Country overview
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.
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.
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)
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 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).
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
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.
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).
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
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).
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.
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.
portugal_transpositionamendment.pdf 29.49 kB
On 29 March 2006 Decree-Law n.º 76-A/2006 was published, a huge reform package aimed at improving company law and reducing bureaucracy. It will come into force on 30 June 2006. Overall, 32 statutes were affected. Amongst them was the Portuguese transposition of the SE Statute, the legal regime of European Companies. Report by Philippe Lafontaine.
portugaltranspositionseeuropefeb2006.pdf 75.88 kB
On 20 October 2005, the Portuguese government transposed the Directive on workers' involvement in the SE by governmental decree. The new SEEurope report examines in detail the Portuguese transposition law with regard to the benchmarking points set-up in the first SE checklist prepared by ETUI and UNI Europa. Report by Philippe Lafontaine.
SEEurope report
Reinhard Naumann (Centro de Investigação e Estudos de Sociologia, Lisbon)
Landslide Victory for the Opposition in General Election May Postpone Transposition: European Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European Company (SE) has been transposed into Portuguese national legislation by Decree-Law n.º 2/2005 (4 January 2005). Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European Company with regard to the involvement of employees has not been transposed yet. In October 2004 the project for the transposition of this Council Directive was published in the Official Journal of the Labour Ministry, passed through the process of public evaluation and was ready to be promulgated by government decision (Decree-Law voted by the government). However, in November 2004 the President of the Portuguese Republic decreed the dissolution of the Parliament, and at the beginning of December the conservative government stepped down. Elections on 20 February 2005 brought a landslide victory for the Socialist Party (PS): for the first time in its history the PS won an absolute majority. The new government, led by PM José Sócrates, took office on 12 March 2005. ring the transition period between November 2004 and March 2005 the conservative government did not pass the Decree-Law transposing the Council Directive on workers’ involvement. Thus, the new Socialist government will have to decide whether to pass the Decree-Law as it was prepared by its predecessor or to make some amendments.
Evaluation by Social Partners
In their evaluation the employers and the unions have criticised the fact that the transposition project goes beyond a number of the Directive’s provisions. While the employers see this in the first place as a problem of higher ‘costs’ (time-consuming procedures, financial expenditure, etc.), the trade union camp points to the loss of autonomy of the negotiating parties.
The employers’ critique and subsequent demands are clearly directed at limiting costs and the scope and range of involvement. Thus they demand, among other things:
- limitation of the geographical scope of the workers’ council’s representativeness (European Economic Space, see project article 4-a) to the European Union;
- limitation of obligation to cover costs to only one expert;
- abolition of regulation on payments to experts (project article 35: 3 and 4);
- limitation of travel expenses;
- reduction of time credit for workers’ representatives (project article 43);
- reduction of fines (project article 45).
The trade unions, on the other hand, are seeking:
- effective regulation of the election/appointment of workers’ representatives (special negotiating body and representative body);
- effective rules for workers’ involvement in case of a failure to reach agreement;
- clear rules on confidentiality;
- protection for workers’ representatives;
- effective regulation against misuse of the SE to reduce or deny workers’ participation rights;
- effective regulation of compliance with the Directive.
From this perspective, the trade union critique pointed out that the project fails to transpose important aspects of the Directive in a complete and correct fashion. Central criticisms include:
- the definition of ‘representative body’ (designated in the project as ‘Workers’ Council’), while the Directive leaves it to the negotiating parties to freely decide on the involvement regime (project article 4-b);
- the regulation that gives the participating company with the largest proportion of employees and its headquarters in Portugal the right to determine the number of members of the special negotiating body and the countries in which they should be elected or appointed and to set a time limit for their election/appointment (project article 9);
- the regulation on the agreement on involvement between the SE and the SNB that, on the one hand, limits the autonomy of the negotiating parties (revision of the agreement), and on the other, does not regulate sufficiently the resources to be made available to the representative body (project articles 16 and 18);
- the omission of a regulation on certain aspects of obligatory involvement (paid free time for workers’-representative training – Directive Annex Part 2-g, and material and financial resources for the representative body – Directive Annex Part 2-h);
- the exclusion of workers’ representatives on SE governing bodies from employment protection (project article 43);
- the omission of a regulation on administrative or legal procedures to enforce Directive implementation (Directive, Article 12-2).
Notwithstanding their distant, even opposing, positions, the employers’ and the trade unions’ criticisms converged on the demand for a ‘profound revision’ of the transposition project.
At the moment we do not know what new Labour Minister José Vieira da Silva and his team will do regarding transposition
FILES
Full report: Transposition of Se legislation in Portugal (March 2005) Portugal transposition SE march 2005.pdf 61.69 kB
SEEurope report
Reinhard Naumann (Centro de Investigação e Estudos de Sociologia, Lisbon)
Tripartite Negotiations on the Transposition Bill Delayed Due to Fall of Government: On 20 October 2004, the Portuguese Labour Ministry published a bill (projeto de decreto-lei) for the transposition of Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European Company with regard to employee involvement. The Ministry initiated a process of “public discussion” of the bill, which is an obligatory part of the labour legislation process. The period of public discussion finished at the end of November 2004.
From the legal point of view, the government may now promulgate the law. However, from a political point of view the legitimacy of doing so may be questioned from various angles. First, during the period of public discussion the bill received harsh criticism from the social partners: for a number of different reasons, both employers and trade unions demanded a “profound review” of the bill. Second, the present government itself has only limited legitimacy. In December the President of the Portuguese Republic decided to dissolve the Parliament and called for general elections that will take place on 20 February 2005. A few days later the government stepped down.
At the moment it seems that the Socialist Party will beat the governing right-wing coalition in the coming elections and that there will be a new government supported by a left majority. That means that the transposition project which has been drawn up by the present right-wing government may be subject to major changes, even if it comes into force before the elections.
The bill was published in the Labour Ministry’s Bulletin (Boletim do Trabalho e Emprego 10, Separata) on 20 October 2004.
SEEurope report
Reinhard Naumann (Centro de Investigação e Estudos de Sociologia, Lisbon)
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
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.
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).