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Workforce Flexibility and Government Incentives in times of Covid-19 - Portugal

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?


If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

A short term state aid program through the form of partial payment of wages in a simplified lay off procedure and financial support has been set up, in which Social Security will be responsible for 70% of the employees’ wages.

please see the answer to Q16.

Application to be made through a form (not yet available) to be filled in and submitted to Social Security (or IEFP) with the applicable supporting documents, regarding respectively financial incentives and professional training programs.

Temporary exemption from payment of contributions to Social Security, regarding the workers concerned by the abovementioned measures and members of statutory bodies.

The Council of Ministers Resolution no. 33-C/2020 entails the possibility of partial teleworking, with off-peak schedules or mirror teams from 1 June 2020, for example.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

In order to implement simplified lay-off (temporary reduction and/or suspension of employment agreements), union representatives need to be consulted/informed and this should be documented.

It is not necessary to follow formal consultation procedures, as more expedite informal procedures are allowed (v.g. meeting, notice to comment on a reduced deadline).

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

  • A simplified lay-off procedure has been implemented, whereby employment agreements may be suspended/reduced. This is accessible to:
    • companies facing a breach of supply chain, which entails the total or partial stoppage of the companies or its establishment;
    • companies facing a 40% reduction in turnover in the last 60 days, compared to the homologous period; and
    • companies facing a 40% reduction in production or occupancy capacity in the month following the request for such program.
    • Employees under this procedure shall receive up to 2/3 of their monthly wages, with a minimum of €635 and a cap of €1,905, with 70% of the remaining 2/3 being supported by Social Security. This mechanism shall have a duration of one month, extendable up to three months, if required monthly.

  • In alternative to the partial support of wages referred above, eligible companies may resort to an extraordinary professional training plan for the employees, in a part-time basis. This program must be agreed with the Professional training Authority (IEFP, I.P.) and shall be implemented in the near future. This extraordinary plan is borne by IEFP, I.P. and is defined according to the attended training hours, up to 50% of the employee's working time, and grants right to an allowance paid according to the employee's hourly wage (from salary), with a cap of €635. This measure has a duration of one month.
  • In addition to I) or II), companies receiving these incentives shall also receive a financial incentive in the value of €635 per employee.
  • Lastly, companies benefiting from these incentives shall also be exempted of paying Social Security contributions for the employees in question pending the duration of the incentives.
  • For a company to be able to apply for this aid, it is now required that it is facing:

    • a breach of supply chain; or
    • a 40% reduction in turnover in the last 30 days, compared to either:
    • the homologous period; or
    • the average of the previous two months.
    • It is now also restricted for companies resorting to this regime to perform economic dismissals of any employees from the date the regime is implemented in the company until 60 days after it ends (previously it was restricted only towards employees included in the short term state aid regime/temporary lay-off).

      Companies may only apply for this mechanisms, whether the respective contributory and tax situations are duly regularized before the competent authorities.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

A company may apply to the financial mechanism for maintenance of employment contracts, provided that it complies with the following:

The company must be facing

  • a total shutdown as result from the interruption of global supply chains, the suspension or even cancellation of its orders;
  • the abrupt and sudden breakdown of at least 40% of its profit billing regarding a 60-day period before the request of this incentive, based on the average billing in reference to a three month period similar to the current one; or
  • a 40% reduction in production or occupancy capacity in the month following the request for such program.
  • The company must have its contributory and tax situations duly regularized before Social Security and tax authorities, respectively; and

    The company must notify by writing all employees of its decision to apply to this incentive, informing as well of the probable duration of this period, after consulting with the work council or labor delegate (if existent).

    The company must fill in and submit the forms deemed necessary, which are available on Social Security site, and any other supporting documentation required.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

Application to be made through a form available on Social Security site, to be filled in and submitted to Social Security (or IEFP) with the applicable supporting documents.

The abovementioned site includes as well guidelines, in order for the employers to fill in and submit the necessary forms.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 04 June 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.