Portugal Labour Reform: Business Leaders Push for Agreement as Parliament Looms

Portugal's Business Confederation has called the ongoing dispute over labor law reform disproportionate to the actual scope of proposed changes, signaling a willingness to negotiate while warning against parliamentary capture of the contentious "Trabalho XXI" package.

As the Portugal Ministry of Labor, Solidarity and Social Security convened talks on February 23, 2026 with the UGT labor union and employer federations, business leaders argued that the government's labor code overhaul represents a balanced proposal that does not justify the escalating conflict threatening to undermine social dialogue.

The Core Issue

Armindo Monteiro, president of the Confederation of Portuguese Business (CIP), told reporters outside the morning's session that the proposed changes do not warrant "all this conflict." He characterized the government's draft as a moderate starting point open to adjustment, rejecting what he termed "superficial" tweaks that would leave labor law fundamentally unchanged.

"If we're playing games with minor alterations, then it's not worth keeping the country in suspense only to end up with everything so polished that nothing actually changed," Monteiro said. "In that case, it would have been better not to start this process."

The CIP leader emphasized that labor relations are too serious to be left to electoral positioning in Parliament. He urged stakeholders to forge an agreement within the Social Concertation framework—Portugal's formal tripartite consultation body—where employers, unions, and the government traditionally hammer out compromises on economic and social policy.

Why the Reform Matters

The "Trabalho XXI" package includes proposed changes to contract types, working time arrangements, parental leave, and strike regulations. Key areas of contention include:

Outsourcing restrictions: One of the most disputed elements is the proposed repeal of Article 338-A of the Labor Code, which since 2023 has prohibited companies from contracting external service providers for 12 months following collective dismissals. Monteiro defended outsourcing as a "competitiveness tool" but signaled openness to targeted regulation. The UGT has declared any rollback of outsourcing restrictions a red line, arguing that the measure prevents employers from replacing permanent staff with cheaper contractors.

Strike regulations and working time: The government also proposes expanding minimum service requirements during labor actions and modifying working time arrangements—measures that have drawn significant opposition from union confederations.

The Negotiation Landscape

Negotiations resume after breakdown: The UGT participated in today's session after boycotting last week's meeting, which it deemed "ill-timed." The UGT has submitted a counterproposal maintaining opposition to key pillars of the government's plan.

CGTP remains excluded: Portugal's largest union confederation, the CGTP, was not invited to today's talks. Labor Minister Rosário Palma Ramalho has suggested the CGTP is "self-excluding," while the CGTP maintains the government is deliberately sidelining it. This deepens divisions in Portugal's social dialogue architecture.

Critical juncture ahead: A plenary session of the Permanent Commission for Social Concertation is scheduled for March 3, where parties will assess progress. If no consensus emerges, the executive could submit its proposal directly to the Assembly of the Republic, where parliamentary dynamics rather than negotiated consensus would shape the final text.

For Workers and Employers

For workers, the stakes include job security, contract predictability, and collective bargaining strength. For employers, the issue centers on operational flexibility and competitiveness. Whether Portugal's social partners can bridge these competing priorities will determine not only the fate of "Trabalho XXI" but the viability of consensus-driven policymaking in Portugal's increasingly polarized environment.