Factsheet for measure
PT-2013-35/2641
– measures in Portugal
Work Compensation Fund and Guarantee Fund for Work Compensation
Fundo de Compensacão do Trabalho (FCT); Fundo de Garantia de Compensacão do Trabalho (FGCT)
Background information
In 2013, through the Law 70/2013 of 30 August, two national compensation funds were established: the Work Compensation Fund (Fundo de Compensação do Trabalho - FCT) and the Guarantee Fund for Work Compensation (Fundo de Garantia de Compensação do Trabalho - FGCT). These Funds seek to ensure to workers the payment up to 50% of the compensation they are entitled to for labour contract ceasing (as predicted in the article 366 of the Labour Code).
The legal regimes of the FCT and FGCT have changed with the publication of the Decree-Law 115/2023 of 15 December.The obligation to join and contribute to the FCT is abolished and new memberships and the obligation to make payments to the FGCT are suspended untilthe end of the Medium-Term Agreement to Improve Incomes, Wages and Competitiveness (2026).
Content of measure
The FCT and FGCT aim to ensure the workers’ right to receive half of the compensation owed to them in case of termination of their employment contracts. This amount is calculated according to article 366 of the labour code, which establishes that:
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The amount of compensation is equal to 12 days of basic salary and seniority bonus for each full year of seniority or fraction thereof.
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The amount of monthly basic salary and seniority bonus to be considered for the basis of calculation may not exceed 20 times the minimum guaranteed wage (€705 in 2022).
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The total amount of compensation may not exceed 12 times the monthly basic payment and seniority bonus of employee or, when the limit specified above is taken in consideration, 240 times the minimum guaranteed salary.
Employers are required to contribute 1% of pay (0.925% to FCT, 0.075% to FGCT) for employees hired after 1 October 2013.
FCT and FGCT are obliged to inform the Authority for Working Conditions (Autoridade para as Condições de Trabalho - ACT) of any non-compliance by the employer within 30 days.
Decree-Law 115/2023 of 15 December
The FCT, which previously served as a guarantee for compensation for termination of employment contracts, will be transformed into a closed fund for accounting purposes and will be used for the following purposes:
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Supporting workers’ housing costs and investments;
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Supporting other investments made by mutual agreement between employers and the bodies representing their workers, in particular crèches and canteens;
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Financing the qualification and certified training of workers;
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Payment of up to 50% of the compensation due for the termination of employment contracts of workers included in the FCT, calculated in accordance with article 366 of the Labour Code - applicable only to workers included in the FCT by 1 May 2023.
In order to use the funds in the FCT accounts, the employer must follow a procedure that includes making a declaration on the FCT website. Furthermore, depending on the purpose, this may involve consultation with or agreement from the employee representative structure.
The FGCT preserves its nature and purposes, but the obligation to make deliveries to FGCT is suspended for as long as the Medium-Term Agreement to Improve Incomes, Wages and Competitiveness is in force (December 2026).
Use of measure
According to the Management report of FCT, in 2023, the fund originated applications to the amount of €638,535,825.02, representing an increase of 4.32%, compared with 2022.
Target groups
Actors and funding
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Actors
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Funding
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National government
Social partners jointly
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Companies
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Consultation through tripartite or bipartite social dialogue bodies
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Consultation through tripartite or bipartite social dialogue bodies
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Social partners' role in the
implementation, monitoring and assessment phase:
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Social partners jointly
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Main level of involvement: Peak or cross-sectoral level
Involvement
The trade union confederations CGTP and UGT and the four employer confederations CIP, CAP, CCP and CTP represented at the tripartite Standing Committee for Social Concertation have been consulted. Also the Funds are subject to a regular assessment, with the participation of the Standing Committee for Social Concertation.
Views and reactions
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