Dismissal due to business reasons in Portugal
| Autor | Catarina de Oliveira Carvalho |
| Cargo | Universidade Católica Portuguesa, CEID-CRCFL ? Católica Research Centre for the Future of Law, Faculdade de Direito ? Escola do Porto |
| Páginas | 61-74 |
IUSLabor 1/2018
DISMISSAL DUE TO BUSINESS REASONS IN PORTUGAL
Catarina de Oliveira Carvalho
Universidade Católica Portuguesa, CEID-CRCFL – Católica Research Centre for the
Future of Law, Faculdade de Direito – Escola do Porto
Introduction
In Portugal, the main principles concerning the termination of the employment contract
are embodied in the Constitution. According to article 53 of the Portuguese Constitution
(Job security), “Workers are guaranteed job security, and dismissal without fair cause or
for political or ideological reasons is prohibited”. Hence, a termination of the contract
by the employer, namely a dismissal, always requires a cause, which might be either
subjective or objective. The objective cause concerns mainly business reasons.
The Labor Code contemplates three different situations of termination of the
employment contract that can be based on business reasons: i) collective redundancy; ii)
dismissal by extinction of the work post (despedimento por extinção do posto de
trabalho); iii) expiry (caducidade) of the employment contract due to the total and final
closing of the company.
The 2003 Labor Code expanded the expiry of the labor contract substantially and, at the
same time, facilitated collective redundancies significantly, an option that the 2009
Labor Code has not altered.
As a matter of fact, the present Portuguese labor law system is something of a paradox,
since it provides a rather strong protection of the employee against disciplinary
dismissals but has much less demanding requirements when collective redundancies are
at stake – it is therefore rather easy to get rid of an unwanted employee, simply by
including them in a collective dismissal. Simultaneously, it is generally considered
easier and safer for the employer to go for a collective redundancy rather than a
dismissal by extinction of the work post.
The economic and financial crisis led the Portuguese State to request financial
assistance from the European Commission, the European Central Bank and the
International Monetary Fund (the so called “Troika”), which was granted on May 2011
under the terms of the European Financial Stabilization Mechanism. In exchange, this
required a commitment to a three-year austerity plan laid out in the Memorandum of
Understanding on Specific Economic Policy Conditionality (MoU). The MoU
prescribed several labor market reforms in a broad group of areas, including
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