This legal regime applies to all job contracts initiated after October 1st 2013, except for the very short-termed contracts.
Published on August 30th Law n.70/2013 and September 30th Ordinance n.294-A/2013, establish the legal regimes of the Employment Compensation Fund, the Equivalent Mechanism and the Employment Compensation Guarantee Fund.
The above mentioned funds ensure that all employers finance severance payments to the Employment Compensation Fund of 0,925€ of the basic wage and seniority payments payable to each employee and of 0,075% to the Employment Compensation Guarantee Fund.
The referred charges shall be paid on a monthly basis and 12 times a year made within the scheduled time periods for paying contributions to the Social Security, that is, between the 10th and the 20th of each month as regards to the previous one.
Information regarding the payable amount towards funds and employees shall be validated on the following website: www.fundoscompensacao.pt
The Employment Compensation Fund may be enabled to ensure severance payments to employees who are entitled to them upon termination of contract, but solely when employees are covered and entitled to so.
In such cases, the employers will pay the full amount of compensation resorting to the Fund or Mechanism to obtain the reimbursement of the account balance of the concerned employee.
If employees choose to terminate a contract on their own initiative, they are not entitled to any compensation and severance payments towards funds are reimbursed to employers.
These new funds created to ensure employees receive half of the amount of severance payments they are entitled to upon termination of their employment contract, are regarded by many as an added work cost for employers.
