The law is less stringent when an employee terminates an employment contract in Portugal, but it does require the employee to comply with certain requirements. Employees have greater freedom to terminate their contracts than employers do. In certain situations, they may even terminate the employment relationship immediately, without having to give notice.
How to terminate an employment contract in Portugal
In Portugal, under certain conditions, an employee may be entitled to relatively substantial severance pay depending on the reasons for their resignation. In this article, we’ll take a look at the various reasons that may or may not entitle you to severance pay.
Grounds for terminating a contract that entitle the party to compensation
Termination of the contract must be made in writing, with a brief statement of the facts justifying it, within 30 days of being notified. If the matter is brought before the courts, the employee may only rely on the facts mentioned in the letter.
The law lists certain types of conduct by an employer that may constitute valid grounds for terminating an employment contract:
- Delayed payment of wages; ;
- violation of an employee's protections (as provided by law, the employment contract, or a collective bargaining agreement)
- the imposition of an unjustified penalty; ;
- an undeniable violation of occupational health and safety requirements; ;
- willful harm to a worker’s substantial financial interests; ;
- Acts by the employer or its representatives that infringe upon an employee’s physical integrity, freedom, honor, or dignity, which are punishable by law, including harassment.
Termination of the contract based on these grounds entitles the employee to severance pay ranging from 15 to 45 days’ worth of base pay and seniority pay per full year. An incomplete year is calculated proportionally. A minimum of three months’ pay is provided. The compensation may be higher if the employee proves that he or she has suffered greater harm.
Grounds for terminating a contract that do not entitle the party to compensation
There are also grounds for an employee to terminate the employment contract that do not entitle the employee to severance pay
- compliance with legal obligations that are incompatible with continued employment; ;
- a substantial and lasting change in working conditions resulting from the employer’s legitimate exercise of its authority; ;
- unintentional failure to pay wages on time; ;
- the transfer of the business to another entity, if the employee does not wish to continue working for the new employer.
Termination of the Contract Without Valid Cause
There is no need to have a valid reason for terminating the contract, provided that the employee gives the employer advance notice.
The employee may terminate the contract as of Portugal, with or without cause, by giving the employer written notice of at least 30 or 60 days, provided the employee has been with the company for two years or more.
Collective bargaining agreements and individual employment contracts may extend the notice period for termination of the contract to up to six months if the employee holds an administrative or managerial position, represents the employer, or holds a position of responsibility.
If the employee fails to comply with the notice period for terminating the contract, the employee must pay the employer compensation equal to the base salary for the missed notice period. You may also be required to compensate the employer for any damages you have caused due to the failure to provide or the delay in providing the required notice.
