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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure PT-2020-13/297 Updated – measures in Portugal

Exceptional and temporary measure on layoffs to protect jobs in the context of the COVID-19 pandemic

Medida excecional e temporária relativa ao 'lay-off' de proteção dos postos de trabalho, no âmbito da pandemia COVID-19

Country Portugal , applies nationwide
Time period Temporary, 27 March 2020 – 30 June 2021
Context COVID-19
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Maria da Paz Campos Lima (CESIS)
Measure added 06 April 2020 (updated 07 February 2022)
Related ERM support instrument

Background information

This exceptional and temporary measure, set by Decree-Law No. 10-G/2020 of 26 March 2020, simplifies the implementation and sets new conditions to the temporary measure provided for in the Ordinance No. 71-A/2020 of 15 March to respond to the COVID-19 pandemic, which introduced exceptional changes to the ‘Lay-off' regime defined by Labour Code (Law No. 7/2009). The measure aims at protecting jobs and maintaining labour contracts in companies by supporting two-thirds of workers’ wages. This measure adds the following main provisions: it forbids the companies that are entitled to the support to eliminate jobs (collective and individual redundancies); and establishes that the state budget will cover the financing of the part of wages provided by social security.

Content of measure

Decree-Law No. 10-G/2020 of 26 March 2020 establishes that companies in a crisis situation as a result of: i) a complete halt in the activity or ii) or abrupt and sharp decrease of activity of at least 40% of invoicing have access to extraordinary support to help pay the wages of their workers for a maximum period of six months.

The criteria related with abrupt reduction in activity of at least 40% concerns the period of one month before the date of the application, with reference to the average of the two previous months, or to the average of the same period in the previous year. For those companies that started their activity less than 12 months, the reference is the average of that whole period.

The measure aims at protecting jobs and maintaining labour contracts in companies by supporting two-thirds of workers’ wages. This measure adds the following main provisions: it forbids the companies that are entitled to the support to eliminate jobs (collective and individual redundancies); and establishes that the state budget will cover the financing of the part of wages provided by social security. Workers compensation cannot in any case be below the mandatory minimum wage.

The Resolution of the Council of Ministers no. 41/2020, of 6 June, that approved the Economic and Social Stabilization Program, extends the extraordinary support for the maintenance of employment contracts and establishes a transitional regime replacing the regime in force of ‘simplified layoff’ by a support to progressive recovery (2.2.).

Companies that remain closed as determined by the government continue to benefit from the simplified lay-off regime; the simplified lay-off, in the model currently in force, is extended until the end of July; companies that have a decrease in revenue equal to or greater than 40% may benefit, between August and December 2020, from a support mechanism for progressive recovery; companies that have benefited from the simplified lay-off regime can now benefit from an extraordinary incentive to normalize business activity, choosing one of two modalities: One minimum wage (€635) one-off or two minimum wages over six months.

The support for progressive recovery (2.2.1) introduces changes concerning the wages of workers under layoff (at the present a payment by 66%): workers will receive between 77% and 83% of their wages from August to September, and between 88% and 92% from October to December 2020. The measure has two conditions: prohibition of dismissals during the application of the measure and in the subsequent 60 days; and prohibition of the distribution of dividends during the application of the measure.

The Resolution introduces also a one-off measure, the Stabilization Complement with the aim to improve the income of workers under layoff (2.3). The one-off measure, payable in July, in the amount of income loss of one month of lay-off, which can vary between €100 and €351 applies to all workers with an income, in February, up to two minimum wages and who have registered a loss of basic salary, and were in layoff in one of the months between April and June. Recipients: workers with a basic salary above one minimum wage and up to two minimum wages.

Updates

The following updates to this measure have been made after it came into effect.

24 March 2021

Decree Law 23-A/2021 of 24 March extends the access to the provisions of Law 6-E/2021 of 16 January also to companies, whose activity has been total or partially (above 40%) suspended in the month prior to the request, when considerably affected by the disruption of global supply chains or by the suspension or cancellation of orders, in the situations in which more than half of their billing in the previous year related with payments made to activities or sectors currently suspended or closed by legislative or administrative order. In addition, it extends the option for the simplified lay off scheme also to members of statutory bodies exercising management functions.

15 January 2021

Decree Law 6-C/2021 of 15 January 2021 extended the measure for six months and updated the following provisions: The level of compensation increased to 100% of original gross wage, up to three times the minimum wage. The level of compensation established for the ‘normal layoff regime’ provided for in article 298 of the Labour Code, when it applies to situations motivated by the COVID-19 pandemic, increased also temporarily to 100% of original gross wage.

15 January 2021

Decree Law 6-E/2021 of 16 January allows that during the state of emergency, the companies that are currently benefiting from extraordinary support to progressive recovery (created by Decree Law 46 -A/2020) and whose activities are suspended due to the closure of facilities and establishments by legislative or administrative determination of the government, may cease the ongoing support and subsequently opt for the simplified lay off scheme (created by Decree Law 10 -G/2020).

30 December 2020

The Resolution of the Council of Ministers no.114/2020 of 30 December sets the aim to promote the extension and strengthening of extraordinary support for the progressive recovery activity, extending its validity to the 1st semester of 2021, ensuring the payment of 100% of the remuneration of the workers covered up to the limit of three times the value of the mandatory minimum wage, maintaining the exemption of 50% of the social contributions on compensation for micro, small and medium-sized enterprises covered. It covers also members of the statutory bodies of companies exercising functions of management, with registration of social security contributions and having employees (point 7). In addition it foresees to launch, in the first half of 2021, an extraordinary incentive directed at micro-enterprises, based on the combination of financial support in the amount corresponding to twice the mandatory minimum wage for each employee, and company’s partial exemption from social security contributions in the first three months (point 8).

19 June 2020

Decree-Law 27-B/2020 of 19 June 2020 extends the extraordinary support for the maintenance of employment contracts in a business crisis situation and the respective transitional regime in line with the Resolution of the Council of Ministers no. 41/2020, of 6 June.

06 June 2020

The Resolution of the Council of Ministers no. 41/2020, of 6 June, that approved the Economic and Social Stabilisation Programme, extends the extraordinary support for the maintenance of employment contracts and establishes a transitional regime replacing the regime in force of ‘simplified layoff’ by a support to progressive recovery (2.2.1). It introduces also a one-off measure: the Stabilisation Complement to improve income of workers under layoff (2.3).

Use of measure

The quantitative information 'Indicadores COVID-19' published by the Strategy Planning Office of the Ministry of Labour, Solidarity and Social Security ( GEP/MTSSS ) refers to the number of workers employed by the companies that applied for the scheme, but not to the actual number of workers that benefited from the scheme.

Information on 7 April 2020: The simplified layoff support was requested by 40,000 companies, encompassing around 642,000 workers. In terms of sectors 24.2% are companies in the Accommodation and Food Services, 19.9% in Wholesale and Retail, 9.3% in Manufacturing Industry and 8.9% in Human Health and Social Support Activities.

Information on 6 June 2020: According to the information provided by the Resolution of the Council of Ministers no. 41/2020, of 6 June that approved the Economic and Social Stabilization Programme, the simplified layoff regime covered around 100,000 companies and 800,000 workers.

Information at 6 August 2020: The simplified layoff support was requested by 115,111 companies. In terms of sectors 22.4% are companies in the Accommodation and Food Services, 22.2% in Wholesale and Retail, 10.1% in Manufacturing Industry and 6.9% in Human Health and Social Support Activities. The total number of workers working in the companies covered by applications for simplified lay off 1,381,465 workers.

The coverage of workers per sector (for the companies covered by the applications) at 6 August 2020 was:

  • 17.5% in Accommodation and Food Services;
  • 17.9% in Wholesale and Retail;
  • 22.5% in Manufacturing Industry; and
  • 7.0% in Human Health and Social Support Activities.

The information published in October 2020 - accumulated data since the measure entered into force until it expired in 14 October 2020 - reported that 115,271 companies employing 1,369,239 workers requested this support.

The information published on 11 March 2021 - accumulated data since the renewal of the measure on 15 January 2021 until 2 March - reported that 55,987 companies employing 515,415 workers requested this support.

The information published on 2021 - accumulated data from 15 January to 7 May 2021 - reported that 58,362 companies employing 540,116 workers requested this support. Around 35% of the companies were from the in Accommodation and Food Services and 20% were from Wholesale and Retail.

The use of this measure by the companies in 2020 and 2021 was much above their use of the 'standard lay off regime' provided by the Labour Code, according to the information published by the Strategy Planning Office (GEP) of the Ministry of Labour, Solidarity and Social Security (MTSSS) in the Statistical Bulletin of December 2021. In 2020, 842 companies and 20,069 workers benefited from the 'standard regime' (of which 7,791 with reduced working time and 12,278 suspending the labour contract).

Target groups

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

Actors and funding

Actors Funding
National government
Trade unions
Employers' organisations
Public employment service
Social insurance
European Funds
National funds

Social partners

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

Trade unions Employers' organisations
Role Consulted Consulted
Form Consultation through tripartite or bipartite social dialogue bodies Consultation through tripartite or bipartite social dialogue bodies

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

  • Social partners jointly
  • Main level of involvement: Peak or cross-sectoral level

Involvement

Tripartite consultation involving the government, the trade union confederations CGTP and UGT and the employer confederations CIP, CCP, CTP and CAP at the Standing Committee for Social Concertation (Comissão Permanente de Concertação Social – CPCS). The measures provided for in Decree-Law no. 10-G / 2020 of 26 March are subject to regular assessment by the CPCS.

Views and reactions

Not available.

Sources

  • 15 March 2020: Portaria nº. 71-A/2020, Diário da República n.º 52-A/2020, 1º Suplemento, Série I de 2020-03-15 (dre.pt)
  • 26 March 2020: Decreto-Lei n.º 10-G/2020 - Diário da República n.º 61/2020, 1º Suplemento, Série I de 2020-03-26 (dre.pt)
  • 06 June 2020: Resolução do Conselho de Ministros n.º 41/2020 (data.dre.pt)
  • 19 June 2020: Decreto-Lei n.º 27-B/2020 (data.dre.pt)
  • 30 July 2020: Decreto-Lei 46-A/202 (dre.pt)
  • 08 August 2020: Monitorização COVID-19 MTSSS - Layoff - 08 August (www.gep.mtsss.gov.pt)
  • 30 December 2020: Resolução do Conselho de Ministros nº 114/2020
  • 15 January 2021: Decreto-Lei n.º 6-C/2021 (data.dre.pt)
  • 15 January 2021: Decreto-Lei n.º 6-E/2021 de 15 de Janeir (dre.pt)
  • 11 March 2021: Monitorização COVID-19 MTSSS - 11 Março 2021_Layoff simplificado (www.gep.mtsss.gov.pt)
  • 24 March 2021: Decreto-Lei n.º 23-A/2021 de 24 de Març (dre.pt)
  • 07 May 2021: Monitorização COVID-19 MTSSS - 7 Maio 2021 _Layoff simplificado (www.gep.mtsss.gov.pt)
  • 30 December 2021: GEP/MTSSS - Boletim Estatistico - Dezembro 2021 (www.gep.mtsss.gov.pt)

Citation

Eurofound (2020), Exceptional and temporary measure on layoffs to protect jobs in the context of the COVID-19 pandemic, measure PT-2020-13/297 (measures in Portugal), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/PT-2020-13_297.html

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