Lisbon, May 19, 2026 (Lusa) - The Portuguese government’s draft labour bill was published on the parliament’s website on Tuesday, after the cabinet meeting approved it last Thursday.
In a document of around 80 pages, the government outlines the rationale for amending the Labour Code, noting that the current legislation is rooted in traditional models of work and struggles to address the challenges of the digital age.
The government, led by Luís Montenegro, highlighted that the revision of labour legislation was one of the commitments made in the tripartite agreement on wage increases and economic growth for 2025–2028, signed in October 2024, and that the pursuit of the objectives set out in the government’s programme required a revision of labour legislation.
The government also noted that the bill submitted to parliament incorporates the partial transposition of EU Directive 2024/2831, passed by the European Parliament and the Council on 23 October 2024, which focusses on improving working conditions in platform work, saying that this transposition allows for the improvement of working conditions and the protection of personal data when working on digital platforms.
The draft labour bill includes over 50 amendments to the initial draft, 12 of which the UGT (Socialist-backed General Workers' Confederation) proposed, the labour minister said at the time.
Among the main measures, the government has retained the initial version of its draft bill regarding contract durations, providing for a return to a maximum of three years for fixed-term contracts and five years for open-ended contracts, despite the fact that during negotiations it had been suggested that the current durations (two and four years, respectively) might be maintained.
On the other hand, it repeals the rule prohibiting outsourcing for one year following redundancies, as provided in the initial draft bill presented on 24 July 2025.
Regarding the non-reinstatement of workers in cases of unfair dismissal, the provision remains unchanged from the government’s initial proposal, and is extended to small, medium and large enterprises, whereas under the current law it applies only to micro-enterprises (enterprises with up to nine employees) or where the individuals concerned hold administrative or managerial positions.
However, the government proposes to increase the compensation amount, raising the benchmark for its calculation from the current 30 days to 45-60 days annually.
With regard to the agreed TOIL (Time Off In Lieu), another measure trade unions heavily criticised, the bill establishes that they can be introduced through an express agreement between the employer and the worker in the absence of a collective bargaining agreement.
“Under the agreed TOIL scheme, the normal working hours may be increased by up to two hours daily, reaching 50 hours weekly, with a maximum increase of 150 hours annually, and a reference period not exceeding six months,” the draft labour bill stipulates.
At the end of the six-month reference period, if there is a credit balance in favour of the employee, the employer must, in accordance with the employee’s choice, grant the employee a period of compensatory rest corresponding to the total number of hours in the credit balance, to be taken by the end of the following month at the latest, or alternatively, pay the value of those hours with a supplement corresponding to the value of the first hour of overtime on a working day, to be settled with the current month’s pay, which is 25%.
At the same time, according to the government’s draft labour bill, the group-based TOIL established by referendum shall cease within one year of this law coming into force, unless, in the meantime, any event occurs that would terminate this form of TOIL.
JMF/MYAL // ADB.
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