HR Future: Legal Highlights

Lay-off – Social Security Contributions

Judgment of the Supreme Administrative Court of 9 September 2026  

Case No: 0893/21.8BELRS

This judgement examines whether an employer, when implementing the standard lay-off procedure provided for in Articles 298 et seq. of the Labour Code, is required to pay social security contributions on the compensation paid to employees. 

Article 303 of the Labour Code obliges the employer to pay contributions on the remuneration earned by the employees but makes no mention of wage compensation. In the view of the Supreme Administrative Court (STA), this omission is not an oversight on the part of the legislator. Drawing attention to Article 304, which requires employees, during the period of reduced or suspended activity, to pay contributions on their earned remuneration and on wage compensation, the STA noted that the legislator did not use the same terms to define the employer’s and the employee’s contribution obligations. Furthermore, the Court recalled that Social Security covers 70 per cent of wage compensation and that, therefore, if the employer were required to pay contributions on that compensation, it would be paying them on an amount that Social Security itself had financed. 

The STA thus concluded that the legislator deliberately intended to exclude wage compensation from the concept of ‘earnings’, and that the employer is therefore not required to pay social security contributions on it.

Effects of the Continued Validity of a Collective Bargaining Agreement 

Judgment of the Supreme Court of Justice of 8 July 2026  

Case No: 3149/24.0T8VFR.P1.S1 

This judgment addresses whether the effects of an expired Collective Bargaining Agreement (CBA) continue to apply over time with regard to the application of the system of career progression through pay bands based on length of service, with implications for the employee’s remuneration in accordance with the terms set out in the expired CBA. In this specific case, the employment relationship was not covered by the CBAs subsequently applicable to the sector, either directly or by virtue of an extension order. 

With regard to the continued validity of CBAs, the Supreme Court of Justice (STJ) emphasises that the legislator has shown concern not to diminish the general protection afforded to employees – and has therefore ruled that, following the expiry of a CBA and until another agreement or arbitral award comes into force, the terms agreed by the parties shall remain in force or, in the absence thereof, those already produced by the CBA in employment contracts with regard to the employees’ remuneration, category and its definition, working hours, and alternative social protection schemes, parental leave and occupational health and safety – but that it cannot be ignored that the law expressly refers to the effects ‘already produced’ by the CBA in employment contracts. 

The STJ acknowledges that career progression through pay bands based on length of service is reflected in employees’ remuneration. It considers, however, that this is not an effect that has already been produced. 

In the STJ’s view, the most coherent interpretation is one that preserves the active situations arising from the expired CBA that have already been consolidated in the contracts of the employees covered by it – that is to say, subjective or discretionary rights, past and present, and not mere legal expectations or rights in the process of being established. 

As such, it concludes that the system of career progression through pay bands based on length of service is not covered by the principle of continued validity, because such progression does not constitute an irreversibly acquired right, but rather a legal expectation.  

Objection to the Transfer of a Business or Undertaking 

Judgment of the Évora Court of Appeal of 17 September 2026  

Case No: 301/25.5T8FAR.E1

In this judgment, the Évora Court of Appeal (TRE) accepted that an employee’s right to object to the transfer of their employment contract in the context of a transfer of an undertaking may be exercised through a legal proceeding, arguing that the law merely requires the employee to inform the employer, in writing and within the statutory time limit, that they object to the transfer, stating their identity, the contracted role and the grounds for the objection.

Since the objection constitutes a legal act which takes effect as soon as it reaches the addressee or otherwise comes to their knowledge, the service of the proceedings, by informing the employer that the claim has been brought, constitutes an effective written means of informing them of the exercise of that right to object. 

Flexible Working Hours

Judgment of the Porto Court of Appeal of 14 July 2026 

Case No. 4456/24.0T8VLG.PI

In this judgment, the Porto Court of Appeal (TRP) ruled on the scope of the flexible working hours scheme provided for in Article 56 of the Labour Code, to which employees with children under the age of 12 are entitled. 

The TRP noted that this scheme allows employees to choose the start and end times of their normal daily working hours but does not allow them to determine the specific terms under which they wish to carry out their work; this determination rests with the employer. The TRP emphasised that this scheme does not confer on the employee the right to demand a fixed timetable and clarified that a request for working hours between 8.30 am and 5.30 pm does not constitute a genuine request for a flexible timetable, as it leaves the employer no scope to adjust the timetable to the needs of work organisation.