Continuing our work from February of this year (see here), this time we have three more important decisions. These are highlights from last March and relate to our higher courts.
- The first to be highlighted comes from the Supreme Court of Justice (case 5001/21.2T8MAI.P1.S1, of 06.03.2024), on the subject of international employment contracts, or more specifically, employment contracts entered into under a law other than Portuguese. It is important to note that the Supreme Court ruled: “[a]lthough the individual employment contract is governed by the law of another country (under the terms chosen by the parties), the payment of vacation and Christmas bonuses is mandatory for workers whose employment contract is being performed in Portugal”. (emphasis added)
In fact, the Supreme Court of Justice (“SCJ”) emphasized what has been the experience, which already expresses some uniformity in other higher courts (see other examples here and here) and even in the SCJ (see here), regarding the application of Rome I and what is understood by the precepts (of Portuguese law) that cannot be derogated from by agreement. In fact, the choice of applicable law (or applicable laws) must be assessed in advance, particularly for the execution of multi-location employment contracts and in multinational realities or with representation across borders.
- The second to be highlighted comes from the Lisbon Court of Appeal (case 2878/20.2T8CSC.L1-4, of 06.03.2024), and concerns the issue of permanence pacts and the proof to be carried out on the requirements that form the basis of this pact. The Court ruled that: “[t]he employer does not have to prove the expenses actually incurred in training the employee, but only has to demonstrate that they go beyond the ordinary training to which he is obliged”.
It should be noted that one of the basic assumptions of the permanence pact is the incurring of large expenses for the employee’s training. The Portuguese courts have been preoccupied with this issue and companies are particularly concerned about the “minimum amount” (a frequent and, in fact, quite incisive doubt, sought by practical traders) that must be considered in order to meet this requirement. The recent ruling by the Lisbon Court of Appeal seems to make the demonstration required of labor organizations more flexible to a certain extent.
- The third – and final – case we highlight belongs to the field of the transfer of an economic unit (“TUPE”, in the business lexicon), once again dealing with the transfer of an economic unit in the sector of surveillance companies. The Lisbon Court of Appeal (case 5837/20.1T8LRS.L1-4, of 06.03.2024) has once again emphasized that for this type of company, which provides surveillance services, the human factor is particularly important, the “transfer” of workers (see other examples here and here). Therefore: “[t]here is no transfer of an economic unit if there is no transfer of a significant part of the company’s staff who worked in the same post, although the activity previously carried out using the contractor’s assets is maintained”.
It should be noted that this is a particularly sensitive issue, since, as it is understood that there is a transfer of an economic unit, there is a need for (i) a specific procedure (e.g. with legal deadlines to be observed and mandatory phases), (ii) the preparation of specific working documents and the possible classification of documents. What’s more, if a “TUPE” is applied and the legal procedures have not been followed, there is also the risk for labor organizations of (i) the application of an administrative offense, (ii) a possible scenario of litigation and possible labor disputes, which could lead to the termination of the employment contract, (iii) the possibility that a poorly conducted “TUPE” could lead to the unlawful dismissal of workers by employers (plus possible reinstatement and possible compensation), as has already been the case in the higher courts.
We’ll be on the lookout for more decisions in the coming month. We intend to continue this challenge and report on some (of the many) decisions of relevance to work organizations.
Tiago Sequeira Mousinho @ DCM | Littler
