The Confederation of Commerce and Services of Portugal (CCP) said on Wednesday that the increase in severance pay from 12 to 14 days will only apply in the future, that is, it will not be retroactive.
CCP President João Vieira Lopes spoke at the entrance of a meeting of the Social Concert, the agenda of which is the status of the medium-term agreement to improve incomes signed on October 9 between the government, employers’ federations and UGT.
The agreement provides for an increase in the compensation in the event of collective redundancy or termination of the employment contract from 12 to 14 days and the suspension of the monthly contributions to the Compensation Fund for Employment Agency from 2023.
“We have an indication that the government is apparently going to remove that doubt that there was about the severance payment,” Vieira Lopes said at today’s meeting.
According to the chairman of the CCP, the measure will not be applied retroactively, because “the various amendments to the law have never been retroactive” and the government’s indication “is that this will not be the case”.
João Vieira Lopes indicated that his interpretation of the agreement is that the measure should be “applied from now on, as it has been done in the past”.
“It was never retroactive, so it would be very strange for us if there was a change in procedures in this area,” he concluded.
The CGTP in turn defended that severance pay should once again correspond to 30 days’ pay for each year of service, as before the ‘troika’.
“The position of the CGTP is that it should be neither 14 nor 12 days. It should be 30, which it was in 2013 and the workers were very affected by this change,” said CGTP leader Andreia Araújo.
Currently, most employees who are laid off as part of a collective redundancy process or due to job termination are entitled to compensation equivalent to 12 days of base pay and seniority benefits for each full year of seniority.
The reduction in the amount of the fee to 12 days came into effect in October 2013, at the time of the ‘troika’, for new contracts.
Before the financial adjustment program in Portugal, severance pay was equivalent to approximately one month for each year of seniority.
Changes in the rules in recent years have meant that, depending on the date of conclusion of the contract, the severance payment can result in an amount that includes the rule of 30 days for each year of work, 20 days and 12 days (and even 18 days in specific cases).
If the new rule will only apply in the future, as stated in the CCP, the 14-day rule will only be part of that formula after the new law enters into force.
Source: DN
