Last September 4, Law nr. 93/2019 was published, which changed the Labour Code, through the insertion of significant changes in the regime of term labour contracts and temporary contracts, among others.
These changes came into force on the 1st of October 2019, without prejudice of some particularities provided for in the law regarding their application in time.
Within this framework, as regards to the fixed-term contract: its duration cannot exceed two years (currently the maximum duration of this type of contract is three years); the fixed-term contract can still be renewed up to three times, although the total duration of the renewals cannot exceed the duration of the initial period of the contract (currently, there is no limitation on the duration of renewals provided that the entire contract does not exceed the maximum period legally stipulated). This last amendment represents a significant change in the labour paradigm of most companies carrying out their activity in Portugal, as it represents a limitation on the duration of fixed-term contracts. By way of example, and to make it easier to verify the impact of the limitation now established, a company that signs a fixed-term contract for the initial period of six months may renew the contract up to three times but only for the maximum period of six months, which means that such a contract will have a maximum total duration of one year. In the light of the law still in force, such a contract may have the maximum duration of three years (depending on the reason for its signature). In this framework, in future, what will determine the maximum duration of fixed-term contracts will be the duration established by the Parties for their initial period, and only where contracts are signed for the initial period of twelve months, will it be possible to reach the maximum duration of two years legally provided.
On the other hand, as regards to the temporary needs of the company which may justify the signature of a fixed-term contract, the list currently provided in law is maintained, and two limitations have been introduced to such needs: on the one hand, the need related to the launch of a new business, as well as the beginning of activity of a company or of an establishment owned by the company, is limited, and must have less than 250 employees. Presently, such companies will have to have less than 750 employees.
In this respect, a legal clarification has been introduced to the effect that the duration of fixed-term contracts based on any of these facts may not exceed two years after the beginning of the respective motive.
On the other hand, in the same logic of limitation of the needs that may justify the signature of such contracts, the possibility of concluding fixed-term contracts with employees that are looking for their first job is eliminated and the signature of fixed-term contracts with employees in a situation of unemployment is only allowed in cases of very long-term unemployment (individuals aged 45 and over, who have been registered with IEFP for 25 months or more).
As for the uncertain term contract, its duration cannot exceed four years (unlike the current maximum duration of six years).
These changes do not apply to term labour contracts signed before the entry into force of Law 93/2019, as regards their admissibility, renewal and duration. Thus, the contracts already in force remain in the exact terms in which they were signed, and as from 1 October 2019, all term labour contracts to be signed must comply with the new rules.
In what concerns the temporary work regime, a limitation is introduced to the number of renewals of temporary fixed-term contracts, which can only be renewed up to six times, as long as its justification remains. Such limitation shall not apply to temporary contracts entered into for the replacement of absent employees, provided that their absence is not attributable to the employer.
In terms of the duration of the temporary contract, the maximum limits of two years, six or twelve months shall be maintained, depending on whether we are dealing with the generality of the contracts, or the specific cases of vacancy of a labour post or exceptional increase of activity, respectively.
Law 93/2019 also introduced changes to the trial period in effective labour contracts. The trial period of one hundred and eighty days now applies not only to employees that hold positions of technical complexity, a high degree of responsibility or that imply a special qualification, and to those who perform duties of trust, but also to employees looking for their first job (individuals under 31 who have never had an effective contract) and to long-term unemployed people (individuals who have been enrolled in IEFP for 12 months or more).
This measure, together with the elimination of the possibility of signing fixed-term contracts with employees looking for their first job and with long-term unemployed people, is intended to encourage the signature of effective labour contracts with such employees, giving, however, the employers the option of terminating the contract for up to six months of duration without the need of invoking just cause.
In addition, the trial period may be reduced or excluded in case of previous professional training carried out with the same employer and depending on whether its duration was inferior or equal/longer than the duration of the trial period (in addition to cases of previous fixed-term contract, temporary contract or rendering of services contract, signed with the same employer, in accordance with the wording of the Labour Code still in force).
Also, the number of hours of continuous training to which each employee is entitled, every year, changes from a minimum of thirty-five hours to a minimum of forty hours, or, in case of fixed-term employees with contracts of three months or more, to a minimum number of hours commensurate with the duration of the contract in that year (which will be calculated on the basis of the 40 hours provided for effective employees).
On the other hand, the individual bank of hours is eliminated (meaning that the individual bank of hours schemes in force on 1st of October 2019 must cease within one year) and the set bank of hours can now be applied to the employees of a team, section or economic unit, as long as approved by referendum by, at least, 65% of the employees to be covered and not only when so provided for in a collective bargaining instrument.
Finally, it should be emphasized the amendment introduced by this Law to the Code of Contributory Regimes, which entails the creation of an additional contribution for excessive turnover of employees, to be paid by the employer, of progressive application based on the difference between the annual weight of fixed-term contracts and the sectoral average, up to a maximum of 2% on the total amount of the basic remunerations of fixed-term contracts, due in the calendar year to which the clearance relates.
In order to summarize the changes introduced, please note the following: