End of employment in Portugal

Under Portuguese labour laws, there’s a specific procedure that employers must follow to terminate an employee’s contract. Employee termination in Portugal is usually only possible with just cause, and the employer almost always has to give notice to the employee according to how long they have been employed.

Valid reasons for employment termination in Portugal

In some cases, an employer and an employee may mutually agree to terminate an employment contract. In this case, they must sign a termination agreement, and the employee has seven days to revoke their decision.

If there is no mutual agreement, the employer must have a good reason for terminating the employee’s contract. Valid reasons for employment termination in Portugal include the employee’s behaviour or performance. This is sometimes referred to as ‘termination for just cause’. For example, an employer may terminate an employee’s contract if they:

• Disobey orders given by superiors
• Fail to observe health and safety rules
• Lie to justify their poor performance
• Cause serious harm to the company’s finances
• Repeatedly cause conflicts with other employees

Other justifiable reasons for employment termination in Portugal include:

• Redundancy
• Expiration
• Revocation
• Collective dismissals
• Dismissal for inability to adapt
• Dismissal for disciplinary grounds

Process for disciplinary dismissals in Portugal

In the case of disciplinary dismissals, an employee doesn’t have to pay severance pay or give the employee notice. However, they must follow a specific procedure. Dismissal is the last step in this process, and it is in effect as soon as the employer informs the employee of their formal decision to end their employment.

The process for disciplinary dismissals in Portugal is made up of three stages:

1. Accusation: The employer gives the employer a written warning, clearly stating their intention to dismiss the employee and the reason why they are being dismissed.
2. Defence: The employee has the opportunity to respond to the accusation in writing. They may involve employee representatives, who can issue a non-binding opinion on the dismissal that employers must take into consideration.
3. Decision: After considering the employee’s defence, the employer gives a detailed written response stating their formal decision to dismiss the employee.

After receiving a dismissal notice, employees in Portugal have five days to seek an injunction to suspend the dismissal and 60 days (two months) to challenge it in court. Employers must initiate dismissal proceedings within 60 days of becoming aware of the wrongdoing and within one year of the event taking place.

Unfair dismissal in Portugal

Employees in Portugal who feel they have been unfairly dismissed can file a claim with the labour court to challenge the dismissal. If the employer is found not to have followed the correct procedures or doesn’t have a valid reason for dismissal, the employee is entitled to the salary they would have received since being dismissed. They can also claim compensation for damages amounting to between 15 and 45 days’ salary, plus a seniority bonus for each year worked. Employees can also choose to be reinstated to their former position.

Collective redundancies in Portugal

There are specific rules that apply to collective dismissals in Portugal. Collective dismissal is defined as five or more employees being dismissed within three months (or two employees for companies with less than 50 employees). An employer must have a valid reason for proceeding with a collective dismissal, such as:

• One of more sections of the company closing down
• The need to reduce the number of employees for market, structural, or technological reasons