Portugal - New employment financial support: hiring award and payment of contributions in the context of the new government measure 'Sustainable Employment Commitment'
Portugal Labor and Employment Alert
It was published in the Official Gazette Ordinance no. 38/2022, of January 17, which sets out the new 'Sustainable Employment Commitment' measure. In essence, this regulation awards employers economically for entering into open-ended employment contract with unemployed people registered at the Employment and Vocational Training Institute (IEFP).
The referred financial support includes:
(i) Hiring award
The employer is entitled to a hiring award amounting to 12 times the value of IAS (5,318.4 Euros). This entitlement can be increased by:
a) 25% (Eur 6,648.0), in case of hiring of young people with ages up to 35 years old;
b) 35% (Eur 7,179.84), in case of hiring of handicapped and disabled people;
c) 25% (Eur 6,648.0), when the salary provided is equal or higher than 2 times the guaranteed minimum monthly salary (RMMG), i.e. equal or higher than Eur 1,410.0;
d) 25% (Eur 6,648.0), when the workplace is located in remote areas, under the terms provided for in Ordinance no. 208/2017, of July 13;
e) 25% (Eur 6,648.0), when the employer is party to a collective bargaining agreement (CBA), under the terms set out by article 2 from the Labour Code;
f) 30% (Eur 6,913,92), in case of hiring of unemployed people of the under-represented sex for a given profession, under the provisions set out in Ordinance no. 84/2015, of 20 March.
Note 1: Only 3 accruals can be applicable at the same time (except the one identified in f), which can always ad up regardless of the aforementioned limit).
Note 2: The present hiring award shall be reduced in the appropriate proportion in case of part-time work (considering a total weekly working period of 40 hours).
Note 3: The employer is entitled to receive the proportional amount of the hiring award, whenever the following cumulative conditions are met: i) the supported employment contract is suspended (e.g. illness, lay-off, parental leave); ii) the employee’s absence is longer than 1 month and there is no replacement to render his/her functions; iii) in the 36th month after the go-live date of the employment contract, the employee still has not rendered 24 full months of work.
(ii) Payment of contributions
During the first year of execution of the supported employment contracts, the employer is entitled to an amount corresponding to half of the costs of the social security contributions arising from said contracts, under the following terms and conditions:
a) The amount of the financial support provided is determined taking into account base salary as established in the contract and with reference to a period of 14 months;
b) The financial support may not exceed the limit of 7 times the value of the IAS (i.e. Eur 3,102.4);
c) Whenever the supported employment contract is suspended sometime in the first year of its execution (please consider Note 3 above), the employer is entitled to a proportion of the financial support equivalent to the work rendered and paid.
The employer will receive the majority of the new employment financial support right from the beginning of the employment, but will have to wait to receive the rest:
- 60% of the value of the support is paid after the go-live date of all supported employment contracts, within a 20 working days’ time-frame after their submission to the IEFP;
- The remaining 40% are extended in time: 20% will be paid in the 13th month from the last concluded contract’s go-live date and a further 20% in the 25th month from the last concluded contract’s go-live date.
Note: These payments are subject to the existence of the necessary requirements for the concession of the new employment financial support.
The new employment financial support may accrue with fiscal or para-fiscal employment incentive.
Note: In situations where the employer benefits from other incentive in the form of total exemption from payment of contributions to the general social security regime, no financial support shall be granted for the payment of social security contributions (under the provisions herein).
All individuals or legal entities of private nature, either profit-making or non-profit nature, who meet with all the requirements laid down in this regulation, notably: i) being properly constituted and registered; ii) having their tax and social security in order; iii) not being in default with regard to any financial support granted by the IEFP or the European Structural and Investment Funds; iv) having organized accountability
Note: Companies that are being subject to Special Revitalization Procedures (PER) or to Extrajudicial Company Recovery Regime (RERE). In these situations the requirement of not having salaries in arrears does not apply.
Requirements for the extension of the new employment financial support
The granting of the new employment financial support is subject to the following requirements:
I – Publicity and registration of a job offer on the https://iefponline.iefp.pt/ portal, signaled with the intention to apply for the measure;
II – The conclusion of an open ended employment contract with an unemployed person registered with the IEFP, I.P.;
Note 1: The unemployed person must have been registered with IEFP for at least 6 consecutive months. In some cases provided for in Article 6 of this Ordinance the period can be reduced to 2 months (e.g. person aged 35 years old or under, 45 years old or over, beneficiary of unemployment benefit, ex-convict, etc.).
Note 2: A company is not eligible for support in case it is rehiring someone previously made redundant. Employment contracts concluded “between an employer or entity belonging to the same corporate group and an unemployed person who was bound to the latter by an employment contract immediately before becoming unemployed are not eligible, except when the unemployment situation occurred more than 12 months ago or when the employment contract was concluded under the regime for young people on school holidays, provided for in the Code of Contributory Regime of the Social Security Welfare System”.
III – The net creation of employment and the maintenance of the employment level achieved through the support;
Note 1: Net job creation is only considered to exist when the entity reaches, through the supported employment contract, a number of employees higher than the average number of employees registered in the 12 months preceding the month of the registration of the job offer.
Note 2: The concession of financial support determines the obligation to maintain the supported employment contract and the employment level reached by means of the financial support for at least 24 months counting from the first month of the supported contract. The employment level is considered to have been maintained when the employing entity has at is service a number of employees equal to or greater than the average number of employees registered in the 12 months preceding the month in which the job offer was registered, including the supported employees.
IV – The provision of vocational training during the period of duration of the support;
V – The observance of the provisions in terms of the guaranteed minimum monthly salary and, when applicable, of the respective collective bargaining agreement, namely in determining the remuneration offered in the contract.
If the employer does not comply with the rules detailed above, he may have to return all or part of the support received to date: “The breach of any obligation related to the granted financial support under the present regulation implies the termination thereof” and “albeit the right to complain for possible indications of criminal practice”.
This Ordinance further determines that “the reimbursement of the financial support shall be made within 60 days counting from the date of the notification referred to in the previous number, under penalty of the payment of default interest at the legal rate in force”.
The opening and closing periods for applications to this measure are defined by a decision of the directive board of the IEFP, I.P. and published on the website www.iefp.pt.
The application is made through the portal https://iefponline.iefp.pt/, on the appropriate form, through the signaling of a job offer that meets the requirements for granting the financial support and in which there is an express intention to submit an application to this measure.