Portugal: Government Broadens Fight on Undeclared Employment

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By Brett Allan King

The Authority for Work Conditions (ACT) and the public prosecutor will have additional authority to investigate employment relationships disguised as contract, internship, or volunteer work under Law 55/2017, effective Aug. 1.

While it is now the responsibility of workers to challenge illegal employment relationships, Law 55/2017's amendments to articles of the Labor Procedure Code and of Law 107/2009 on processing labor and social security offenses (Decree-Law 480/99) give ACT inspectors power to investigate employment relationships and demand correction of those they deem illegal. Following notification, employers will have 10 days to regularize employment or challenge the inspector's ruling.

If after 10 days the worker's situation isn't regularized or the inspector's ruling successfully challenged, the ACT will provide evidence to the Public Ministry Service (Ministério Publico) to compel recognition of the existence of a job contract through a labor court near the workplace in question.

The law specifically prohibits employers from terminating a challenged employment relationship until the appropriate labor court has reached a decision.

“This new precautionary procedure for suspension of dismissal will be a quick-working mechanism,” Nídia Horta, a lawyer at Albino Jacinto & Associados in Lisbon, told Bloomberg BNA by telephone July 21, calling it “the most significant change in this law.”

‘Green Receipts'

A particular target of the new law is the use of fraudulent “green receipts,” which exempt employers from paying holiday and sick leave and from making social security contributions, liabilities the employee generally picks up under these circumstances.

Horta does not expect the new law to end this practice and expressed general dissatisfaction with the extent of the reform.

“To be honest, I'm a bit disappointed because I expected more,” Horta said. “The whole point of this law was to try and reinforce worker guarantees, yet it has no immediate obligation whatsoever for employers.”

Law 55/2017 was approved May 19 by the ruling Socialists and their leftist coalition partners but opposed by conservative opposition parties.

To contact the reporter on this story: Brett Allan King in Madrid at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

The full text of Law 55/2017 is available here, of law 107/2009 here, and of Decree-Law 480/99 here, all in Portuguese.

For more information on Portuguese HR law and regulation, see the Portugal primer.

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