Portugal's Labour Law Overhaul Enters Critical Week as Government, Unions, and Employers Resume Talks

Portugal's government sat down with the UGT trade union confederation and the four main employer associations on Monday for what both sides describe as a pivotal round of negotiations on the country's proposed labour law reform. The draft legislation, titled "Trabalho XXI" (Labour XXI), has been under discussion for eight months and touches on some of the most sensitive aspects of Portuguese employment law — from fixed-term contracts and dismissal rules to working-time arrangements.

What Is on the Table

The government's latest counter-proposal, delivered to social partners in late March, retains the core structure of the original draft but includes adjustments aimed at bridging the gap between employer demands for greater flexibility and union insistence on worker protections. Key areas under negotiation include:

• Fixed-term contracts: The government wants to reduce the maximum duration of fixed-term employment contracts, pushing employers toward permanent hiring. Employer groups have resisted, arguing that seasonal industries — particularly tourism and agriculture — depend on temporary arrangements.
• Dismissal procedures: Proposals to simplify termination processes have drawn sharp criticism from unions, who warn that any loosening of dismissal protections could be weaponised against older or less-skilled workers.
• Working-time flexibility: A proposal to allow greater variation in weekly hours through company-level agreements, as long as average hours remain within legal limits over a reference period. This echoes reforms already adopted in several other EU countries.
• Trial periods: The draft reportedly extends trial periods for certain categories of workers, particularly first-job holders under 30.

CGTP Excluded, Calls General Strike

Notably absent from Monday's meeting was Portugal's other major trade union confederation, the CGTP-IN. The government has opted for months to negotiate exclusively with the more moderate UGT and employer bodies, leaving the communist-aligned CGTP out of the room. The CGTP has responded by calling a national strike and demonstration for 17 April, with construction unions already confirming they will join.

The exclusion has become a politically charged issue. The CGTP argues that any labour reform agreed without its participation lacks democratic legitimacy and will face fierce opposition in parliament and on the streets. The government counters that progress requires a negotiating partner willing to compromise.

Why It Matters for Expats and Businesses

For foreign residents working in Portugal — or running businesses that employ Portuguese workers — the outcome of these talks will directly shape the employment landscape. Key implications include:

• Employers may gain more flexibility in hiring and adjusting working hours, but face tighter restrictions on the use of temporary contracts.
• Workers on fixed-term contracts — common among younger employees and those in the services sector — could see their contract durations shortened, potentially accelerating the path to permanent status.
• The proposed changes to trial periods could affect how quickly new hires gain full employment protections.

Timeline

Labour Minister Maria do Rosário Palma Ramalho is pushing for a tripartite agreement before the end of April, which would allow the government to present legislation to parliament in May. However, with the CGTP strike looming on 17 April and several sticking points still unresolved, that timeline looks increasingly ambitious.

The UGT has signalled it remains open to negotiation but wants concrete guarantees on wage floors and dismissal safeguards before signing any accord. Employer confederations, meanwhile, have warned that excessive rigidity in the new law could deter foreign investment at a time when Portugal is already grappling with energy costs, tariff uncertainty, and a slowing EU economy.