Centrist Union Slams Portugal's Proposed Labour Overhaul Plan

Foreign residents who have built their careers in Portugal woke up this week to an unexpected warning: one of the country’s main trade-union confederations, UGT, says the minority government’s plan to overhaul labour legislation amounts to a “clean break with everything negotiated since the financial-crisis years.” If the draft reaches Parliament unchanged, several rules that protect employees on Portuguese contracts could shift within months—potentially altering how international staff are hired, fired, or assigned to hybrid work.

What exactly is on the table?

Successive administrations have tweaked labour norms since the 2011 bailout, yet the new bill goes further. According to a summary circulated among the social-dialogue council, the cabinet wants to shorten severance pay to 12 days per worked year, widen the maximum length of fixed-term contracts from 3 to 4 years, and simplify collective layoffs for firms with fewer than 50 workers. Another article would let companies impose remote-work recalls—ordering staff back to the office with only 5 days’ notice—whenever “economic efficiency” is invoked. For multinational employers, these moves promise greater flexibility; for employees, they raise fears about job security.

Why UGT’s reaction matters this time

For expats unfamiliar with Portuguese labour politics, UGT (União Geral de Trabalhadores) is traditionally the centrist counterpart to CGTP, the more combative federation linked to the Communist Party. UGT often sides with Socialist governments on incremental reforms, so its decision to call the current proposal “a rupture” signals deep trouble for the bill’s tripartite support. Sources close to the confederation say leadership felt blindsided after a draft circulated without clauses they believed had been agreed in July—especially protections for workers aged over 55 and safeguards against successive temporary contracts.

Potential impact on foreigners working under Portuguese contracts

International employees—whether holding the D8 digital-nomad visa or a standard residency permit—are covered by the same Labour Code as locals. If approved, the new framework could mean:• Shorter trial periods for specialised roles, reducing the window in which either party can walk away without compensation.• Fast-track terminations for under-performing staff, with severance calculated on lower coefficients.• Tighter definitions of “posted worker,” possibly affecting freelancers who invoice Portuguese firms while living elsewhere in the EU.Corporate HR departments are already fine-tuning contract templates to align with the draft, according to two Lisbon-based employment lawyers interviewed for this story.

Government’s argument: competitiveness over caution

Finance Minister Marta Cordeiro insists the overhaul is crucial for attracting foreign direct investment. She points to Portugal’s unit-labour costs, still 15 % above Spain’s, and says easing rigidities could lure multinational tech hubs away from Eastern Europe. Business associations such as CIP echo that view, claiming the cost of dismissal is the third-highest in the EU and discourages firms from turning temporary positions into permanent ones.

Political calendar and what could still change

Parliament is expected to begin committee hearings in late October, with a plenary vote pencilled for early December. Amendments are common: during the last major reform in 2019, lawmakers rewrote 34 of the 62 proposed articles. UGT has already requested a formal mediation meeting under the Social Consultation Council—a step that pauses the legislative clock for up to 30 days. If no consensus emerges, the government can still push the bill through, but doing so may cost it the union support it relies on for other policy fronts, from pension indexing to public-sector pay.

Practical steps for expats and employers

While nothing changes immediately, foreign professionals may wish to review contract clauses on probation, severance, and telework. Employers should prepare dual scenarios—one under current law, another under the draft’s parameters—to avoid last-minute compliance scrambles. Employment experts recommend keeping written records of any remote-work agreements signed before the new law takes effect, as grandfathering could protect existing terms.

Bottom line

Even in a country known for gradualism, Portugal’s labour ground rules can shift quickly when political winds change. For expatriates whose residence permits hinge on stable employment, staying ahead of these legislative currents is more than a bureaucratic hobby—it is the safest way to preserve both income and immigration status in the years ahead.