After the “focus” period of the COVID-19 pandemic – and in the wake of all the economic (and social) impacts of the pandemic on the national economy – there are some doubts about the application of the Labor Code as a general law; doubts that (re)emerge, especially when employers most need to resort to: (i) instruments of greater flexibility, and/or (ii) support provided by the State.
This text focuses on a very specific duty, which results from Article 303(2)(e) of the Labor Code. This provision determines the obligation of employers during the lay-off period [reduction of the normal working period (NWP) or suspension of the employment contract]:
Not hiring or renewing an employment contract to fill a job that could be filled by a worker on retrenchment or suspension.
Doubts are higher about the term the legislator uses, “admission”, which is used on several occasions throughout the Code (e.g. fixed-term employment contracts, part-time work, service commission, overtime, vacations, collective dismissal).
The law seems to refer to the act of hiring as an act of contracting (signing an employment contract) during the lay-off period. This seems to be the understanding that best coordinates with the underlying reason for this prohibition: that the employer should not aggravate his situation (of business crisis), with increased costs, while benefiting from State support. This prevents certain abuses and safeguards healthy competition.
Doubts remain as to whether this concept of “admission” includes: (i) the reintegration of workers, (ii) the “return” of workers, e.g. after the occasional assignment of workers, or even (iii) the “recognition” of the service provider as a true subordinate worker. In particular, if the lay-off process has already started, e.g. after the communication phase of the measures applicable to the workers and after the communication/insertion/selection of these workers on the social security platform, as workers covered by the reduction of the NWP or suspension of employment contracts.
Doubts remain as to whether this concept of “admission” includes: (i) the reintegration of workers, (ii) the “return” of workers, e.g. after the occasional assignment of workers, or even (iii) the “recognition” of the service provider as a true subordinate worker. In particular, if the lay-off process has already started, e.g. after the communication phase of the measures applicable to the workers and after the communication/insertion/selection of these workers on the social security platform, as workers covered by the reduction of the NWP or suspension of employment contracts.
Strictly speaking, reinstatement, e.g. in the event of unlawful dismissal, presupposes that there has already been a previous act of hiring (only someone who has been previously hired is reinstated). But the same applies to the return of workers after occasional assignments (or the return of workers after the suspensive phenomenon of the employment contract prior to the lay-off measures). Let’s imagine, furthermore, that the employer has to recognize an employment relationship with a “false” service provider due to a court order – even in this case, there will be an act of admission prior to the lay-off period, since the seniority up to the date of hiring of the “false” service provider (in reality, a subordinate worker) is recognized.
However, from a factual point of view, even in these reported cases, there is an increase in economic costs; plus, during this period the State will continue to pay social support for employers and workers to make the employment relationship viable, as far as possible. If “new hires” are not considered, how will the procedural obligations of lay-off processes be reconciled? And how will these “returns” be dealt with by the Social Security services? Will these acts be disregarded as acts of admission? Is there an obligation to postpone the acts of “return”? And when there is a judicial obligation to recognize the employment relationship or reinstate the worker?
We’ll keep an eye on future developments.
Tiago Sequeira Mousinho @ DCM | Littler
