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EU PolicyWatch

Database of national-level policy measures

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-2020-31/1278 Updated – measures in Portugal

Support to temporary reduction of the normal period of working time

Suporte à redução temporária do periodo normal de trabalho

Country Portugal , applies nationwide
Time period Temporary, 01 August 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 Heloisa Perista and Maria da Paz Campos Lima (CESIS) and Eurofound
Measure added 14 October 2020 (updated 17 November 2021)

Background information

Under the scope of the Economic and Social Stabilisation Program approved by the Resolution of the Council of Ministers no. 41/2020, of 6 June, the decree-law 46-A/2020 of 30 July creates extraordinary support for the progressive recovery of companies in a situation of business crisis, for the temporary reduction of the normal working period, with a view to maintaining employment. The extraordinary support article applies to employers of a private nature, including those in the social sector, who have been affected by the COVID-19 disease pandemic and who are, as a result, in a business crisis situation.

Content of measure

The extraordinary support applies to companies of the private sector and of the social sector, which are in a business crisis situation resulting from the COVID-19 pandemic. The diploma considers a business crisis (Article 3) when there is a break in invoicing equal to or greater than 40%, in the month immediately preceding the initial request for support or extension, compared with the same month of the previous year; or compared to the average of the two previous months. For those that started activity less than one year before, the break in invoicing compares to the average monthly between the beginning of the activity and the penultimate month before the initial request.

The working time reduction lasts for one month, but may be extended monthly while the Decree Law is in force (article 4).

Companies are allowed to reduce the working time depending of the level of business crisis and of the time of year (Article 5):

  • by 50% in August and September and by 40% in the last quarter 2020 - when the break in invoicing is equal to or greater than 40%;
  • and by 70% and 60% in the same periods of the year - when there is a break in invoicing equal to or greater than 60%.

During the reduction of the normal period of working time, the worker has the right to the wage corresponding to the hours worked and to a compensation for the hours not worked (Article 6). This compensation can be up to three times the statutory minimum wage (RMMG), in the amount of: two thirds of normal gross wage, in the months of August and September 2020 and four-fifths in the last quarter of 2020. If the value of these provisions is lower than the RMMG value, the compensation is increased to ensure it. The compensation is calculated in proportion of gross remuneration including: basic remuneration; monthly premiums; regular monthly allowances, bonus for shift work and night work; and meal allowance. The estimation of the compensation has into account the compliance with the statutory minimum wage.

The employer is entitled to financial support exclusively for the purpose of paying the compensation to workers. Social security supports 70% of the compensation, the employers are responsible for ensuring the remaining 30% (Article 7). The amount paid by Social Security is financed by the State Budget of the State. The support provided is subject to European funding the respective provisions of national law and the European Union being applicable to them (Article 17).

The measures provided for in this decree-law are subject to regular assessment by the social partners Standing Committee for Social Concertation (Article 18).

The PEES foresees that the budgetary amount covering this measure and prolongation of simplified layoff (when companies close by government determination) will be around €730 million (to be financed by the state budget + SURE).

Decree Law 90/2020 amends the extraordinary support for the gradual resumption of activity in companies in a situation of business crisis with a reduction of the normal working period: If the employer has a fall in turnover of 40% or more, the working time reduction can be as much as 50%; if the employer has a fall in turnover of 60% or more, the working time reduction can be as much as 70%. In situations where the working time reduction is higher than 60%, the employee's wage compensation is adjusted to ensure that he/she receives 88% of his/her gross salary. Employers with a fall in turnover of 75% or more can now reduce the working time in 100%. For these employers, the financial support provided by social security for the payment of employee compensation is 100% of the employee's salary.

Updates

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

13 August 2021

Decree Law 71-A/2021 of 13 August 2021 extends the support to the reduction of normal working period extend the support as long as restrictions on economic activity associated with the pandemic remain, such as rules on matters of opening hours, occupation or capacity of establishments or events, limitation to the movement of people in the national territory, or conditioning access to tourists. Regardless of the date of submission of the request for support, the employer can only benefit from this support until the end of the month the restrictive measures are in force by legislative or administrative decision. the employer has a duty to maintain in operation of the activity in all establishments, except in situations where the closure of departments and establishments is established by legislative or administrative determination within the scope of the COVID-19 disease pandemic.

06 July 2021

Decree Law 56-A/2021 of 6 July 2021 amended and extended in time the provisions of Decree Law 4 46 -A/2020, of 30 July 2020 establishing that in the case of a company with a billing break equal or greater than 75%, the reduction of the normal working time, per employee, may be maximum: up to 100% in the months of June, July and August 2021, up to a limit of 75% of the workers working for the company.

And up to 100% in the months of June, July and August 2021, for the employers in the sectors of bars, nightclubs, recreational parks and supply or assembly of events (an ordinance will define more specifically the classification of companies to cover).

12 May 2021

Decree Law 32/2021 of 12 May established that given the current pandemic context and the epidemiological reality experienced in Portugal, companies with a billing break equal to or greater than 75% can continue to reduce the normal working time of their workers up to a maximum of 100%, during the months of May and June 2021. However, in June, the referred reduction is limited to up to 75% of the workers working for the employer, unless their activity falls within the sectors of bars, nightclubs, recreational parks and events. Alternatively, the reduction of the normal working time may, in the month of June, be a maximum of 75% when it covers up to all employees working for the employer.

24 March 2021

Decree Law 23-A/2021 of 24 March extends the access to the provisions of Law 6-E/2021 of 15 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. See also case PT-2020-13/297 .

15 January 2021

On 15 January 2021, following the declaration of the state of emergency the regime was upgraded and prolonged by more six months (Decree Law 6-C/2021). The following provisions changed the previous measure:

Level of reduction of working time - in the case of a decrease of turnover equal to or greater than 25%, working time can be reduced by a maximum of 33%; when the decrease of turnover is equal to or greater than 40%, the reduction of working time can be a maximum of 40%; when the decrease of turnover is equal to or greater than 60%, the reduction of working time can be a maximum of 60%; when the decrease of turnover is equal to or greater 75%, the reduction of working time can be: up to 100% in the months of January, February, March and April 2021; and 75% in the months of May and June 2021.

In relation to employees compensation it represents four fifths of normal gross remuneration corresponding to hours not worked; but if it results in a monthly level lower than the employee's normal gross remuneration, the level of compensation is increased to the extent necessary to ensure normal gross remuneration, up to a cap of three times the minimum wage.

15 January 2021

Decree Law 6-E/2021 of 15 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) – see also case PT-2020-13/297 .

27 November 2020

Decree-Law no.101-A/2020, of 27 November added to Decree -Law no. 46 -A / 2020, of July 30, the Article 3-A which concerns 'Business crisis situation due to limitation of activity by government decision'. It applies to companies that already benefited from the support to temporary reduction of working time; but also to companies that did not, when their activity is limited by government decision. Basically, it gives companies more scope to reduce the level of the normal period of working time, having into account the level of fall in turnover. Companies can ask for support to the maximum limit of reduction of working time corresponding to the turnover fall which is a step above their actual turnover fall. For instance, for a company which turnover fall was equal or above 40% that only allowed working time reduction by 50%, working time reduction can be as much as 70%.

19 October 2020

Decree Law 90/2020, of 19 October amends the extraordinary support for the gradual resumption of activity in companies in a situation of business crisis with a reduction of the normal working period: If the employer has a fall in turnover of 40% or more, the working time reduction can be as much as 50%; If the employer has a fall in turnover of 60% or more, the working time reduction can be as much as 70%. In situations where the working time reduction is higher than 60%, the employee's wage compensation is adjusted to ensure that he/she receives 88% of his/her gross salary. Employers with a fall in turnover of 75% or more can now reduce the working time in 100%. For these employers, the financial support provided by social security for the payment of employee compensation is 100% of the employee's salary.

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.

The information published on 12 February 2021 (accumulated data since 1 August 2020 when the measured entered into force until the end of January 2021) reported that 19,121 companies employing 197,048 workers requested this support.

Around one month later, on 11 March 2021, 29,475 companies employing 299,369 workers requested this support (accumulated data on 2 March 2021).

According to information published on May 2021, 39,411companies employing 387,180 workers requested this support (accumulated data on 27 April 2021). In terms of sectors 24.8% of the companies are from Accommodation and Food Services; 22.3% from Wholesale and retail; and 10.1% from Manufacturing industry.

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
Company / Companies
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

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 measures provided for in this decree-law will be subject to regular assessment by the Standing Committee for Social Concertation (Article 18).

Views and reactions

Partially supportive.

The trade union confederations had, to a certain extent, a supportive reaction insofar the compensation rate concerning workers loss of income the reduction of the normal period of working time improved in comparison with the 'simplified layoff regime'. Also the level of loss of invoicing to entitle companies to reduce working time is higher than the level required in the simplified layoff regime (see case PT-2020-13/297 ).

The employer confederations did not support the measure. After the government announced the proposed measure in the tripartite Standing Committee for Social Concertation the 4 employer confederations CIP, CCP, CAP and CTP published a joint statement on 4 June 2020 under the title 'The simplified layoff has the days counted' in which they stand against the replacement of the 'simplified layoff' by the regime of working time reduction: '(...)When the first steps are taken to recover the activity, with a very high probability that it will experience advances and setbacks, it becomes absolutely essential the existence of flexible management instruments (…). Truncating these instruments, amputating one of the tools vital to their effectiveness - and the possibility of suspending employment contracts is, alongside the reduction of the normal working period, in the simplified layoff regime, a vector absolutely crucial - it will drastically increase the risk that what today is felt as extreme difficulty will become a real impossibility, in the immediate or very short term.'

Notice that the government decided to prolong only the 'simplified layoff' when companies remain closed as determined by the government as a confinement measure. For employer confederation the reduction of working time is not an effective measure.

Sources

Citation

Eurofound (2020), Support to temporary reduction of the normal period of working time, measure PT-2020-31/1278 (measures in Portugal), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/PT-2020-31_1278.html

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