Usually, the end of the year is synonymous with new legislation, particularly in the areas of labour and social security. Below, we have listed the most relevant amendments published during November and December.

UPDATE OF  NATIONAL MINIMUM WAGE

Decree-Law No. 107/2023, of 17 November updated the amount of the National Minimum Wage.

Thus, as of January 1, 2024,  the national minimum wage in Portugal mainland is increased to € 820.00.

This update has several impacts notably, in the calculation of the maximum limits of compensation for termination of employment contracts by collective redundancy or elimination of job position, as well as in the minimum amount of the traineeship allowance.

UPDATE OF  SOCIAL SUPPORT INDEX

Executive Order No. 421/2023, of 11 December updated the amount of the social support index for 2024, to € 509,26.

The social support index is relevant, among other, to calculate the basis for social security contributions of independent employees and board members of as well as reference to the maximum amount of unemployment benefit.

The social support index update is effective as of January 1, 2024.

STATUTORY AGE OF RETIREMENT

Executive Order No. 414/2023, of 7 December established the statutory age for retirement pension in 2025 to 66 years and 7 months.

On the other hand, the sustainability factor applicable to the calculation of retirement pensions under the general Social Security system to be applied in 2024 is set at 0.8420. In practical terms, the application of this factor is equivalent to a 15.8% penalty to the amount of the early retirement pension, increasing the 13.83% penalty that was applied in 2023.

UPDATE OF PENSIONS FOR LABOUR ACCIDENTS

Executive Order No. 423/2023, of 11 December updated by 6% the amount of pensions for permanent disability and death resulting from work related accidents.

This update is effective as of January 1, 2024.

INCENTIVE FOR RETURN TO WORK OF LONG TERM UNEMPLOYED INDIVIDUALS | LIMITATION OF  EMPLOYER'S LIABILITY IN CASES OF TERMINATION BY AGREEMENT | EXTENSION OF PROTECTION IN UNEMPLOYMENT TO VICTIMS OF DOMESTIC VIOLENCE

The Decree-Law No. 113/2023, 30 November established an extraordinary incentive aimed to the return to work of long-term unemployed individuals, i.e. beneficiaries who have been receiving unemployment benefit for more than 12 months.

These beneficiaries are now entitled to accumulate a fraction of the unemployment benefit with personal income, arising from of the execution of a full-time employment contract (permanent, fixed-term or uncertain with an actual or foreseeable duration of more than 12 months), upon acceptance of a job offer from the public employment and training services or by their own means.

Cumulation is allowed as long as the salary is not higher than the reference remuneration of the unemployment benefit, being its amount reduced as of the 13th month of the respective period of duration, depending on the type of employment contract.

This incentive is available until December 31, 2026, and each beneficiary is entitled to requested it once.

Decree-Law No. 113/2023 of 30 November also amends the unemployment benefit regime, namely in the following matters:

a)    Limitation of the employer's liability for payment to the Social Security of the unemployment benefit when termination by agreement do not comply with the legal requirements notably when the quota of eligible termination agreements is exceeded. The employer is now obliged to pay only the amount of the benefit effectively paid to the beneficiary and not, as up until now, the entire initial period of unemployment benefit (irrespective of the amount effectively received by the beneficiary);

b)    Extension of involuntary unemployment situations to include those resulting from termination of the employment contract by employees victims of domestic violence. This statute will also allow access to unemployment benefit in the case of independent employees holding a business activity, independent employees economically dependent of a single contracting entity and board members.

These amendments are in in force since December 1, 2023.

WORK COMPENSATION FUND (“FCT”) AND  WORK COMPENSATION GUARANTEE FUND (“FGCT”)

As part of the Agenda for Dignified Work, as a consequence of the suspension of contributions for FCT and FGCT, implementing the changes set out in last May's revision of labour legislation, Decree-Law No. 115/2023, of December 15, now amends the FCT and FGCT legal regimes.

Regarding the FCT, we highlight the following amendments:

·       Reconversion of the FCT to a closed fund composed by the balance of the employers' global accounts existing on 01.05.2023;

·       Extinction of the obligation to join and pay contributions, which was already been suspended since 01.05.2023;

·       Reformulation of the objectives of the FCT: the amounts of each employer's account can now be used, in respect to every employees, to (i) housing support, (ii) support investments with kindergarten and canteens and (iii) funding qualification and certified training. The objective of ensuring the effective receipt of 50% of the severance pay for employees included in the FCT until 01.05.2023 remains applicable;

·       The amounts of the FCT accounts can be used by employers until 31.12.2026, after which it is foreseeable that the FCT will be extinguished.

Regarding FGCT, we highlight the following changes:

·       It has now the purpose previously assigned to FCT: ensure employees’ right to be paid 50% if the compensation for termination of  employment contracts (includes any contracts entered into on or after October 1, 2013);

·       The employee's registration is now communicated automatically by the Social Security to the FGCT upon completion by the employer of the notification of admission to Social Security;

·       The amount of the employer's contributions to the FGCT is equivalent to 0.075% of the base salary and seniority allowance due to each employee (the update of the respective amounts is communicated to the FGCT by the Social Security authorities);

·       Payments from FGCT to employees are taxed under the terms foreseen in Personal Income Tax Code to the compensation for termination of employment contracts;

·       The obligation of registration with the FGCT as well the obligation to pay the respective contributions are suspended until 31.12.2026.

These changes are effective as of on January 1, 2024.

On same date, any pending administrative misdemeanor proceedings and executive actions for collection of outstanding contributions to the FCT, and interests for delay payment are dismissed and closed .