1.4. Types of Employment Contracts
Under the Portuguese labour law, indefinite employment is the general rule as far as hiring is concerned (despite being advisable, in many situations, to enter into written agreements). Fixed and unfixed-term employment contracts constitute exceptions to this rule (even if this type of contracts is widely used in Portugal).
Term employment contracts are generally admitted in order to satisfy temporary working needs, such as the replacement of other employees or exceptional workforce demands, or to undertake employment policies (such as the hiring of long-term unemployed or first-time jobseekers) and the launch of new companies or activities. Fixed-term employment contracts for young people looking for their first job and the long-term unemployed is no longer possible and is limited to contracting of the very long-term unemployed (for more than 24 months). On the other hand, companies with more than 250 employees can no longer contract fixed-term employees based on the reason for launching a new activity of uncertain duration or for starting up a company or establishment, a possibility that is limited to micro, small and medium-sized companies.
The maximum duration of fixed-term contracts, including renewals, has been reduced from 3 to 2 years. These contracts may be renewed up to three times, provided that the total duration of the renewals does not exceed the initial period of the contract.
The maximum duration of indefinite duration employment contracts has been reduced from 6 to 4 years. If one of the referred limits is exceeded, the fixed-term employment contract will be converted into an indefinite employment contract.
Fixed-term contracts might be judicially converted into contracts of indefinite duration when, for example, the motive for the hiring is invalid or judicially unproved or it has exceeded their maximum duration or renewals.
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