Government’s ‘Trabalho XXI’ Plan Sparks September Showdown Over Portugal’s Work Rules

Portugal’s ambitious attempt to rewrite more than 100 clauses of its Código do Trabalho is turning into a high-stakes tug-of-war. On one side, the centre-right government insists the package dubbed “Trabalho XXI” will unlock competitiveness and modernise hiring rules. On the other, the Communist Party (PCP) and the country’s largest union federation, CGTP, are mobilising street protests for 20 September, warning of a “war on workers” that could reverberate through offices, factories and even nurseries.

A reform that touches every corner of the workplace

Instead of tinkering at the edges, the cabinet of Prime Minister Luís Montenegro has opted for a sweeping redesign. Employers would gain latitude to extend fixed-term contracts from 2 to 3 years, resurrect the individual “banco de horas” allowing 10-hour days, outsource tasks even after collective layoffs and demand fewer hours of mandatory training in micro-companies. The bill also redraws parental leave, pares back safeguards for remote staff, and broadens the sectors that must keep “serviços mínimos” during strikes, reaching as far as childcare, elderly care and private security.

For officials at the Ministry of Labour, the common thread is “flexibilidade”—greater room, they say, to reward merit, hire young talent and adapt rosters to seasonal demand. Expat managers running Portuguese subsidiaries may welcome the prospect of leaner procedures when terminating under-performing contracts or scheduling overtime. Yet the same clauses raise alarm among rank-and-file employees who fear longer hours and weaker bargaining power.

Flashpoints that could test daily life

Although the draft spans dozens of pages, three ideas concentrate the anger. First, the expansion of compulsory minimum services undermines what unions call their last economic lever: the right to shut down an operation completely. Second, the abolition of a 12-month cooling-off period on outsourcing after layoffs is seen as a green light to replace permanent staff with cheaper freelancers. Third, giving bosses explicit power to refuse teletrabalho requests—or even fire someone who resists returning to the office—strikes a nerve in Portugal’s booming tech scene, popular with remote workers from abroad.

Add to that the controversial plan to scrap a three-day leave for luto gestacional—time off after a miscarriage—and the political temperature rises. Paulo Raimundo, the PCP’s secretary-general, calls the entire bundle a “violent aggression against fundamental rights” and vows to block it “no matter how long it takes”.

A Communist Party flexing its street muscle

While the PCP polls below 6 % nationally, its influence inside trade unions remains outsized. The 20 September marches in Lisbon and Porto, organised by the CGTP but energetically backed by the Communists, aim to put tens of thousands in the streets. Party cadres are fanning out to factory gates, schools and call centres, urging workers to “derrotar na rua e nas empresas” the government’s plan. If the crowds are large, the optics could embolden left-of-centre parties to force amendments when the text reaches parliament in October. If turnout disappoints, the cabinet will claim a mandate to push through its blueprint largely intact.

Why foreigners should care—whether they work or invest here

For the growing community of digital nomads and multinationals headquartered in Lisbon, the stakes are practical, not ideological. Broader minimum-service rules may cushion travellers from transport strikes, but they can also limit leverage in wage negotiations, potentially prolonging disputes that drag on in the courts. Managers will need to re-examine employee handbooks as the contractual trial period for first-time hires disappears, while HR teams contemplate the option of extending short-term contracts to three years.

Remote professionals attracted by Portugal’s generous D7 visa should watch the telework clauses closely: firms could start insisting on hybrid arrangements, undercutting one of the country’s lifestyle perks. Meanwhile, budding entrepreneurs may welcome simpler outsourcing rules yet face reputational risks if accused of replacing laid-off staff with gig-economy contractors.

The economic backdrop: solid growth, fragile sentiment

Forecasts from the Banco de Portugal and the ISEG/CIP barometer still place 2025 GDP growth near 1.5 %-1.7 %, better than much of southern Europe. Employment continues to expand, and the minimum wage will rise to €870 in January. Business lobbies argue that loosening hiring and firing constraints is essential if Portugal hopes to climb the value chain and retain talent now lured by Spain or Ireland. Unions counter that productivity gaps stem from low salaries and patchy investment, not from “rigid” laws.

Analysts caution that clashes over labour rights can dent investor confidence faster than the reforms can spur productivity. Prolonged street action, especially if it morphs into sector-wide walkouts, could weigh on Q4 tourism and logistics—key arteries for export-oriented companies and the expat job market.

From negotiating table to asphalt—and back

The draft text remains in concertação social, Portugal’s tripartite forum that includes business confederations and unions. Labour Minister Maria do Rosário Palma Ramalho insists “there is no rush but no eternity either.” Cabinet sources hint at a final government decree before Christmas, leaving a narrow window for tweaks and compromises.

Opposition parties may try to force a referendum, though constitutional lawyers say the odds are slim. More likely is a legislative ping-pong in parliament, followed by legal challenges in the Constitutional Court should any article be deemed to infringe the right to strike enshrined in Article 57.

What to watch next

Expat employees should track company memos in the run-up to 20 September; some HR departments are already reviewing contingency plans for disrupted commuting and childcare. Entrepreneurs, especially those relying on freelancers, will want to consult legal counsel about new time-limits on fixed-term deals and potential litigation if outsourcing replaces laid-off staff.

Finally, anyone contemplating relocation to Portugal might consider the broader picture: a country still ranked among the EU’s safest, with moderate cost of living and a thriving tech ecosystem, yet now entering a pivotal debate over how much flexibility—or protection—its workforce should enjoy. Whatever shape “Trabalho XXI” ultimately takes, it will redefine the fine print of Portuguese employment contracts for years.