There is no employee board-level representation in Portugal, although the constitution theoretically provides for it in publicly-owned companies. The transposition of the directive was delayed by a change of government in Portugal and both unions and employers had criticisms of the initial draft legislation. However, there was no widespread public debate.
For further information on the SE legislation, such as the choice of SNB members, click on the more button.
There is no effective legislation giving employees the right to be represented at board level. In the private sector, legislation permits employee representation to be agreed between employers and unions, but in practice this does not happen. In state-owned companies the constitution gives works councils the right to “promote the election of workers’ representatives in the governing bodies of companies belonging to the state and other public bodies” and legislation in 1979 and 1984 gave employees the right to elect one member of the management board. However, in 1999 these rights were removed.
The directive on employee involvement in European companies was initially discussed in the tripartite Portuguese Economic and Social Council (CES), which produced a report on the subject which was approved in January 2003. Draft legislation was then published by the Portuguese government in October 2004, with the official period of consultation running to the end of the following month. However, parliament was dissolved in November 2004, and although the government could theoretically have introduced the legislation, it decided not to do so. Legislation implementing the directive was only finally passed a year later, following elections and a change of government.
Both unions and employers had substantial criticisms of the draft legislation (see section on position of trade unions and employers), but there appears to have been no widespread public debate.
Form of transposition
Directive was transposed by law in December 2005 more than a year after the October 2004 deadline.
The directive on employee involvement in European companies was transposed through legislation passed on 13 December 2005. It does not have a title, simply a date and numerical reference, which is Decree Law No. 215/2005 of 13 December 2005 (Decreto-Lei n.o 215/2005 de 13 de Dezembro). The law was approved by the council of minister on 20 October 2005 and published in the official journal on 13 December 2005.
Separate legislation making the changes necessary to adapt Portuguese company legislation to the Regulation on European companies was passed 11 months earlier in January 2005.
Special negotiating body (SNB)
Selection of national members
Portuguese SNB members are chosen through agreement between the works councils, or by the works councils alone, if there are no unions, or through the unions, if they represent enough employees. There is a direct election by the workforce only if there is neither a works council nor unions with sufficient support, or the employees want one.
Portuguese SNB members should, if possible, be chosen through agreement between the works council and the unions, both where there is a single Portuguese company involved and where there are several. If there is a works council but no unions, then it can make the choice. The alternative is that the SNB members are chosen by the unions in the company or companies involved, provided that together they represent at least two-thirds of the employees, or, if this cannot be demonstrated, by the unions, provided they each represent at least 5% of the employees. Only unions representing at least 5% of the employees of the companies involved have a right to participate in the selection of Portuguese SNB members. However, if several unions together represent at least 5% of the workforce, they can mandate one of their number to participate.
There is a direct election of SNB members only in two circumstances. First, where there is neither a works council nor unions representing at least 5% of all employees in the company or companies involved; or, second, where a third of the employees ask for it. In such cases nominations much have the support of either 10% of the workforce or 100 employees and there is a secret ballot (Article 39).
In practice, employee representation is normally provided through the union. Works councils are relatively rare and are often linked to a strong union presence. Figures from the recently published green paper on labour relations show that at the end of 2005 there were only 192 works councils in the whole of Portugal.
External trade union representatives
External union representatives are specifically permitted to be members of the SNB.
The legislation specifically states that the SNB may include external union representatives who are not employees of companies involved, provided the union represents employees in the company (Article 38).
Financing of experts
Funding limited to a single expert.
The Portuguese legislation states that the SNB can be assisted by “experts of its choice” (Article 12). However, the companies involved in setting up a European company are not required to pay for an unlimited number. They should, however, pay the costs of “at least one expert” (Article 35).
Standard rules under the fallback procedure
Allocation of national seats on SE representative body
Portuguese members of the SE representative body are chosen in the same way as Portuguese members of the SNB – through agreement between the works councils, or by the works councils alone, if there are no unions, or through the unions, if they represent enough employees. Direct elections are a last resort.
Portuguese members of the SE representative body, known in the legislation as the workers’ council (conselho de trabalhadores) are chosen largely in the same way as Portuguese members of the SNB. In other words, they should be chosen through agreement between the works council and the unions, by the works council if there are no unions, and by the unions, provided they represent at least two-thirds of the employees, or provided each individual union represents at least 5%. Only unions representing at least 5% of the employees have a right to participate in the selection of Portuguese members of the representative body, although where several unions together represent at least 5% of the workforce, they can mandate one of their number to be involved. In the case of the representative body, there is a direct election only if there is neither works councils nor any union with the required level of support (Article 40).
In contrast with the SNB, legislation does not specifically allow external trade union representatives to be members of the representative body. On the other hand, this is also not specifically prohibited.
Budget of representative body
The company should bear the costs of the representative body, including one expert.
The company is obliged to bear the costs of the representative body, including meetings, interpretation, travelling and accommodation. This includes the costs of a single expert. The travelling and accommodation costs should be on the same basis as those for employees travelling on company business (Article 35). Portuguese members are entitled to the same paid time off as members of the works council, in addition to time off to attend the meetings. This is equivalent to 25 hours a month in all but the smallest companies. However, this time off cannot be added to existing time-off rights (Article 44).
National procedure for the allocation of board seats
Employee representatives at board level from Portugal are chosen in the same way as SNB members – through agreement between the works council and the unions, by the works council, if there are no unions, and by the unions if they have sufficient support. There are direct elections where these representative bodies do not exist, or where the employees want them.
The legislation states simply that the appointment or election of board members representing Portuguese employees is the same as that for the appointment or election of Portuguese SNB members (Article 42).
This means they should be chosen through agreement between the works council and the unions, by the works council, if there are no unions, and by the unions, provided they represent at least two-thirds of the employees, or provided each individual union represents at least 5% of the employees. The need for unions, either individually or together, to represent at least 5% of the employees, before they can participate in the process applies in this case, as it does for SNB membership and direct elections take place, if there are no existing representative structures, or one third of the employees want them (see SNB section). External trade union representatives are not specifically allowed to be chosen as board members, although this is also not specifically prohibited.
Misuse of procedures and structural change
Misuse of procedures
There is no specific reference in the legislation to circumstances where procedures are misused to deprive employees of their rights to be involved. Contravention of the legislation is, however, an administrative offence.
The Portuguese legislation does not include any reference to circumstances after an SE has been set up, which might indicate that the intention in doing so was to deprive employees of their rights. It states only that contravening the legislation constitutes an administrative offence, which is more or less serious, depending on the terms breached (Article 47).
Structural change
The Portuguese legislation does not provide for renegotiation after structural change.
There is no automatic right in the Portuguese legislation to renegotiate the agreement if there are changes in the structure of the SE.
Position of trade unions and employers
Unions and employers were consulted on the introduction of the legislation and both sides had substantial criticisms of the draft legislation proposed by the then centre right government.
Both unions and employers commented on the proposed text of the legislation published by the conservative government in October 2004. For the unions, the key points included their view that there were insufficient resources and protection for employee representatives, that there was no protection against the procedure being misused and that the enforcement mechanisms were too weak. They also argued that the legislation reduced the autonomy of the parties to negotiate their own arrangements. The employers’ concerns were in some ways a mirror image of this, as they wanted a reduction of the paid time off for employee representatives, a reduction in any fines for failing to comply and greater limitations on travel expenses. They felt the legislation went beyond what the directive required, in terms of costs and procedures. For more details see report from Reinhard Naumann (Dinâmia) March 2005.