of the LC.

CGTP was strongly opposed to the decree and claimed that some of its provisions should be examined on the grounds of unconstitutionality. The confederation asked the President of Portugal, Cavaco Silva, to demand the evaluation of these provisions by the Constitutional Court. According to CGTP legal experts, the decree conflicts with the Portuguese Constitution in a number of respects – more specifically, with regard to employment relations, as well as industrial relations and collective bargaining.

Employment relations

CGTP argues that the decree conflicts with the following aspects: the principle of more favourable treatment (Article 3); temporary work (Article 185); instruction disciplinary proceedings in relation to dismissal (Article 356); the duration of workers’ trial period (Article 112); special cases of fixed employment contracts of a very short duration (Article 142); the termination of service mission and effects (Articles 163 and 164); working time adaptability at the workplace (Article 206); working time accounts (Article 208); and concentrated schedules (Article 209).

Industrial relations and collective bargaining

Moreover, in terms of industrial relations and collective bargaining, CGTP believes that the decree conflicts with the following elements: the concept of trade union delegates (Article 442) and the duration of their mandate (No. 2 of Article 462); the principles of democratic management and organisation (Article 451); the choice of collective agreement to apply (Article 497); and the duration and expiry of collective agreements (Article 501). President Silva only expressed doubts in relation to the article extending the trial period for all workers up to 180 days (Article 112) and required the preventive examination of the Constitutional Court. At the end of December 2008, the court decided unanimously to reject the decree rule in question on the grounds that it violates the right to secure employment and the principle of proportionality.

Parliament votes again on revised LC

As a result, the parliament had to reassess this particular rule (Article 112) and to vote again on the revision of the LC. On 21 January 2009, the parliament approved, once more with only the favourable votes of the socialist majority, the new LC, changing the trial period for all workers from 180 to 90 days – as defined by Article 107 of the 2003 LC. President Silva promulgated the law on 6 February, and on 12 February 2009 the new LC (Law 7/2009) was published, becoming effective on 17 February 2009.

Maria da Paz Campos Lima, Dinâmia

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