Overview: Types of Employment Termination
Portuguese law recognizes eight distinct forms of employment termination, each governed by specific legal requirements and procedures. Understanding which type applies to your situation determines your rights, obligations, and potential compensation.
The Eight Termination Categories
- Termination by mutual agreement (revogação por acordo) - Employer and worker mutually consent to end the relationship
- Termination by worker with notice (denúncia pelo trabalhador) - Worker resigns with advance notice
- Termination by worker without notice (resolução pelo trabalhador) - Worker immediately terminates due to employer's serious breach
- Collective dismissal (despedimento coletivo) - Employer dismisses multiple workers for economic reasons
- Dismissal for redundancy/position extinction (despedimento por extinção de posto de trabalho) - Employer eliminates specific position
- Dismissal for unsuitability (despedimento por inadaptação) - Employer dismisses worker who fails to meet performance requirements
- Dismissal for just cause (despedimento com justa causa) - Immediate dismissal for serious misconduct
- Expiry of fixed-term contract (caducidade) - Contract reaches its predetermined end date
Each type involves different parties initiating termination, different procedural requirements, and different compensation entitlements. The remainder of this guide examines each category in detail.
Termination by Mutual Agreement
Revogação por acordo allows employers and workers to end the employment relationship by mutual consent at any time. This provides flexibility for both parties but requires careful consideration of terms.
Legal Requirements
Termination by mutual agreement must meet specific requirements under Articles 349-351 of the Código do Trabalho:
Written Agreement Required:
The agreement must be in writing and clearly specify the termination date. Verbal agreements have no legal effect for employment termination.
7-Day Withdrawal Period:
Workers have seven calendar days after signing to withdraw from the agreement without penalty. This cooling-off period protects workers from pressure or hasty decisions. The withdrawal must be communicated in writing to the employer.
Negotiable Terms:
The parties can negotiate compensation, notice periods, and other terms. Portuguese law does not mandate specific compensation for mutual termination, making negotiation important.
Practical Considerations
Benefits:
- Flexibility for both parties to agree on terms
- Clean separation without contentious procedures
- Potential to negotiate favorable compensation or references
- Avoids formal dismissal procedures
Cautions for Workers:
- Read terms carefully before signing - you may be waiving certain rights
- Consider negotiating compensation, especially if your employer initiated the conversation
- Use the 7-day withdrawal period to consult with legal counsel if needed
- Understand that signing ends your employment relationship once the withdrawal period expires
Workers should never feel pressured to sign mutual termination agreements. If your employer suggests mutual termination but you don't agree, they must follow formal dismissal procedures with associated protections and compensation requirements.
Resignation by Worker
Workers in Portugal have the right to resign from employment by providing advance notice. This section covers normal resignation with notice, distinguishing it from immediate resignation (covered in the next section).
Notice Periods
Article 400 of the Código do Trabalho establishes mandatory notice periods based on length of service:
30 Days Notice:
Workers with less than two years of service must provide 30 calendar days' written notice.
60 Days Notice:
Workers with two years or more of service must provide 60 calendar days' written notice.
These notice periods give employers time to find replacements and ensure business continuity. The notice period begins the day after the employer receives your written resignation.
Resignation Procedure
Written Form Required:
Resignation must be submitted in writing. While no specific format is required, your resignation letter should clearly state:
- Your intention to resign
- The effective termination date (respecting required notice period)
- Your signature and date
Employer Cannot Refuse:
Your employer cannot refuse your resignation. Employment relationships in Portugal are voluntary, and workers have the constitutional right to leave employment.
Working Through Notice:
You're expected to work through the notice period unless you and your employer agree otherwise. If you fail to work the notice period without agreement, your employer may claim compensation for damages, though this is relatively uncommon.
No Compensation Requirement
Workers resigning with proper notice have no legal obligation to pay compensation to employers. This applies even if you're leaving shortly after starting or during a busy period.
Accrued Entitlements
When you resign, you're entitled to payment for:
- All accrued unused vacation days
- Pro-rated vacation subsidy (subsídio de férias)
- Pro-rated Christmas subsidy (subsídio de Natal)
- Any outstanding wages, overtime, or other compensation
These payments must be made by your final working day or within the payment cycle following termination.
Resignation Without Notice by Worker
Portuguese law allows workers to terminate employment immediately without notice when employers commit serious breaches. This is fundamentally different from standard resignation and provides workers with both immediate exit and compensation rights.
Legal Basis: Resolução pelo Trabalhador
Articles 394-395 of the Código do Trabalho permit workers to terminate immediately for "just cause" on the employer's part. This mirrors the employer's right to dismiss for just cause but from the worker's perspective.
Grounds for Immediate Termination
Workers can resign immediately when employers commit serious violations including:
Financial Violations:
- Non-payment of salary
- Persistent delays in salary payments
- Failure to make social security contributions
Rights Violations:
- Serious violation of worker's fundamental rights
- Application of illegal sanctions or disciplinary measures
- Forcing worker to perform illegal tasks
- Significant unilateral modification of working conditions without consent
Safety and Dignity:
- Violence, threats, or serious harassment in the workplace
- Failure to provide safe working conditions
- Failure to provide required health and safety equipment
- Discriminatory treatment or harassment
Consequences and Compensation
When workers successfully establish just cause for immediate termination:
No Notice Period:
You can leave immediately without working any notice period.
Compensation Entitlement:
You're entitled to compensation equivalent to dismissal compensation - the same amount you would receive if your employer had dismissed you without just cause. This typically equals 15-45 days of salary per year of service, with a minimum of three months' salary.
Accrued Entitlements:
You receive all accrued vacation, subsídios (Christmas and vacation subsidies), and outstanding wages just as with normal resignation.
Procedure and Risk
Written Communication:
Communicate your immediate termination in writing within 30 days of becoming aware of the facts justifying termination. Specify the grounds clearly and preserve evidence supporting your claim.
Burden of Proof:
If your employer disputes the termination, you must prove just cause in labor court. The court will examine whether the employer's conduct was serious enough to justify immediate termination.
Significant Risk:
If the labor court finds you lacked just cause for immediate termination, you may be liable to compensate your employer for failing to provide proper notice. Given this risk, immediate resignation without notice should only be pursued when you have clear, documented evidence of serious employer breaches.
Collective Dismissal
Despedimento coletivo occurs when employers terminate two or more workers within a three-month period for economic, market, structural, or technological reasons unrelated to individual worker performance.
Legal Grounds
Collective dismissals must be justified by one or more of these reasons under Articles 359-366 of the Código do Trabalho:
Economic Reasons:
Financial difficulties threatening business viability
Market Reasons:
Decline in demand, changes in competition, market conditions requiring workforce reduction
Structural Reasons:
Business reorganization or efficiency improvements
Technological Reasons:
Automation, implementation of new technology reducing workforce needs
The employer must provide concrete evidence supporting these justifications. Vague claims without documentation are insufficient.
Strict Procedural Requirements
Collective dismissals follow a rigorous multi-step process:
Step 1: Written Communication
Employer must provide written communication to:
- Workers' representatives (or directly to workers if no representatives exist)
- Ministry of Labour (Ministério do Trabalho, Solidariedade e Segurança Social)
This communication must include:
- Detailed economic/structural justification
- Number of workers to be dismissed
- Professional categories affected
- Selection criteria
- Proposed implementation timeline
- Proposed compensation
Step 2: Consultation Process
Workers' representatives (or workers) must be consulted in good faith negotiations for minimum five days. The consultation must allow meaningful discussion of:
- Whether dismissals are necessary
- Possibility of alternatives (reduced hours, voluntary departures)
- Selection criteria
- Mitigation measures
Step 3: Objective Selection Criteria
Employers must use objective, non-discriminatory criteria for selecting workers. Criteria might include:
- Skills and qualifications needed for remaining positions
- Performance evaluations (if properly documented)
- Length of service (considering priority retention requirements)
The criteria cannot target individuals based on protected characteristics (age, gender, disability, union membership, etc.).
Step 4: Priority Retention Categories
Certain worker categories must receive priority for retention when selection criteria are otherwise equal:
- Workers with dependent children
- Disabled workers
- Workers with longer service
- Workers nearing retirement age
- Single parents
Step 5: Individual Termination Notices
Each affected worker receives written notice specifying:
- Grounds for dismissal
- How selection criteria were applied to their situation
- Effective termination date (60 days minimum from notice)
- Compensation calculation
Step 6: Compensation Payment
Compensation must be paid before termination date or within 30 days maximum.
Compensation for Collective Dismissal
Workers with one year or more of service receive:
Calculation Formula:
12 days of salary per year of service, with a minimum of three months' salary
Salary Basis:
Calculated on base salary plus regular supplements (excludes occasional bonuses)
Payment Timing:
Must be paid before termination effective date or within 30 days
Example:
Maria has worked 8 years earning €2,000 per month base salary.
- Calculation: (12 days × 8 years) = 96 days of salary
- Daily rate: €2,000 × 12 months / 365 days = €65.75 per day
- Total compensation: 96 days × €65.75 = €6,312
Since this exceeds the 3-month minimum (€6,000), Maria receives €6,312.
Challenges to Collective Dismissal
Workers can challenge collective dismissals in labor court within 60 days if:
- Economic justification is insufficient or fabricated
- Procedural requirements were violated
- Selection criteria were discriminatory or improperly applied
- Priority retention rules were ignored
- Consultation process was inadequate
Labor courts scrutinize collective dismissals closely. Employers must provide substantial documentary evidence of economic necessity.
Dismissal for Redundancy (Position Extinction)
Despedimento por extinção de posto de trabalho applies when an employer eliminates a specific position for economic, market, structural, or technological reasons. This differs from collective dismissal in affecting only one worker's position.
Justification Requirements
Under Articles 367-372 of the Código do Trabalho, employers must prove:
Position Genuinely Eliminated:
The position must actually cease to exist. Employers cannot simply transfer duties to another worker under a different job title.
Valid Business Reasons:
Market conditions, structural changes, or technological advances genuinely eliminating the need for the position.
Documentary Evidence:
Employers must provide concrete evidence of the business changes necessitating position elimination.
Procedural Requirements
Written Notification:
Employer provides written notice to the worker specifying:
- Grounds for position extinction
- Why the specific position is being eliminated
- Evidence supporting the decision
- Compensation calculation
Worker's Right to Respond:
The worker has an opportunity to contest the grounds, question whether the position is genuinely eliminated, or present alternative solutions.
60-Day Notice:
Workers receive 60 days' advance notice or salary in lieu of notice.
Compensation
Compensation is identical to collective dismissal:
- 12 days of salary per year of service
- Minimum: three months' salary
- Payment before termination date or within 30 days
Worker Protections
Workers can challenge position extinction dismissals if:
- The position continues under a different name or is reassigned
- Duties are distributed to other employees
- Employer hires for similar position shortly after dismissal
- Economic justification is insufficient
Courts require employers to prove the position was genuinely eliminated, not merely restructured to remove a specific worker.
Dismissal for Unsuitability
Despedimento por inadaptação permits employers to dismiss workers who fail to adapt to position requirements despite training and support. This is among the most difficult dismissals to execute successfully.
Legal Requirements
Articles 373-380 of the Código do Trabalho establish stringent requirements:
Minimum Employment Period:
Worker must have been in the position for at least six months. This allows reasonable adaptation time.
Training and Support:
Employer must have provided:
- Adequate training for position requirements
- Reasonable adaptation period
- Coaching or mentoring support
- Clear communication of performance expectations
Objective Performance Assessment:
Employer must demonstrate unsuitability through objective, measurable performance assessments documenting:
- Specific performance deficiencies
- Comparison to position standards or peer performance
- Impact on business operations
Assessment Criteria Must Be:
- Objective (measurable, not subjective opinions)
- Fair (standards reasonable for the position)
- Applied consistently to all workers in similar positions
- Well-documented over time
Procedural Steps
Step 1: Performance Documentation
Employer compiles comprehensive documentation of performance issues, training provided, and assessment results.
Step 2: Written Communication
Employer provides written communication to worker specifying:
- Performance deficiencies
- Training and support provided
- Assessment results
- Grounds for unsuitability dismissal
Step 3: Worker's Response
Worker has the right to respond, presenting:
- Evidence of adequate performance
- Arguments that training was insufficient
- Claims that standards were unreasonable
- Evidence of discriminatory motive
Step 4: Employer Decision
After considering worker's response, employer makes final decision documented in writing.
Step 5: Compensation Payment
If dismissal proceeds, employer pays compensation.
Compensation for Unsuitability
Workers receive 50% of collective dismissal compensation:
- 6 days of salary per year of service
- Minimum: 1.5 months' salary
Worker Defenses
Workers commonly challenge unsuitability dismissals on grounds that:
Insufficient Training:
Employer failed to provide adequate training or adaptation support
Unreasonable Standards:
Performance expectations were unreasonable for the position level or industry norms
Lack of Objective Assessment:
Employer relied on subjective opinions rather than measurable criteria
Discriminatory Motive:
Dismissal targeted worker for protected characteristic or exercising legal rights
Practical Reality
Unsuitability dismissals are relatively rare because:
- Heavy burden of proof on employer
- Complex documentation requirements
- Substantial compensation required
- High rate of successful worker challenges
Most employers find it administratively easier to pursue mutual termination agreements or other options.
Dismissal for Just Cause
Despedimento com justa causa permits immediate dismissal for serious worker misconduct making continuation of the employment relationship impossible. This is the only dismissal type requiring no advance notice or compensation.
Grounds for Just Cause
Article 351 of the Código do Trabalho defines just cause as worker conduct or behavior so serious that immediately ending the relationship is justified. Examples include:
Serious Disobedience:
Refusal to follow lawful, reasonable work instructions
Violation of Worker Duties:
Serious breach of obligations toward employer or colleagues
Systematic Performance Degradation:
Deliberate, systematic reduction in productivity or quality without valid reason
Disrespect and Hostility:
Serious disrespect toward employer, supervisors, or colleagues; repeated conflicts
Safety Violations:
Non-compliance with health and safety rules endangering others
Competing with Employer:
Operating competing business or working for competitor in violation of contractual duties
Confidentiality Breaches:
Disclosure of confidential business information
Abusive Sick Leave:
Fraudulent use of sick leave (working elsewhere, recreational activities while claiming illness)
False Declarations:
Providing false information causing material harm to employer
Criminal Conviction:
Conviction of crime making employment relationship untenable
The conduct must be sufficiently serious that continuing the employment relationship would be unreasonable for the employer.
Strict Procedural Requirements
Just cause dismissals follow a rigorous multi-step procedure under Articles 352-358. Many dismissals are overturned for procedural violations even when misconduct occurred.
Step 1: Disciplinary Note (Nota de Culpa)
Within 60 calendar days of becoming aware of the facts (or 1 year maximum from occurrence), employer provides written disciplinary note to worker describing:
- Specific facts constituting misconduct
- Evidence supporting the allegations
- Reference to violated contractual obligations or rules
- Potential sanction being considered
The note must be sufficiently detailed for the worker to understand allegations and prepare a defense.
Step 2: Worker's Defense Period
Worker receives minimum 10 working days to submit written defense. During this period, the worker can:
- Present their version of events
- Provide contradictory evidence
- Identify witnesses to support their defense
- Challenge the employer's characterization of events
- Argue the conduct doesn't constitute just cause
The 10-day minimum is absolute - any shorter period makes dismissal illicit regardless of misconduct severity.
Step 3: Worker Representatives (If Applicable)
If the worker is a union representative, workers' committee member, or holds other representative role, the employer must notify the relevant organization and allow them to participate in the defense.
Step 4: Investigation and Evidence Gathering
Employer conducts thorough investigation:
- Reviews worker's defense
- Interviews witnesses from both sides
- Examines all relevant evidence
- Documents investigation findings
The investigation must be objective and complete. Employers cannot ignore exculpatory evidence.
Step 5: Written Decision
Employer issues written decision within 30 days of worker's defense submission (or defense period expiry). The decision must:
- State whether misconduct is proven
- Reference specific evidence supporting findings
- Explain why conduct constitutes just cause
- Specify effective dismissal date
- Address worker's defense arguments
Step 6: Communication to Worker
The written decision must be formally communicated to the worker. Dismissal becomes effective from communication date.
Timing Constraints
60-Day Knowledge Rule:
Employer must initiate disciplinary proceedings (issue nota de culpa) within 60 calendar days of becoming aware of the facts.
1-Year Absolute Limit:
Regardless of when employer learned of misconduct, proceedings must begin within one year of the conduct occurring.
30-Day Decision Rule:
After worker's defense period ends, employer has 30 days to issue final decision.
Missing these deadlines makes dismissal illicit even if just cause existed.
No Compensation or Notice
When dismissal for just cause is properly executed:
- Worker receives no compensation
- No advance notice required
- Employment ends immediately upon communication of decision
However, worker still receives payment for:
- Accrued unused vacation days
- Pro-rated subsídios (Christmas and vacation subsidies) up to dismissal date
- Any unpaid wages or overtime
Common Reasons for Overturning Just Cause Dismissals
Portuguese labor courts overturn many just cause dismissals for:
Procedural Violations:
- Nota de culpa issued after 60-day deadline
- Less than 10 working days for defense
- No consideration of worker's defense
- Decision made more than 30 days after defense period
Insufficient Evidence:
- Employer failed to prove alleged facts
- Reliance on rumors or hearsay without investigation
- Contradictory witness testimony
- Worker's defense creates reasonable doubt
Conduct Not Serious Enough:
- Single minor infraction treated as just cause
- Conduct didn't make employment relationship impossible
- Sanction disproportionate to offense
Discriminatory or Retaliatory Motive:
- Timing suggests retaliation for exercising rights
- Similar conduct by others not punished
- Pattern of discriminatory enforcement
When labor courts overturn just cause dismissals, they typically reclassify them as dismissal without just cause, entitling workers to significant compensation or reinstatement.
Expiry of Fixed-Term Contracts
Caducidade refers to the natural expiry of fixed-term employment contracts. While seemingly straightforward, strict rules govern fixed-term contract termination to prevent abuse.
Notice Requirements
30-Day Advance Notice:
For contracts lasting six months or longer, employers must provide written notice at least 30 days before expiry. This advance warning allows workers to seek new employment.
15-Day Advance Notice:
For contracts lasting between three and six months, 15 days' written notice is required.
8-Day Advance Notice:
For contracts lasting less than three months, 8 days' written notice suffices.
Failure to Provide Notice
If employers fail to provide required notice:
Automatic Conversion to Permanent:
The contract automatically converts to a permanent (open-ended) employment contract.
This conversion protection prevents employers from using rolling fixed-term contracts to avoid permanent employment obligations.
Compensation Upon Expiry
Workers whose fixed-term contracts expire (with proper notice) receive:
Compensation Formula:
18 days of salary per year of service
No Minimum:
Unlike collective dismissal, no minimum compensation applies.
Example:
João's 2-year fixed-term contract expires with proper 30-day notice.
- Salary: €1,500 per month
- Calculation: (18 days × 2 years) = 36 days of salary
- Daily rate: €1,500 × 12 / 365 = €49.32 per day
- Total compensation: 36 days × €49.32 = €1,775.52
Accrued Entitlements
Regardless of notice compliance, workers receive:
- Payment for accrued unused vacation days
- Pro-rated vacation and Christmas subsidies for the final year
- Any outstanding wages, overtime, or benefits
Renewal Restrictions
Portuguese law restricts repeated fixed-term contract renewals to prevent employers from indefinitely avoiding permanent employment status. After certain renewal thresholds, contracts automatically convert to permanent status regardless of the parties' intentions.
Protected Workers: CITE Approval Requirement
Portuguese law provides enhanced protection to certain workers, requiring employers to obtain prior approval from CITE (Comissão para a Igualdade no Trabalho e no Emprego) before dismissal.
Who Are Protected Workers?
Pregnant Workers:
From pregnancy confirmation through the end of maternity leave
Workers on Parental Leave:
Including paternity leave, parental leave, and adoption leave
Workers Who Recently Gave Birth:
For a specified period after maternity leave concludes
Workers Undergoing Fertility Treatment:
In some circumstances, when fertility treatment is documented
CITE Prior Approval Process
Before dismissing a protected worker for any reason (including just cause, redundancy, or unsuitability), employers must:
Step 1: Request CITE Opinion
Employer submits request to CITE demonstrating:
- Grounds for dismissal
- Evidence supporting the dismissal
- Why dismissal is unrelated to pregnancy, maternity, or parental leave
Step 2: CITE Investigation
CITE investigates whether:
- Dismissal grounds are genuine
- Timing suggests connection to protected status
- Employer complied with all legal requirements
- Dismissal appears retaliatory or discriminatory
Step 3: CITE Decision
CITE issues binding opinion either approving or rejecting the dismissal. The process typically takes several weeks.
Consequences of Dismissing Without CITE Approval
Dismissals of protected workers without prior CITE approval are automatically void (nulo) under Article 381 of the Código do Trabalho.
Void Dismissal Consequences:
- Dismissal has no legal effect whatsoever
- Worker entitled to mandatory reinstatement
- Employer cannot refuse reinstatement
- Full back pay from dismissal date to reinstatement
- All benefits and seniority restored as if dismissal never occurred
This is the most severe classification of unlawful dismissal. Unlike dismissal without just cause (where workers can choose compensation), void dismissal mandates reinstatement.
Practical Implications
For Workers:
If you're pregnant, on parental leave, or recently returned from parental leave and your employer discusses dismissal:
- Ask whether CITE approval has been obtained
- Request written documentation of CITE's approval
- If dismissed without CITE approval, immediately challenge in labor court
- Document the timing of pregnancy disclosure and dismissal discussions
For Employers:
Failure to obtain CITE approval is among the costliest employment law mistakes. Even when legitimate grounds for dismissal exist, dismissing protected workers without approval leads to mandatory reinstatement and back pay, often spanning many months.
Timing Issues
Courts scrutinize dismissals occurring:
- Shortly after pregnancy announcement
- During protected leave periods
- Immediately after return from parental leave
- Following disclosure of fertility treatment
Even when employers claim economic or performance grounds, timing suggesting connection to protected status creates strong presumption of unlawful motive.
Compensation Calculations
Understanding compensation calculations helps workers verify whether employers have calculated amounts correctly and determine the value of potential claims.
Collective Dismissal and Redundancy Compensation
Formula:
12 days of salary per year of service
Minimum: 3 months' salary
Salary Basis:
- Base salary
- Regular supplements (e.g., guaranteed monthly allowances)
- Excludes: occasional bonuses, performance bonuses, expense reimbursements
Daily Rate Calculation:
(Monthly salary × 12 months) ÷ 365 days = daily rate
Example 1:
Sofia: 5 years service, €2,200/month
- Compensation days: 12 × 5 = 60 days
- Daily rate: (€2,200 × 12) / 365 = €72.33
- Total: 60 × €72.33 = €4,339.80
- Minimum: 3 months = €6,600
- Sofia receives €6,600 (minimum applies)
Example 2:
Ahmed: 12 years service, €3,000/month
- Compensation days: 12 × 12 = 144 days
- Daily rate: (€3,000 × 12) / 365 = €98.63
- Total: 144 × €98.63 = €14,202.72
- Minimum: €9,000
- Ahmed receives €14,202.72 (exceeds minimum)
Unsuitability Compensation
Formula:
6 days of salary per year of service (50% of collective dismissal rate)
Minimum: 1.5 months' salary
Example:
Maria: 4 years service, €1,800/month
- Compensation days: 6 × 4 = 24 days
- Daily rate: (€1,800 × 12) / 365 = €59.18
- Total: 24 × €59.18 = €1,420.32
- Minimum: 1.5 months = €2,700
- Maria receives €2,700 (minimum applies)
Fixed-Term Contract Expiry Compensation
Formula:
18 days of salary per year of service
No minimum
Example:
João: 3-year contract, €2,500/month
- Compensation days: 18 × 3 = 54 days
- Daily rate: (€2,500 × 12) / 365 = €82.19
- Total: 54 × €82.19 = €4,438.26
- João receives €4,438.26
Unlawful Dismissal Compensation (Court-Ordered)
Formula:
15-45 days of salary per year of service (amount depends on circumstances)
Minimum: 3 months' salary
Factors Affecting Amount:
- Severity of employer's violation
- Worker's age and length of service
- Difficulty finding comparable employment
- Worker's salary level
- Employer's conduct during proceedings
Typical Range:
- Minor procedural violations: 15-20 days per year
- Moderate violations or weak grounds: 20-30 days per year
- Serious violations or discriminatory motive: 30-45 days per year
Example:
Ana: 8 years service, €2,000/month, employer violated procedure
- Court awards 25 days per year (mid-range)
- Compensation days: 25 × 8 = 200 days
- Daily rate: (€2,000 × 12) / 365 = €65.75
- Total: 200 × €65.75 = €13,150
- Minimum: €6,000
- Ana receives €13,150
Resolução (Worker Immediate Termination) Compensation
When workers successfully establish grounds for immediate termination due to employer's breach, compensation equals what they would receive for unlawful dismissal:
Formula:
15-45 days of salary per year of service
Minimum: 3 months' salary
The amount depends on the severity of the employer's breach that justified immediate termination.
Worker Protections Against Unfair Dismissal
Portuguese law categorizes unlawful dismissals into three classifications, each with different legal consequences and remedies.
Classification 1: Void Dismissal (Despedimento Nulo)
Definition:
Dismissals that are null and void from inception due to violating fundamental rights or mandatory legal protections.
Grounds for Void Dismissal (Article 381):
Dismissal is void when based on or related to:
- Discriminatory grounds (race, gender, sexual orientation, age, disability, religion, political beliefs, union membership)
- Pregnancy, maternity, paternity, or adoption
- Worker exercising legal rights (filing complaints, participating in strikes, requesting parental leave)
- Retaliation for reporting violations or cooperating with investigations
- Dismissal of protected worker without CITE approval
- Violation of fundamental constitutional rights
Consequences of Void Dismissal:
The dismissal has no legal effect whatsoever:
Mandatory Reinstatement:
- Worker must be reinstated to their exact position
- Employer cannot refuse reinstatement under any circumstances
- Worker cannot be offered compensation in lieu
Full Back Pay:
- Employer pays full salary and benefits from dismissal date through reinstatement date
- Includes all subsídios, benefits, salary increases that would have occurred
- May span many months if litigation is lengthy
Seniority and Benefits Restored:
- Worker's seniority continues uninterrupted
- All benefits restored as if dismissal never occurred
- Vacation accrual continues
No Worker Choice:
Unlike other unlawful dismissals where workers can choose compensation, void dismissal mandates reinstatement. Workers must return to employment.
Classification 2: Dismissal Without Just Cause (Despedimento sem Justa Causa)
Definition:
Dismissals where employer failed to prove legitimate grounds justifying termination.
When It Applies:
Labor courts find dismissal without just cause when:
- Alleged facts were not proven
- Proven facts don't meet legal threshold for just cause
- Economic justification for collective dismissal/redundancy is insufficient
- Performance issues don't meet unsuitability requirements
- Employer's evidence is contradicted or insufficient
Worker's Choice of Remedy:
Workers choose between two options:
Option 1: Reinstatement
- Return to same position
- Full back pay from dismissal through reinstatement
- All benefits and seniority restored
- If worker chooses reinstatement, employer must comply (except small employer exception below)
Option 2: Compensation
- Payment in lieu of reinstatement
- 15-45 days of salary per year of service (court determines specific amount)
- Minimum: 3 months' salary
- Worker receives compensation and employment ends
Small Employer Exception:
Employers with fewer than 10 workers can refuse reinstatement even if worker requests it. In such cases:
- Worker must accept compensation instead
- Compensation calculated at higher end (30-45 days per year) as penalty for refusing reinstatement
Factors Affecting Compensation Amount:
When workers choose compensation (or must accept it due to small employer exception), courts determine the amount within the 15-45 day range based on:
- Severity of employer's violation
- Worker's age, service length, and salary level
- Worker's difficulty finding comparable employment
- Employer's good or bad faith
- Aggravating circumstances (discrimination, retaliation)
Classification 3: Illicit Dismissal (Despedimento Ilícito)
Definition:
Dismissals where substantive grounds existed but employer violated procedural requirements.
When It Applies:
Labor courts find illicit dismissal when:
- Facts supporting dismissal are proven (just cause existed, position genuinely eliminated, etc.)
- BUT procedural requirements were not followed
- Examples: insufficient defense period in just cause dismissal, inadequate consultation in collective dismissal, missing CITE approval (even if grounds existed)
Worker's Choice of Remedy:
Workers choose between:
Option 1: Reinstatement
- Return to position with full back pay
- Benefits and seniority restored
Option 2: Compensation
- 15-30 days of salary per year of service (lower range than dismissal without just cause)
- Minimum: 3 months' salary
Rationale for Lower Compensation:
Since substantive grounds for dismissal existed (only procedure was defective), compensation is lower than dismissal without just cause where grounds were lacking entirely.
Practical Implications:
Even when legitimate grounds exist, procedural violations convert lawful dismissals into illicit dismissals. This underscores the critical importance of strict procedural compliance in Portuguese employment law.
Burden of Proof in Dismissal Disputes
Understanding who must prove what in dismissal litigation is crucial for both workers and employers.
General Rule: Employer Bears Burden
In dismissal disputes, Portuguese law places the burden of proof on employers for most elements:
Employer Must Prove:
1. Facts Justifying Dismissal
- In just cause cases: employer must prove misconduct occurred
- In collective dismissal: employer must prove economic necessity
- In unsuitability: employer must prove inadequate performance
- In redundancy: employer must prove position genuinely eliminated
2. Procedural Compliance
- Employer must prove all procedural requirements were followed
- Evidence must show consultation occurred, notice was proper, defense period provided, etc.
- Missing documentation often results in dismissal being overturned
3. Non-Discriminatory Motive
- Employer must prove dismissal was not based on discriminatory or retaliatory grounds
- Burden increases when timing or circumstances suggest prohibited motive
Worker's Burden: Limited Circumstances
Workers bear burden of proof only in specific situations:
If Claiming Void Dismissal:
Worker must present prima facie evidence suggesting prohibited grounds (pregnancy, discrimination, retaliation)
Once worker presents initial evidence, burden shifts back to employer to prove dismissal was unrelated to protected status.
If Claiming Immediate Resignation Rights:
Worker pursuing resolução (immediate termination with compensation) must prove employer committed serious breach justifying immediate departure
Practical Implications
This allocation of proof burden means:
For Employers:
- Must maintain meticulous documentation of performance issues, misconduct incidents, economic conditions, training provided
- Contemporaneous documentation critical - cannot reconstruct evidence later
- Missing documentation often fatal to defense
- Must document all procedural steps comprehensively
For Workers:
- Can challenge dismissals without extensive evidence if employer's case is weak
- Employer's failure to document undermines their defense
- Strategic advantage in many disputes
- Settlement negotiations often favor workers when employer documentation incomplete
For Settlements:
The heavy burden on employers to prove their case creates strong incentive for settlement negotiations. Many disputes resolve when employers recognize documentation gaps or procedural violations.
Challenge Process and Timeline
Workers who believe their dismissal was unlawful can challenge it in Portugal's specialized labor courts. Understanding the process and strict timelines is essential to preserving your rights.
Critical 60-Day Deadline
File Within 60 Days:
Workers must file their dismissal challenge in labor court (Tribunal do Trabalho) within 60 calendar days of:
- Receiving the dismissal notice, or
- The effective termination date
Deadline is Strict:
Missing the 60-day deadline typically bars challenge permanently. Exceptions are rare and require extraordinary circumstances (e.g., worker was hospitalized and unable to act, employer deliberately concealed dismissal).
Action Required:
- Consult with a Portuguese labor lawyer immediately upon dismissal
- Don't wait until the end of the 60-day period - legal preparation takes time
- Gather all documentation related to your employment and dismissal
- Document timeline of events while memories are fresh
Labor Court Process
Filing:
Your lawyer files a petition (petição inicial) in the labor court with jurisdiction over your workplace, outlining:
- Facts of your employment (hiring date, position, salary, length of service)
- Circumstances of dismissal (how and why you were dismissed)
- Why the dismissal was unlawful (legal grounds for challenge)
- Remedy sought (reinstatement or compensation)
Interim Relief:
At the same time as filing or shortly after, you can request a preliminary injunction for provisional reinstatement pending trial. Courts grant these when:
- Strong likelihood you'll prevail at trial
- Irreparable harm would result from waiting for final judgment (financial hardship, career damage)
- Balance of hardships favors interim reinstatement
Provisional reinstatement orders require employers to reinstate you immediately while litigation proceeds. If you ultimately prevail, your employment was never truly interrupted. If you lose, employment ends at that point.
Employer Response:
The employer files a response (contestação) presenting their case, typically including:
- Their version of facts
- Evidence supporting the dismissal (performance documentation, misconduct evidence, economic data)
- Argument that dismissal was lawful
- Documentation of procedural compliance
Evidence Phase:
Both parties submit evidence including:
- Employment contracts, job descriptions, and related documentation
- Dismissal notices and all related communications
- Performance evaluations, disciplinary records, training documentation
- Witness lists and testimony
- For economic dismissals: financial statements, business plans, market analyses
- Procedural records proving compliance with consultation, notice, and defense requirements
Hearings:
Labor courts conduct hearings where:
- Witnesses testify under oath
- Parties present oral arguments
- Judge questions parties and witnesses
- Documentary evidence is examined
Decision:
The court issues a written decision determining:
- Whether dismissal was lawful or unlawful
- If unlawful: classification (void, without just cause, illicit)
- Remedy: reinstatement or compensation, amount of back pay or compensation
- Legal costs allocation (losing party typically pays winner's legal costs)
Timeline for Labor Court Proceedings
Labor court cases in Portugal proceed more quickly than general civil litigation:
First Instance:
- Simple cases (clear procedural violations, straightforward facts): 6-12 months
- Complex cases (disputed economic justification, conflicting evidence): 12-18 months
Appeals:
Either party can appeal to higher labor courts (Tribunal da Relação and potentially Supreme Court), adding:
- Additional 6-12 months per appeal level
Total Potential Timeline:
From filing to final non-appealable judgment: 12-36 months depending on complexity and appeals
Costs and Legal Representation
Legal Representation:
While not technically mandatory, legal representation is strongly recommended given complexity of labor law and importance of proper pleading and evidence presentation. Most dismissal challenges are brought by specialized labor lawyers.
Legal Costs:
Lawyer fees vary but typically involve combination of:
- Initial consultation fee (€100-300)
- Monthly retainer or hourly rate during litigation (€1,000-3,000+ per month depending on lawyer and case complexity)
- Success fee based on compensation awarded (typically 15-30% of award)
- Court filing fees are relatively modest (€100-300)
Cost Recovery:
If you prevail, the employer typically pays your legal costs as determined by the court. This reduces the financial risk of challenging wrongful dismissals.
Legal Aid:
Workers who qualify based on income can access subsidized or free legal representation through Portugal's legal aid system (apoio judiciário). Apply through:
- Social Security offices
- Legal aid offices (Gabinetes de Apoio ao Cidadão)
- Online through Segurança Social Direta portal
Eligibility depends on household income and assets. Legal aid provides either:
- Full cost coverage (complete exemption)
- Partial cost coverage (reduced fees)
- Payment plan arrangements
Settlement Negotiations
Many dismissal disputes settle before or during litigation:
Employer Incentives to Settle:
- Risk of owing substantial compensation plus back pay if they lose
- Legal fees and management time investment
- Uncertainty of outcome, especially with weak documentation
- Reputational considerations
- Desire to avoid protracted litigation
Worker Considerations:
- Guaranteed outcome versus uncertainty of trial
- Faster resolution and immediate payment
- Avoiding stress and time commitment of litigation
- Present value of immediate payment versus delayed judgment
- Certainty versus risk
Typical Settlement Ranges:
Settlements often fall between:
- 50-80% of potential compensation award for moderate-strength cases
- 80-100%+ of potential award for strong worker cases with clear violations
- Less for weak cases where outcome is uncertain
Your lawyer can guide you on whether settlement offers are reasonable based on case strength, typical awards in similar cases, and your personal circumstances.
Timing of Settlements:
- Before filing: early settlement discussions
- After filing, before trial: most common settlement point once employer evaluates case strength
- During trial: sometimes parties settle mid-trial as evidence unfolds
- After first instance decision: losing party may settle to avoid appeal
Related Guides: