Portugal's Labour Reform Hangs in Balance as Unions Clash Over Working Rights and Flexibility

Portugal's Ministry of Labour concluded negotiations on Friday, January 24, 2025 over contentious labour law reforms with no binding deal, leaving the nation's workforce in a holding pattern as the government awaits the UGT (União Geral de Trabalhadores) emergency internal vote scheduled for Thursday, January 30. Business confederations have backed the final proposal, but the largest union federation remains excluded from key talks—and organized a protest march in response.

Why This Matters

• UGT's emergency vote on January 30 will determine whether reforms covering contracts, working-time flexibility, and dismissal rules move forward.

• CGTP, representing hundreds of thousands of workers, has been excluded from subsequent negotiating rounds and organized a march from Saldanha to parliament on January 24, signalling potential for continued industrial unrest.

• Employers have indicated support for the government's current text, but unresolved items include individual time-banking schemes and continuous-shift rights for parents—issues that affect households with dependent children.

CGTP Organizes Protest—Questions Negotiating Process

While Labour Minister Maria do Rosário Palma Ramalho met with UGT and the four business confederations, thousands gathered in central Lisbon on January 24 under banners reading "Down with the Labour Package! Raise Wages, Guarantee Rights, a Better Life Is Possible." The march, organized by the CGTP-IN (Confederação Geral dos Trabalhadores Portugueses), was timed to coincide with the final negotiating session and reflected the union federation's position that major union federations should be included in the full negotiating process.

CGTP Secretary-General Tiago Oliveira told demonstrators that the government excluded his union from subsequent negotiating rounds while including other stakeholders. "The government should ensure that all major union federations participate in the full negotiation process," Oliveira said from the Saldanha rally point. He added that CGTP maintains the struggle around labour legislation protection, and warned that industrial action could continue.

Earlier in the week, the CGTP raised concerns about the negotiating process after learning that pre-meetings occurred before the formal Permanent Commission for Social Concertation (CPCS) session. That meeting started half an hour late, prompting CGTP accusations of procedural exclusion. The ministry declined to comment, referring journalists to the post-session press conference.

UGT Sets Emergency Vote for January 30

After the three-way session with the ministry, UGT, and the CIP, CAP, CTP, and CCP employer confederations, UGT leader Mário Mourão announced his union would convene an extraordinary national secretariat meeting for Thursday, January 30 to vote on the latest draft. When pressed, Mourão declined to disclose his own position or predict the outcome. "We need to see the final version first," he said, noting that the CPCS document omitted several matters already under discussion, including technical corrections the government promised to provide.

Mourão acknowledged that two UGT proposals remain unaccepted by employers: modifications to the individual time-bank (banco de horas individual)—a scheme that would allow workers and employers to agree to flexible hour arrangements within defined parameters—and expanded access to the continuous working day (jornada contínua), a compressed schedule that could reduce total working hours. UGT and employers have differing views on the conditions and scope of these arrangements.

Business confederations told reporters they accept the government's current text, signaling that the ministry has broadly met their positions on dismissals, contract duration, and working-time arrangements.

What Palma Ramalho Says—"Patient" Wait for UGT

Speaking after the January 24 session, Minister Maria do Rosário Palma Ramalho indicated the government would await UGT's decision. "At this stage, it is up to the government and other partners to wait for UGT's final position, which will conclude this negotiating phase," she said. Palma Ramalho noted that all sides had proposed amendments to the initial draft over eight months of discussions, resulting in multiple agreed provisions and areas of common ground between the government, unions, and employers.

She framed the reform as balancing worker protections with business flexibility: stronger protections regarding parenting leave, training entitlements, and health-and-safety transparency, while providing firms new tools for operational flexibility—with the aim of improving working conditions overall. "We continue to hope this process ends in agreement," she said, adding that the corrected final version would also be forwarded to CGTP for review, even though that union has not participated in the negotiation rounds.

Impact on Residents—Key Areas Under Discussion

For the roughly 5 million employees covered by Portugal's labour code, this standoff will determine whether proposed changes advance. The main areas under discussion include:

1. Individual Time-BankingOne proposal concerns individual banco de horas agreements, which would allow workers and employers to reach arrangements for flexible hour distribution within legal limits. The details of how such arrangements would be regulated, compensated, and enforced remain under negotiation.

2. Fixed-Term ContractsAmong the topics discussed are potential adjustments to how fixed-term contracts operate in Portugal. The government and social partners are negotiating the parameters of these arrangements.

3. Dismissal ProceduresThe government and UGT have different positions on court procedures and reinstatement following collective redundancies. This remains an unresolved negotiation point.

4. Parenting and Working-Time FlexibilityDiscussion has included ways to provide working-time flexibility for parents, potentially including compressed working schedules. The specific conditions—such as whether such arrangements would be automatic, optional, or negotiated individually—remain under discussion.

5. Training RequirementsThe reform package discusses enhanced training provisions, though specific thresholds for different company sizes remain to be finalized.

6. Parenting Leave and SupportProvisions related to parenting leave remain among the items being negotiated between the government and social partners.

What Happens Next

Minister Palma Ramalho has indicated that the negotiating phase may conclude in the coming days, pending UGT's January 30 vote. If UGT votes no or abstains, the cabinet will likely submit the proposal to the Assembly of the Republic for parliamentary consideration. There, opposition parties can file amendments and request public hearings. The government coalition holds a majority, though the extent of support from individual deputies for specific provisions remains to be seen.

Meanwhile, CGTP has indicated it may pursue industrial action if labour protections are weakened in the final legislation. Past CGTP-led mobilizations have included sector-specific actions in transport, healthcare, and education.

The Bottom Line—Decisions Ahead

The January 24 session produced no final agreement—only UGT's commitment to conduct an internal vote on January 30 and a reminder from CGTP that broader negotiations should have included all major union federations. Portugal's workers, employers, and investors now await the January 30 UGT vote, which will determine whether this negotiating phase concludes and the proposal advances to parliament. Either way, the legislative process will involve public debate and amendment procedures before final approval.