Background information

The temporary reduction of working hours/suspension of employment contracts are combined in a measure, under the Labour Code (Law 7/2009 of 12 February), which may be adopted on the initiative of a company, provided that there is sufficient evidence of economic crisis and that the measure is required to ensure the company's economic viability and the maintenance of jobs.

Content of measure

The temporary reduction of working hours/suspension of employment contracts are combined in a measure which may be adopted on the initiative of a company, provided that there is sufficient evidence of economic crisis and that the measure is required to ensure the company's economic viability and the maintenance of jobs.

The reduction or suspension must have a predefined duration not exceeding six months. Only in the case of a catastrophic event or incident which has severely affected the normal activities of the company the reduction or suspension may be accorded for the duration of one year. The initial six months may be extended for an additional six months as long as the employer notifies, in writing and in a substantiated manner, the worker representatives, and they do not oppose.

The employer may temporarily reduce the normal working hours or suspend the employment contracts for market reasons, structural or technological shocks or other events that severely affected the normal activities of the company, provided that such action is crucial to ensure the viability of the company and maintenance of jobs.

In 2012, changes were made to make it easier for employers to implement the measure. to initiate the temporary layoff, the eligible company must notify the worker representatives, but the agreement of such representatives is no longer required, and the written notice period was reduced from 10 days to 5 days.

The reduction may include:

• One or more normal daily or weekly working hours and may involve different groups of workers, alternatively.
• Reducing the number of employees corresponding to the daily or weekly working hours.

During the reduction or suspension of the contract, workers are entitled to receive a minimum amount equal to 2/3 of the gross salary (without discounts) that they would receive if they were working normally; this will never be lower than the national minimum wage (which stands at €635 in 2020) and with the maximum limit of three times national minimum wage (€1,905 in 2020). The 30% of the compensatory payment attributed to each employee is borne in by the employer and 70% by the social security institution.

During the suspension or reduction period the employee is entitled to maintain all its social security benefits, which are calculated considering their normal remuneration as well their rights relating to set vacation period and vacation and Christmas allowances, under the same conditions as if the same were rendering effective work. Regarding the Christmas allowance, 50% of the compensatory payment is borne by the social security institution and the remaining is directly paid by the employer.

The employer may only introduce a new reduction of the normal working hours or suspend the employment contracts once the previous period of suspension is over and at least half of the duration of that period has passed (for example if the initial suspension was for six months, a new one can only start three months after the last day of the six-month period). This period could be shortened by agreement between the employer and the affected workers or their representative structures.

COVID-19 temporary measure

During the COVID-19 crisis, the government introduced a special measure (Article 7 of Decree law 10-G/2020), valid from 27 March to 30 June 2020, and then extended until the end of July. It is aimed at supporting employees' training when on short-time working. This measure adds the following main provisions:

• The support to the extraordinary training plan is not cumulative to the extraordinary support to the maintenance of the employment contract.
• The support to the extraordinary training plan has a defined duration (one month).

The training plan is proposed by the employer and approved by the Institute of Employment and Vocational Training (Instituto do Emprego e Formação Profissional, I.P., IEFP, I. P.) and is supplemented by a training grant. This training grant is monthly paid by IEFP, I.P. and it corresponds up to 50% of the gross remuneration or with the maximum limit of the national minimum wage (€635, in 2020). The training plan may be previously defined in articulation with the IEFP, I.P. and must include a selection of Short-Term Training Units (Unidades de Formação de Curta duração - UFCD) included (or not) in the National Catalogue for Qualifications. Whenever possible, this may be developed as distance training. The duration of the training should not be longer than 50% of the normal working time or up to a total of 88 hours of training.

Use of measure

In August 2022, 110 companies and 6,717 workers were involved in these measures (less 105 companies than in August 2020 and less 1,072 employees than in August 2020; and more 80 companies and 6,182 employees than in August 2019): 352 workers with suspension of employment contracts and 6,365 with temporary reduction of working hours.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations Public employment service	Employer National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

The workers or their representative structures must be informend and consulted about the implementation of the measures.

Views and reactions

The Portuguese Uniond Confederation CGTP-IN considers that the measure has costs for the employee, whose salary is always reduced because they work less hours or their contract is suspended.

Sources

• 12 February 2009: Labour code (articles 298, 301 and 303) - updated version (www.pgdlisboa.pt)
• 17 August 2015: CGTP-IN (2015), Reduction of working hours and suspension of employment contracts by companies (layoff), web page, 17 August (www.cgtp.pt)
• 26 March 2020: Decree Law 10-G/2020 of 26 March (dre.pt)
• 10 December 2021: ERM database on restructuring related legislation (www.eurofound.europa.eu)
• 30 September 2022: Statistics bulletin 2022 (www.gep.mtsss.gov.pt)
• 30 September 2022: Decree Law 66A/2022 of 30 September (dre.pt)