Transposition of the SE legislation in Portugal (Report: July 2004)

The rules on information, consultation and participation of workers as defined in the Directive differ positively from existing Portuguese law on these issues. According to experts, the procedures and content of information and consultation rights are defined more concretely than in Portuguese legislation. Furthermore, Portuguese law guarantees workers’ participation at the level of governing boards only in state-owned companies. Transposition of the Directive would for the first time introduce legislation on participation in private companies.

The Directive and Existing Portuguese Legislation

Participation

According to the Constitution (1976) and specific legislation (1979, 1984) workers have the right to be represented on all governing bodies in companies that are completely owned (directly or indirectly) by public entities (state, regions, municipalities). This right is specified in relation to the board of directors and the audit committee. Nevertheless, effective representation of workers on the boards of directors of public companies has so far not been permitted by government. Only in a limited number of cases have governments allowed workers’ representatives to sit on audit committees. As workers’ rights of representation on governing bodies apply exclusively to 100%-owned public companies, large-scale privatisation of public enterprises over the last 14 years has drastically reduced the number of firms to which these rights, even in theory, might apply. Furthermore, new legislation on public companies (1999) abandoned all reference to this constitutional right, thus further promoting its non-observance.

The legal possibility for the social partners to agree upon workers’ representation on the governing bodies of private companies (from 1979) had no practical consequences, and the legislator never took the steps necessary for effective promotion of workers’ representation in the management of private companies.

The Directive’s “Standard Rules for Participation” open the way for the introduction of participation rights in some private companies. Despite the stipulations that make it possible to avoid the introduction of workers’ participation (Directive, Art. 7, par. 3; Standard Rules, Part 3, b), this may introduce a new element into Portuguese industrial relations.

Information and Consultation

The absence of workers’ representatives from executive bodies has hindered workers’ representative bodies at company level from exercising their extensive information and consultation rights, guaranteed by the Constitution and specific legislation. This refers in particular to the efficacy of workers’ commissions’ right to “scrutinise management” (controle de gestão) since that depends on the activities of workers’ representatives on governing bodies, particularly the board of directors.

Transposition of the Directive may give a new impulse to information and consultation in the companies concerned. One reason for this is that the Directive’s stipulations on the procedures and content of information and consultation are more concrete than those in Portuguese legislation, as one trade union expert pointed out. Another reason may be the strong legitimacy of European law in Portuguese society. Portuguese labour law is largely a product of the revolutionary period in 1974–75 and the years of democratic institution-building which followed. The labour movement had significant power at that time. Since then, power relations have changed dramatically to the detriment of workers’ organisations. Now employers and governments tend to disregard workers’ rights as embodied in the Constitution and other legislation. However, as already mentioned, European legislation has strong social and political legitimacy and failure to observe it may give rise to problems with EU institutions.

The “State of the Art” As Regards Transposition

The transposition of the Directive seems to be a non-issue in the debate between the Portuguese government and the social partners. The Labour Ministry started work on a transposition bill without previously consulting the social partners. Unions and employers’ associations have not started a debate on the issue within their own organisations and have not come forward with specific demands. Experts expect that transposition will not be concluded in time. The bill may be presented to the social partners in the autumn, and trade union officials expect that there will be great pressure for a rapid consultation process in order to avoid further delays.

References

CES (Economic and Social Council): “Parecer sobre o envolvimento dos trabalhadores na associação Europeia” (Proposta de regulamentação sobre o estatuto da AE e Proposta de directiva que completa o estatuto da AE no que se refere ao papel dos trabalhadores; aprovado no plenário de 17 de Janeiro de 2003; relatores: Joaquim Dionísio e João Proença).
Naumann, Reinhard: ‘Corporate governance and workers’ involvement in Portugal’, unpublished paper (Lisbon, 2003).
TSDACC (Sociedade de Advogados): “Sociedade Europeia – Envolvimento dos trabalhadores no processo de decisão das empresas” (Lisbon, 2002).