Termination of Employment Contracts in Portugal

1. Grounds for Termination

Contracts of employment may come to an end due to: expiry; dismissal by the employer; on the employee’s own initiative (terminating the contract or giving notice) and mutually agreed termination.

2. Termination by the Employee

The employee may immediately terminate the contract in cases of what Portuguese Law qualifies as “fair cause”, depending only on the notification of the employer of said intention.

3. Termination by the Employer

Termination of open ended employment contracts cannot be made by the employer outside a “fair cause” scenario.

Terminations under collective or individual redundancy files, fixed term contracts’ expiry and termination of contracts under a commission of services require the payment of a compensation for the termination.

4. Severance Payment

The legal minimum of a severance pay connected with the termination of an employment contract entered into today would be calculated taking into consideration 12 days of salary (basic salary plus seniority salary accruals) per year of seniority.

5. Unfair Dismissal

In case of wrongful terminations, employees are entitled to launch legal proceedings to obtain the annulment of the employer’s termination decision. Depending on the type of procedure which led to the termination of the contract, different legal proceedings and deadlines may apply.

6. Void Dismissal

Should the termination decision be declared null and void, in principle, the employee will be entitled to be reinstated and continue providing work under the employment contract. Should the reinstatement of the employee be impossible, or in cases where employers oppose such reinstatement (when applicable), the employee shall be entitled to a compensation for the unlawful termination.

For more information on these articles or any other issues involving labour and employment matters in Portugal, please contact Morais Leitão, Galvão Teles, Soares da Silva & Associados
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