Fixed-term Employment Contracts

When can you use a fixed-term contract

The fixed-term employment contract can only be entered into to meet temporary needs of the company, objectively defined, and only for the strictly necessary period (art. 140, no. 1, of the Código do Trabalho - Portuguese Labor Code). The law provides examples such as the replacement of an absent worker, seasonal activity, exceptional increase in activity, occasional task, or execution of temporary work or project (art. 140, no. 2). A fixed term is also allowed in cases of art. 140, no. 4 (for example, hiring a long-term unemployed person). It is up to the employer to prove the facts that justify the term (art. 140, no. 5).

Fixed term or uncertain term?

• Fixed term: has a set end date. It cannot last more than 2 years (art. 148, no. 1) and can be renewed up to 3 times, provided the total duration of the renewals does not exceed the initial period (art. 149, no. 4). Unless otherwise agreed, it renews at the end of the term for an equal period (art. 149, no. 2). It can only be entered into for less than 6 months in the situations of paragraphs a) to g) of no. 2 of art. 140 (art. 148, no. 2).
• Uncertain term: lasts as long as the reason persists (for example, until the return of the replaced worker). It is only allowed in the situations of paragraphs a) to c) and e) to h) of no. 2 of art. 140 (art. 140, no. 3) and cannot last more than 4 years (art. 148, no. 5).

What the contract must contain

The fixed-term contract must be in writing and indicate (art. 141, no. 1): identification, signatures, and domicile or headquarters of the parties; activity and remuneration; place and normal working period; start date; term or foreseeable duration and the justifying reason; date of conclusion and, in the fixed term, of termination. The reason must expressly mention the facts that constitute it and the relationship between the justification and the stipulated term (art. 141, no. 3).

The contract is considered indefinite if it is not reduced to writing, if it is entered into outside the allowed cases, or if the references to the term and the reason are omitted or insufficient (art. 147, no. 1). It converts to indefinite if the maximum duration or the number of renewals is exceeded (art. 147, no. 2).

End of the contract: notices and compensation

• Fixed term: expires at the end of the term if the employer or the worker communicates, in writing, the intention to terminate it 15 or 8 days in advance, respectively (art. 344, no. 1).
• Uncertain term: the employer communicates the termination with a minimum notice of 7, 30, or 60 days, depending on whether the contract lasted up to 6 months, from 6 months to 2 years, or more (art. 345, no. 1). If not, the employer pays the remuneration corresponding to the missing notice (art. 345, no. 3).
• Compensation: 24 days of base remuneration and seniority bonuses for each complete year of service, calculated under art. 366 (arts. 344, no. 2, and 345, no. 4) and subject to the limits of that article. In the fixed term, there is no compensation if the expiration results from the worker's declaration.
• Early exit of the worker: the worker may terminate the contract with 30 days' notice if the contract lasts at least 6 months, or 15 days if it lasts less (art. 400, no. 3).

In this category, you will find templates for fixed-term and uncertain-term contracts and termination notices. Always adapt the justifying reason to the specific case.