Government Sends a Labour Code Overhaul to the Assembleia on 19 May — Fixed-Term Contracts Stretch to Five Years and Work-Hour Bank Bonus Caps at 25%

Minister of Labour Maria do Rosário Palma Ramalho dropped the executive's long-trailed proposta de lei to revise the Código do Trabalho at the secretariat of the Assembleia da República on Tuesday 19 May 2026, ECO confirmed after seeing the parliamentary docket. The filing closes nine months of stalled negotiation inside the Concertação Social, where the UGT confederation and the government failed to reach a consensus text and CGTP withdrew earlier in the cycle. The AD minority government now needs at least one opposition bench to carry the package — and Chega has already telegraphed that any vote is conditional on a lower retirement age and an additional statutory holiday slate.

What Changes for Fixed-Term Contracts

The headline rewrite stretches the termo certo ceiling from two years to three for one bracket and from four years to five for the longer-form contracts the law currently caps at four. Workers who have never held a contrato sem termo — typically younger entrants and re-entrants after long unemployment — would be eligible to sign these extended fixed-term agreements, reversing a 2023 restriction that pushed firms toward open-ended hiring under threat of automatic conversion. The package also fully revokes the existing outsourcing restrictions tied to collective dismissals, a clause the unions repeatedly flagged as the deal-breaker inside Concertação Social.

Banco de Horas, Parental Rights and Training

The work-hour bank (banco de horas) survives the rewrite intact but with one calibrated boost: hours accumulated above the standard week unlock a 25% compensation uplift when drawn down, below the 50% figure UGT had pushed in last summer's negotiation rounds. The proposal narrows parental rights against night and weekend work, restricting the current carve-outs that allowed parents of school-age children to refuse those rosters. Microenterprises gain a softer training duty — a 30 hours per year minimum guarantee in continuous training, slimmer than the current 40-hour benchmark for larger firms. Nursing-leave (amamentação) gets a hard two-year ceiling, with a medical certificate required at the start and again at the six-month mark.

The Parliamentary Maths

The AD-CDS bench commands 91 of 230 seats. PS sits at 78, Chega at 50, Iniciativa Liberal at 9, Bloco de Esquerda at 5, PAN at 1, Livre at 4, and JPP at 1 — meaning the government must either pull PS or Chega to the floor. PS's António José Seguro publicly backed the UGT line during the Concertação Social phase, and the party is unlikely to vote with the executive on the outsourcing revocation. Chega's André Ventura confirmed during the morning's parliamentary briefing that his bench is open to negociar but only against the retirement-age and holiday concessions the executive has so far refused to put on the table.

What This Means for Expats

If you sign on a fixed-term contract: the new five-year ceiling would apply to contracts signed after promulgation; existing contracts continue under the prior cap.
If your employer uses outsourcing: the collective-dismissal restriction that currently blocks fully outsourced workforce transitions would lift on day one — relevant for IT-services and BPO contractors with Portuguese teams.
If you bank work hours: the 25% uplift becomes statutory rather than negotiated, so your recibo should mark accumulated hours at the new bonus when redeemed.
Where the bill goes next: the AR sends the text to the Comissão de Trabalho, Segurança Social e Inclusão for committee work, with the general-vote slot likely in the June plenary window.