AutorFranco Caiado Guerreiro & Associados
Cargo do AutorSociedade de advogados

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Given all the negative consequences of having a wide range of laws regulating labor rules in Portugal, a great effort was made to systematize all legislation and diplomas in one unified Code.

Since the new Labor Code entered into force in 2003, Portugal now has a single law regulating employment contracts and employees' issues.

The opportunity was taken to make some improvements, in particular, introducing flexibility on a wide range of specific issues.

The new Code attempts to address the needs of modern corporations, readjusting labor law to current market forces and stimulating productivity in order to keep up with the increasingly global economy.

3. 1 Forms of Employment Contract
1. Indefinite Term Contract

This is the main and general form of employment contract made in Portugal. Employer and employee do not preset a time limit to the contract and it can only be terminated under the terms set down by law.

2. Fixed Term Contract

These kinds of contract can only be entered into to fulfill a corporation's temporary need and only for the exact time that this need lasts. These agreements may be of definite, or indefinite fixed term. The extent of these contracts is in principle what the interested parties agree upon but there is a legal minimum of six months, except for a few special cases set out in the legislation.

Definite Fixed Term

Here, the contract stipulates a specific time period and terminates on completion of that period. However, such a contract may be renewed, up to a total maximum period of 3 years, after which the contract automatically converts into an indefinite term contract. Page 25

Indefinite Fixed Term

In this case, the employer and employee specify that the agreement should terminate with the occurrence of a specific event to take place at an uncertain date - for example, the return of an employee from maternity or sick leave, or the completion of a project. The contract continues in force until the event specified in the contract occurs. Again, the contract can be automatically converted into an indefinite term contract: this time if the contracted employee continues working more than 15 days after the specified event has occurred.

3. Rendering of Services Contract

This is a contract where one of the parties is required to supply the other with a result of its intellectual or manual work. In this case no working relation will bind the two parties.

This differs from employment contract rules in that the service supplier is not under a form of dependency or subordination to the other party - it is not an employer-employee but a customer-supplier relationship. The only commitment of service suppliers under such a contract is to provide assured outcomes from their actions, being free to organize and implement their work and strategies as they see fit in order to achieve these ends.

3. 2 General Rules on Hiring workers
1. Working hours

A normal period of a day's work has a maximum of 8 hours and cannot go beyond 40 hours per week. However, private or Collective Trade Union Agreements may raise these limits to 10 and 60 hours, respectively, without exceeding an average of 50 hours per week over a period of two months, excluding supplementary work due to unforeseeable causes.

Supplementary Work (Overtime)

Work carried out outside the normal working timetable is called supplementary work (i.e. overtime). It can only be used when an employer needs to respond to the occasional and transient circumstances of increasing work that does not justify the hiring of another worker.

The daily limit for supplementary work is legally set at a maximum of 2 hours. Medium and large corporations cannot exceed 150 hours, but micro and small enterprises can go up to 175 hours. However, even this limit may be raised by a Collective...

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