European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Labour Code, Article 366; Decree-Law 210/2015 of 25 September; Law 69/2013 of 30 August; Law 70/2013 of 30 August; Law 13/2023 of 3 April
In 2011, severance entitlements were reduced from 30 to 20 days pay per year of service. Law 69/2013 further reduced severance entitlements to a maximum of 12 times the individual’s base salary plus seniority pay or 240 times the statutory minimum wage (or 18 times the individual's base salary plus seniority pay in case of fixed-term or temporary contracts). Law 13/2023 of 3 April changes the calculation of the compensation.
As a result of these and prior changes, severance will generally be based on three different formulas for periods of service before, during and after the following dates:
The compensation cannot exceed 20 times the minimum national wage (€760 in 2023, total €15,200).
This refers both to individual and collective dismissal.
Additionally, Law 13/2023 of 3 April amends Labour Code in its articles 344 and 345 and establishes the amount of the compensation as a result of the termination of fixed-term contracts is increased to 24 days times the individual’s base salary plus seniority pay per each complete year of seniority.
The Compensation Fund (Fundo de Compensação do Trabalho) and the Guarantee Fund for Work Compensation (Fundo de Garantia de Compensação do Trabalho - FGCT) were extinguished since May 2023. They were used to partly finance severance payments and were applicable in situations of both individual and collective dismissals.
The new regulation is based on the 'Agenda for Decent Work' that was approved in the Assembly of the Republic, with favorable votes of the Socialist Party (PS) and abstentions of the Social Democratic Party (PSD), Right Party (Chega), Animals and nature Party (PAN) and Livre Party. The Left Bloc, the Liberal Initiative and the Portuguese Communist Party (PCP) voted against.
Eurofound (2015), Portugal: Severance pay/redundancy compensation, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/severance-payredundancy-compensation/portugal
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