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Outsourcing and the transnational application of the Labour Code?

By 25 Setembro, 2024Outubro 14th, 2024No Comments

With the Decent Work Agenda, the Labour Code now establishes in article 498-A, paragraph 1, that:

‘In the event of the acquisition of external services from a third party for the performance of activities corresponding to the corporate purpose of the acquiring company, the collective labour regulation instrument that binds the beneficiary of the activity shall apply to the service provider, when it is more favourable to it.’

It seems to us that the legislator intended to standardise working conditions and create a supposed equality between the workers of the company-employer acquiring the services and the workers of the company-provider, only when it is more favourable.

The law does, however, require

a) The acquisition of external services from a third party organisation;

b) It is intended for the performance of activities corresponding to the corporate purpose of the company-employer that will benefit from the service;

c) That the IRCT provides more favourable labour conditions for the workers of the provider-company.

Without prejudice, it seems to us that the applicability of the Labour Code to the recipients of the aforementioned rule is a prerequisite. Let’s imagine the case of a foreign company-provider, based in France we suppose, which provides its activity remotely to Portugal, with teleworkers based in that same country. Would the Labour Code apply (transnationally) to French labour relations, given that (i) the law applicable to the French employment contract is French labour law and (ii) the French court is the competent court?

We don’t think so.

So that there is no bias in the application of labour rules, the interpretation-application process commands us to submit to conflict law. It is therefore always up to us to assess whether Portuguese labour law is the applicable and competent law. We must therefore remember that there is no hierarchy of rules between different legal systems, so the Labour Code cannot be imposed without more, nor can it escape the system of conflict law.

We’ll keep an eye out for further developments on this matter.

Tiago Sequeira Mousinho @ DCM | Littler