Investor's Guide - Labour System - Employment Contract

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1.4 Types of Employment Contracts


1.4. Types of Employment ContractsUnder the Portuguese labour law, indefinite employment is the general rule as far as hiring is concerned (despite being advisable, in many situations, to enter into written agreements). Fixed and unfixed-term employment contracts constitute exceptions to this rule (even if this type of contracts is widely used in Portugal).


Term employment contracts are generally admitted in order to satisfy temporary working needs, such as the replacement of other employees or exceptional workforce demands, or to undertake employment policies (such as the hiring of long-term unemployed or first-time jobseekers) and the launch of new companies or undertakings.


Fixed-term contracts may only be renewed three times and the total duration may not exceed, in general, three years (18 months and two years are also predicted). Unfixed-term employment contracts may not exceed six years.


A new labour law regarding this matter has recently entered into force (“Law No. 76/2013 of November 7) allowing, for the contracts that reach their maximum length or number of renewals until November 8 of 2015, the increase of the length of fixed-term employment contracts by an additional period of up to 12 months, providing two more renewals in addition to the three already admitted.


Each renewal has a minimum length of 1/6 of the maximum duration of the fixed-term employment contracts, or its effective duration, if this one is lower.


The fixed-term contracts renewed under this regime cannot be in execution after December 31 of 2016.


If one of the referred limits is exceeded, the fixed term employment contract will be converted into an indefinite employment contract.


Term contracts might be judicially converted into contracts of indefinite duration when, for example, the motive for the hiring is invalid or judicially unproved or it has exceeded their maximum duration or renewals.




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