Redundancy in Portugal: Collective Dismissal, Job Elimination and Employee Rights

If your employer says your role is being made redundant in Portugal, do not assume that the word "redundancy" is itself a legal reason for dismissal.

Portuguese employment law uses specific employer-initiated termination routes.

Two important routes are:

• collective dismissal;
• dismissal by extinction of a job position.

Both can arise from business restructuring, market problems or technological change, but they are not the same procedure.

The employer must fit the situation into the correct legal route, follow the required procedure and pay the compensation and employment credits due.

First identify what kind of redundancy process this is

Ask for the written documents and identify whether the employer is using:

• collective dismissal;
• extinction of your individual job position;
• another dismissal route;
• or a mutual termination agreement.

A company cannot turn a settlement proposal into a lawful redundancy simply by calling it one.

Likewise, an individual dismissal cannot always be handled as "job elimination" if the facts actually fall within the collective-dismissal rules.

What is collective dismissal?

Under the current Labour Code, collective dismissal involves employer-initiated termination over a three-month period affecting at least:

• two workers in a micro or small company;
• five workers in a medium or large company,

where the terminations result from closure of sections or a reduction in staff based on market, structural or technological reasons.

The legal threshold matters.

If a company is restructuring multiple positions, the procedure can move out of an individual job-elimination route and into collective dismissal.

What business reasons can support collective dismissal?

The Labour Code recognises categories such as:

Market reasons

For example, reduced demand or inability to place products or services on the market.

Structural reasons

For example, economic-financial imbalance, change of activity, organisational restructuring or replacement of dominant products.

Technological reasons

For example, automation, new production methods or technological changes affecting the need for particular work.

The employer needs an actual factual explanation.

A generic statement such as "business restructuring" should not be accepted as the end of the analysis.

Collective dismissal has a formal procedure

The employer must communicate the intended collective dismissal in writing through the statutory procedure.

The documentation includes information such as:

• reasons for the dismissal;
• staffing information;
• criteria for selecting workers;
• number and professional categories affected;
• intended timeframe;
• method of calculating compensation.

There is then an information and negotiation stage.

This is not a process in which HR can simply announce the final result first and reconstruct the reasoning later.

Notice before the collective dismissal takes effect

The final written decision must normally be communicated with minimum advance notice based on seniority:

• under 1 year: 15 days;
• 1 to under 5 years: 30 days;
• 5 to under 10 years: 60 days;
• 10 years or more: 75 days.

If the required notice is not observed, the Labour Code contains consequences for the missing notice period.

Time to look for new work

During collective-dismissal notice, the employee has a statutory credit of hours equivalent to two working days per week without loss of pay.

This can be used to organise the next employment step.

The worker must communicate use of the hours to the employer under the statutory procedure.

Can you leave before the redundancy date?

During the collective-dismissal notice period, the worker can terminate the contract with at least three working days' notice and retain the right to statutory compensation.

That can be important if a new job begins before the employer's proposed termination date.

Do not confuse this special rule with an ordinary resignation outside a collective-dismissal process.

Statutory compensation

The current collective-dismissal compensation framework is generally 14 days of base salary plus seniority payments for each complete year of service, with proportional calculation for part of a year.

The Labour Code also imposes statutory caps.

Do not reduce the entire final account to "14 days per year".

The employee may also be owed:

• salary;
• holiday-related credits;
• Christmas subsidy proportions;
• overtime;
• bonuses or commissions already earned;
• expenses;
• other contractual credits.

These are separate from statutory redundancy compensation.

Be careful when receiving the compensation

Receipt of the full statutory compensation can create a legal presumption that the worker accepted the dismissal.

The Labour Code provides a route to rebut that presumption by returning or making the full compensation available to the employer at the relevant time.

If you are considering challenging the dismissal, do not treat the payment mechanics as an administrative detail.

Get advice before using or retaining the payment in a way that affects your position.

What is dismissal by extinction of a job position?

This route applies where the employer says a particular position has genuinely disappeared for market, structural or technological reasons.

It is not simply a dismissal of a person the employer no longer wants.

The legal focus is the position itself.

The Labour Code requires, among other things, that:

• the reason is not caused by culpable conduct of employer or worker;
• continuing the employment relationship is practically impossible;
• the company does not have fixed-term contracts for corresponding tasks;
• collective dismissal is not the applicable route.

What if several employees do the same job?

If several positions in the same structure have identical functional content, the Labour Code requires the employer to use an ordered set of relevant and non-discriminatory selection criteria.

Those criteria address factors such as:

• performance evaluation based on previously known parameters;
• qualifications;
• cost of maintaining the employment relationship;
• experience in the function;
• seniority.

The selection cannot simply be arbitrary.

If your position was chosen while colleagues doing the same work remain, ask for the actual criteria and how they were applied.

Can another suitable position save the employment relationship?

One key question in extinction-of-position cases is whether continued employment is practically impossible.

Current law connects that test to whether the employer has another position compatible with the worker's professional category.

A company cannot simply remove one internal label while an equivalent compatible role is realistically available and ignore the statutory requirements.

The employee has a consultation stage

After the initial communication in an extinction-of-position process, the employee and relevant worker representatives can submit a reasoned response within 15 days.

In defined areas, the employee can also ask the labour inspectorate to verify specified statutory conditions within a much shorter five-working-day period after the employer's communication.

These deadlines are worth using.

The correct time to challenge the factual basis is before the final dismissal decision, not only after termination.

Final notice for extinction of position

The final decision also uses the seniority-based notice periods of:

• 15 days;
• 30 days;
• 60 days;
• 75 days.

The written decision must contain the legally required reasoning and information about compensation and other termination credits.

Can redundancy be challenged?

Yes.

A redundancy route is not automatically lawful because the employer followed a sequence of HR meetings.

Issues can include:

• no genuine market, structural or technological reason;
• wrong legal route;
• inadequate reasoning;
• failure to satisfy the statutory requirements;
• arbitrary selection;
• failure to follow consultation and communication rules;
• compensation or credits not made available as required.

The dismissal challenge deadline

The ordinary judicial dismissal challenge is generally subject to a 60-day period from receipt of the dismissal communication or, if later, the contract termination date.

A separate preventive suspension remedy can carry a five-working-day period.

Do not wait until the entire severance negotiation has finished before checking those dates.

Redundancy and immigration status

For a foreign worker, job loss can also create a separate immigration issue.

If your residence route or pending application is employment-based, review:

• current permit status;
• whether a new employer is starting;
• whether AIMA needs updated evidence;
• whether another residence basis is more appropriate.

Employment dismissal and immigration status are connected, but they are not the same legal procedure.

A practical redundancy checklist

1. Ask for the legal route in writing

Collective dismissal or extinction of position?

2. Preserve all employer documents

Especially selection criteria, reasons and compensation calculation.

3. Check the deadlines

There can be short consultation or urgent court deadlines.

4. Compare the business explanation with reality

Is the position actually disappearing?

5. Check who remains

Selection among comparable roles can matter.

6. Separate statutory compensation from other credits

Do not let a single global number hide unpaid employment rights.

7. Get advice before accepting or returning compensation

Payment can affect challenge strategy.

8. Check immigration consequences

Especially if you are a non-EU worker.

Common mistakes

Treating "redundancy" as a legal category by itself

The employer needs a recognised termination route.

Assuming compensation makes the process lawful

Payment does not cure every procedural or substantive defect.

Ignoring the selection criteria

They can be central in job-elimination cases.

Missing the five-day or 60-day deadlines

Redundancy disputes can become time-sensitive very quickly.

Signing a mutual agreement because HR says redundancy is inevitable

Compare the agreement with the employer's actual legal route first.

Frequently asked questions

Is redundancy legal in Portugal?

Yes, through specific statutory routes such as collective dismissal and extinction of a job position, provided the substantive and procedural requirements are met.

How much redundancy compensation is due?

The current collective-dismissal statutory framework generally uses 14 days of base salary plus seniority payments per complete year, subject to statutory caps and transition rules. Other employment credits are separate.

Can the employer choose anyone it wants?

No. Where the statutory selection criteria apply, they must be relevant and non-discriminatory.

Can I challenge redundancy?

Yes. The legality can be reviewed by a court and specific pre-decision objections can also be important.

Can I start a new job during the notice period?

In collective dismissal, the Labour Code contains a specific rule allowing the worker to leave with at least three working days' notice while retaining statutory compensation.

What if my job has not really disappeared?

That can be a central issue in an extinction-of-position challenge.

Have you been selected for redundancy in Portugal?

Send us the employer's communication, employment contract, compensation calculation and any documents explaining the restructuring or selection.

Our lawyers can identify the legal route, review the procedure and selection criteria, calculate the amounts due and advise on negotiation or court challenge.