End of Employment in Portugal
Capital
Lisbon
Official Language
Portuguese
Currency
Euro
Payroll cycle
Bi-weekly
Quick facts about Portugal
Bordered by Spain and the Atlantic Ocean, Portugal is quickly becoming one of Europe’s most important hubs for startups and tech. With an economy that keeps growing, Portugal is a popular destination for digital nomads and workers at major tech companies, including Microsoft, Amazon, and Google.
Employees can easily choose to end employment in Portugal. Employees must provide a written statement and are usually given 7 days to revoke the termination unless executed in front of a public notary.
Termination in Portugal
On the other hand, terminations of employment issued by the employer usually require a valid reason, as well as a clear disciplinary procedure. The severange package should include severance payments that equal 12 days of base salary for each year of service to the company.
Employers aren’t able to dismiss employees without a just cause. They must provide a notice period that corresponds to how long the worker has been with the company.
If the proper process isn’t followed (which usually takes a few weeks), then the termination is considered null and void.
Justified reason for termination include:
Illegitimate disobedience to lawful orders
Breach of rights of other employees
Critical productivity reduction
Breach or refusal to comply count decisions
Kidnapping, theft, or any crime related to essential human rights
Physical violence or insults in the workplace
Non-compliance with health and safety standards in the workplace
Unjustified absence that causes disruptions to the workplace or employer (5-10 successive absences)
Severe damage to employers materials
Repeated disinterest in performing job duties
Repeated conflict with coworkers
Other reasonable justifications for dismissal:
Redundancy or collective dismissals due to structural or technological changes
Expiration of an employment contract
Revocation
Collective dismissal for economic, structural, or technical reasons
Dismissal for inability to adapt
Dismissal when a disciplinary procedure has failed
Termination of the employment contract by the employee
Mutually agreed termination
Termination by the employee when business transfer will cause serious damage to them
Procedure for dismissal
The process and conditions for disciplinary dismissal are governed by Portuguese labor law.
Here's an overview of how disciplinary dismissal works in Portugal:
Grounds for Disciplinary Dismissal: An employer can initiate a disciplinary dismissal when an employee engages in serious misconduct, such as theft, fraud, violence, harassment, repeated insubordination, or other actions that substantially breach their employment obligations.
Due Process: Before proceeding with a disciplinary dismissal, the employer is generally required to follow a fair and transparent procedure, which includes:
Investigation: The employer should conduct a reasonable and impartial investigation into the alleged misconduct. This might involve collecting evidence, interviewing relevant parties, and considering the employee's response.
Notice of Allegations: The employer must notify the employee in writing of the allegations against them and provide an opportunity for the employee to respond and review their disciplinary file.
Disciplinary Hearing: If the investigation supports the allegations, the employer should hold a disciplinary hearing with the employee. The employee has the right to be accompanied by a representative or colleague during this hearing.
Decision: After considering the employee's defense and the investigation findings, the employer will decide whether to proceed with the disciplinary dismissal or impose a lesser disciplinary action.
Notice and Severance: If the employer decides to terminate the employment contract due to serious misconduct, the employee may be dismissed without advance notice or a severance payment, as the grounds for dismissal involve a breach of their responsibilities. However, this can vary depending on the specific circumstances and the severity of the misconduct.
Appeals: Employees have the right to appeal a disciplinary dismissal decision if they believe it was unjust or unfair. They can appeal to the labor court or other relevant authorities within a specific timeframe.
Employment contracts are considered severed as soon as the employer makes their decision and employees receive a receipt of the decision. Employees have 5 days to seek an injunction to suspend the decision and 60 days to file a petition with the Portuguese court.
Disciplinary procedures should be initiated within 60 days of the employer becoming aware of the offense or within 1 year of when the offense took place in the workplace.
Unfair dismissal
If an employee believes they were dismissed unfairly, they can challenge the decision through legal channels. The labor court assesses the grounds for dismissal, the adherence to proper procedures, and the overall fairness of the termination. If the court determines that the dismissal was unjust, it may order the employer to reinstate the employee or provide compensation. Employees are entitled to 15-45 days of their base salary as compensation from the employer if the courts find that they have been unfairly dismissed.
Redundancy in Portugal
Redundancy (layoffs) in Portugal, often referred to as "despedimento por extinção de posto de trabalho," occurs when an employer needs to terminate an employment contract due to economic, technological, or structural reasons that render the job position obsolete.
Here's a concise overview:
Grounds for Redundancy: In general, employers can initiate redundancy when there is a genuine need to reduce the workforce due to factors such as financial difficulties, technological advancements, reorganization, or closure of a business unit.
Notice and Consultation: Before implementing redundancy, employers are required to notify and consult with employee representatives or labor unions. This process allows for discussions about alternatives to redundancy, such as reassignment or retraining.
Selection Criteria: When selecting employees for dismissal due to redundancy, employers must use fair and objective criteria, such as seniority, skills, performance, and other relevant factors. Arbitrary or discriminatory selection is not allowed.
Advance Notice and Severance: Employees selected for redundancy are entitled to receive prior notice of termination, which varies based on their length of service. Additionally, affected employees are entitled to severance pay based on their years of service.
Collective Redundancy: In cases where a certain number of employees are being made redundant, defined by Portuguese law as a "collective redundancy," additional procedures and notifications to labor authorities and employee representatives are required.
Notice periods
Notice periods that employees are entitled to in Portugal depend on the employee’s length of service:
15 days for employees with less than 1 year of service
30 days for employees with 1-5 years of service
60 days for employees with 5-10 years of service
75 days for employees with 10+ years of service
Employee resignation in Portugal
Employees must inform their employee in a written letter if they want to leave their job and give the appropriate notice period:
6 months or less: 15 days of notice
6 months-2 years: 30 days of notice
2+ years: 60 days of notice
Notice periods also depend on the type of contract or collective bargaining agreement the employee is working under. Fixed-term employees must always give at least 15-30 days of notice. Short-term or indefinite contracts should give 30-60 days of notice before ending employment.
Union or high-level employees usually give 6 months of notice, depending on the stipulations set forth in their employment contract.
Employees who do not comply in whole or in part with the notice period must pay the employer compensation in an amount equal to base pay and seniority pay for the period in question. Employees who have a just cause for resigning based on employer neglect can provide a letter to the labor court requesting compensation.
Examples of just cause:
Salaries are consistently paid late by the company
Employers don’t follow the employment contract or disregard employees’ rights
Employers ignore health and safety measures
The employee is discriminated, harassed, physically, or emotionally harmed by the employer
Regardless of the reason for resigning, it is an employee's right to get paid for unused annual leave and accrued Christmas pay. The employee will also be entitled to unemployment subsidy but the amount depends on their salary levels and contributions profile.
Severance in Portugal
Employees are entitled to severance based on the Portuguese Labour Code. Severance should equal 12 days salary for each year of work with a maximum limitation of:
The salary used as a basis to calculate the compensation may not be higher than $12,700 EUR (20 times the national minimum wage)
The global amount of compensation may not be higher than 12 times the monthly salary or $152,400 EUR (240 times the national minimum wage)
For a partial year, compensation is calculated proportionally
Employees have the right to negotiate more time for this, especially in cases of mass lay-offs.
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