Working in Portugal - End of Employment

The contract of employment may cease due to:

• lapse
• termination by agreement
• cancellation or notice of termination

When the contract of employment ceases the employer must provide the employee with a certificate of employment stating the dates of commencement and termination and the post or posts occupied, as well as other documents for official purposes, particularly for social security.

Lapse

The contract of employment lapses in the following circumstances: 

• when its term comes to an end
• when it becomes absolutely and permanently impossible for the employee to perform their work or for the employer to receive it as a result of a supervening event
• when the employee retires

The contract of employment lapses when an individual employer dies or the employing legal entity is dissolved without the enterprise or establishment being transferred. In this case the employee is entitled to compensation that may not be less than three months' basic pay and continuous service bonuses. The legal declaration of the employer's insolvency does not lead to termination of contracts of employment.

Termination by agreement

The contract of employment may be terminated by means of an agreement between employer and employee, provided the agreement is set down in a document signed by both parties showing the date of signature and commencement of its effects. The effects of the agreement may cease on the employee's initiative by the seventh day following the date of signature by means of a written communication, in which case the employee must hand over the full amount of the value of the monetary compensation that may have been paid in compliance with the agreement, or due to termination of the contract of employment.

Termination on the employer's initiative

Misconduct by the employee, the seriousness and consequences of which make it immediately impossible in practice to continue the employment relationship, constitutes just cause for dismissal.

The following conduct may represent just cause for dismissal: 

• refusal to obey superiors
• infringement of the rights and guarantees of the enterprise's employees
• repeated provocation of disputes
• repeated lack of commitment in fulfilling duties
• serious harm to the enterprise's economic interests
• false statements regarding the justification of absence
• five consecutive or 10 separate unjustified absences from work
• violation of occupational hygiene and safety regulations
• physical violence, insults or other abuse directed at the enterprise's employees
• false imprisonment and in general offences against the freedom of the above-mentioned persons
• failure to comply with legal or administrative decisions
• abnormally reduced productivity

Termination, collective dismissal

Termination of contracts of employment by the employer and put into effect simultaneously or within a period of three months, and covering at least two or at least five employees for economic, structural or technological reasons. 

Employees must be notified in writing with no less than 60 days' notice of the decision to carry out this dismissal, with express reference to the reasons for it. 

Employees are entitled to compensation corresponding to one month's basic pay and continuous service bonuses for each full year's length of service. Such compensation may not be less than three months' basic pay and continuous service bonuses.

Termination, individual redundancy

Individual redundancy constitutes justified dismissal for economic, market, structural or technological reasons relating to the enterprise.

This can take place only when the following circumstances prevail cumulatively: 

• the reasons indicated are not culpably imputable to the employer or the employee
• it is impossible in practice for the employment relationship to continue
• no fixed-term contracts exist for the tasks corresponding to the post that has been eliminated
• the scheme provided for collective dismissal does not apply
• the compensation owed is made available to the employee

Termination, dismissal for failure to adapt

The employee's inability to adapt to the job constitutes grounds for dismissal in the following situations: 

• continued reduction in productivity or quality
• repeated breakdowns in the resources allocated to the job
• risks to the employee's health and safety, or that of other employees or third parties

The employee is also deemed to be unable to adapt when, in the case of technically complex or managerial posts, previously established objectives which have been formally accepted in writing have not been met.

Termination on the employee's initiative

The employee may immediately terminate the contract if what Portuguese Law classifies as 'just cause' occurs. The declaration of termination must be set down in writing, with a summary of the grounds for it, within 30 days of the facts becoming known.

Just cause for the employee to terminate the contract is deemed to be the following conduct by the employer: 

• wrongful or other failure to pay wages on the due date
• wrongful infringement of the employee's legal guarantees or guarantees regulated by collectively agreed processes
• the imposition of an unfair sanction
• wrongful failure to ensure occupational safety, hygiene and health conditions
• wrongful harm to the employee's economic interests
• offences against the employee's physical or moral integrity, freedom, honour or dignity, punishable by law, and practised by the employer or his legitimate representative

Notice of termination

The employee may give notice of termination of the contract, irrespective of just cause, by means of a written communication sent to the employer with at least 30 or 60 days' notice, according to whether the employee has less than two years' or more than two years' length of service respectively. The instrument of collective labour regulation and contract of employment may extend the period of notice by up to six months for employees in managerial or administrative posts, or who have duties of representation or responsibility.

An employee who intends to give notice of termination of a fixed-term contract before the end of the term agreed must inform the employer with at least 30 days' notice if the contract has a duration equal to or greater than six months, or with 15 days' notice if the duration is shorter. If the employee does not comply, either totally or in part, with the statutory period of notice, he must pay the employer an indemnity of a value equal to the basic pay and continuous services bonuses corresponding to the period of notice not given.

During the probationary period the contract may be terminated by either the employee or the employer.

Useful information:

• Código do Trabalho [Labour Code], Law No 99/2003 of 27 August
• IDICT – Instituto do Desenvolvimento e Inspecção das Condições de Trabalho [Institute for the Development and Inspection of Working Conditions]
  Praça de Alvalade, 1 - 1749-073 Lisbon
  Tel: 217 924 500
  Fax: 217 924 597

Text last edited on: 12/2004

Source: European Union
© European Communities, 1995-2007
Reproduction is authorised.