Collective Dismissal in Portugal: Rules, Steps and Costs

A collective dismissal in Portugal is a formal, supervised procedure, not a bigger version of an individual termination. It applies when an employer ends at least two contracts (companies with fewer than 50 workers) or at least five (companies with 50 or more) within three months, for market, structural or technological reasons. The employer must notify employee representatives in writing, consult them with a government labor official present, decide in writing, and pay statutory severance and notice. This guide walks through each stage in the order you will meet it.

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TL;DR

The procedure is triggered by two or more dismissals within three months in companies with fewer than 50 workers, and five or more in companies with 50 or more.
Valid grounds are limited to market, structural or technological reasons, or the closure of one or more sections.
The sequence is written notice, an information and consultation phase with a DGERT representative, a written decision, then 15 to 75 days of notice depending on seniority.
Severance is 14 days of base pay per year of service for the post-May 2023 period, with caps linked to the minimum wage.
Breaching key steps of Article 363 is a serious administrative offense, so sequencing and documentation matter more than speed.

What counts as a collective dismissal
Grounds that can justify it
The procedure, step by step
Notice periods and severance
What happens if you get it wrong
Collective dismissal versus temporary layoff
Perspective: what we see with foreign employers
Where an EOR or local support fits
A pre-launch checklist
FAQ
Sources

What counts as a collective dismissal

The Labour Code does not look at how many people you want to let go in the abstract. It looks at what happens in a window. According to DGERT, the labor conditions authority, a collective dismissal is the simultaneous or successive termination, over three months, of at least two workers in a company with fewer than 50 workers, or at least five in a company with 50 or more. The reason must be the closure of one or more sections, or a reduction in headcount, for market, structural or technological reasons.

Two details trip up foreign employers:

How headcount is measured. The count is the previous calendar year’s average workforce. In the year activity begins, it is the number of workers on the date of the event.
Successive dismissals add up. Letting two people go in October and a third in December can bring you inside the window even though no single decision looked collective.

The Portuguese threshold is also lower than the one in the EU directive on collective redundancies, according to a comparative labor law dossier. Smaller reductions that another country would treat as individual terminations can fall under the collective procedure here. If you stay below the threshold, the same dossier points to the separate procedure for extinction of a work post (Article 367), which has its own steps.

Grounds that can justify it

Portuguese law does not allow a collective dismissal simply because the business wants to cut costs. DGERT lists three families of reasons:

Type	Examples named by DGERT
Market	Reduced activity because of foreseeable lower demand, or the practical or legal impossibility of marketing goods or services
Structural	Financial imbalance, change of activity, productive restructuring, replacement of dominant products
Technological	Changed production techniques or processes, automation, computerization

The employer carries the burden of showing the reason is real and linked to the cuts. In its case-law digest for 2015 to 2024, the Supreme Court of Justice stresses that collective dismissal is a management decision. Courts check that the reasons are true and that there is a logical connection between them and the reduction, but they generally do not replace reasonable business criteria with their own.

In practice, that means your file should show the numbers and the logic: falling orders, a lost client, a discontinued product line, a restructured function. A vague statement of “difficult times” is the weakest foundation you can offer.

The procedure, step by step

The order of steps is set by the Labour Code and explained in DGERT’s FAQ on collective dismissals. For a deeper checklist of the notice side, see our guide to dismissal procedures and notice in Portugal.

1. Written notice of intent

The employer must communicate the intention in writing to the workers’ committee. If there is none, the notice goes to the inter-union committee or the union committees representing the affected workers. Where no committee of any kind exists, each worker who may be affected receives the notice individually. The employer also notifies DGERT that the procedure has started.

The notice must set out:

the grounds for the dismissal;
a detailed picture of the workforce structure;
the criteria used to select the affected employees;
the number and category of those affected;
the timeline for the dismissals;
the method for calculating severance.

Legal 500’s Portugal employment chapter lists the same content. Treat it as a checklist: an incomplete notice is where challenges often begin.

2. Appointing representatives where none exist

If there is no works council or union body, the affected employees can appoint a representative committee within five working days. It has up to three members when the dismissals affect up to five workers, and five members when they affect more, per DGERT. Build this window into your calendar, because you cannot move to consultation until the representation question is settled.

3. Information and consultation

This is a negotiation phase with a DGERT representative taking part. The aim is to reach an agreement on the scope of the measure and on alternatives, such as suspension of contracts, reduced hours, early retirement or redeployment. A formal agreement is not compulsory, but you must engage in good faith and keep minutes.

The employer can only finalize the decision once an agreement is reached or at least 15 days have passed since the initial notification.

4. The written decision

After consultation, the employer communicates the final decision in writing to each worker concerned. Article 363 of the Labour Code governs this decision, and DGSL’s text of the article is the version to read before you draft it. The letter should state the reasons, the termination date, the compensation owed and how it will be paid.

5. Notice period, then termination

Only after the decision does the notice period run, and the contract ends when it expires.

Notice periods and severance

Notice

Affected employees are entitled to notice of 15 to 75 days depending on length of service, per DGERT. The longer the service, the longer the notice. Our 15–75 days’ notice checklist helps you map each employee to the right band.

Severance

Severance is 14 days of base pay (plus seniority supplements) per complete year of service, for employment after the May 2023 change. The same DGERT FAQ gives 24 days for fixed-term contracts, and both are subject to caps linked to the national minimum wage. The statutory text, Article 366 as published by Informador, sets the daily rate as monthly base pay divided by 30 and prorates part years.

A simple illustration, using the rule only: an employee with 6 complete years of service entirely after May 2023 would be owed 6 × 14 = 84 days of base pay, before applying caps. Real cases usually mix service before and after the 2023 change, so run each employee individually with your payroll data and check the caps.

On top of severance, final pay includes accrued holiday, holiday and Christmas allowances pro rata, and any unpaid amounts. Payroll teams building the final statement can use this overview of employee payment types to make sure no component is missed, then check each one against Portuguese rules.

Returning the severance before a challenge

In Acórdão n.º 7/2024, the Supreme Court of Justice held that returning the severance is a strict prerequisite for challenging the dismissal: the employee must give the full amount back to the employer by the time the court case starts. You can read the ruling in the Diário da República. It matters for planning because it affects how you pay, document and reconcile amounts.

What happens if you get it wrong

A dismissal that breaches Article 363(1), (2), (3) or (5) is a serious administrative offense, according to the text in force since April 2023. Beyond fines, a procedure that is defective on form or on grounds exposes the employer to a court finding that the dismissal was unlawful, with the reinstatement or compensation consequences that follow. The Supreme Court’s emphasis on verifying the reasons shows where scrutiny lands: on whether the facts in your notice are true and connected to the cuts.

The most frequent avoidable errors are:

Notifying the wrong body, or skipping the individual notices when no committee exists.
Leaving out selection criteria or the severance method from the first notice.
Issuing the decision before the 15-day point without an agreement.
Treating a series of small terminations as unrelated and missing the three-month window.
Applying the wrong severance rate to employees with mixed pre- and post-2023 service.

Collective dismissal versus temporary layoff

They solve different problems. Collective dismissal ends contracts permanently. Temporary measures keep contracts alive: during financial or business hardship, working time can be reduced or contracts suspended, with remuneration reduced at least in part. If the downturn is expected to reverse, a temporary measure usually costs less in severance, protects know-how and avoids the litigation risk. If the position has disappeared for good, the collective procedure is the honest tool. Either way, a conversation with legal counsel before you commit to a route is cheaper than correcting one afterward.

Perspective: what we see with foreign employers

Most international companies that call us about collective dismissal in Portugal have the same surprise: the number of people is smaller than they expected. A team of 12 where two roles disappear after a lost contract already sits in collective territory, with a representative committee, a DGERT meeting and a 15-day clock. In the home country that would have been a conversation and a letter.

Our advice is to plan the sequence before anyone is told anything. Decide whether there is a lower-impact route first: redeployment, reduced hours, voluntary exits by agreement. Build the factual file for the grounds with finance, not just HR. Calculate severance employee by employee, because the 2023 change splits many seniority histories in two. And keep every communication in English and Portuguese, because the legal notice is what counts.

Companies that hire through an Employer of Record often ask whether the EOR carries the risk. The employment relationship sits with the EOR, so the formal steps are run through it, but the business decision and its justification still come from you. That is why we work on the facts with the client before a notice is drafted.

— Paulo

Where an EOR or local support fits

If your Portuguese team is employed through us as Employer of Record, the legal employer handles notices, DGERT contact, payroll and final settlement, while you supply the business rationale and selection criteria. Our Employer of Record service in Portugal covers hiring, payroll and compliance, and our payroll services can be used on their own if you already employ people locally and need exact final-pay calculations. We do not publish prices for these services, so contact us for a quote based on your headcount.

For wider background on the rules that sit around dismissals, see our overview of EU employment law and hiring compliance in Portugal and our note on collective agreements, which can add sector-specific obligations.

A pre-launch checklist

Before sending the first notice, confirm that you can answer yes to each of these:

We counted headcount using the previous calendar year’s average (or the event-date count in a start-up year).
We added every termination in the last three months and those planned in the next three.
Our grounds are market, structural or technological, and documented with figures.
Our selection criteria are objective and applied consistently.
We know whether a works council, union committee or none exists, and who receives the notice.
We have calculated severance and notice per employee, with the 2023 split.
We have a calendar showing the five-working-day committee window, the 15-day point and each notice period.

FAQ

How many dismissals make it a collective dismissal in Portugal?

Two or more within three months if the company has fewer than 50 workers, and five or more if it has 50 or more. Headcount is the previous calendar year’s average. Successive dismissals count together.

How long does the procedure take?

The employer cannot finalize the decision until an agreement is reached or 15 days have passed since the initial notification. After that, notice of 15 to 75 days applies depending on seniority. Preparation and the committee window add time before the clock even starts.

How much severance do employees get?

For employment after May 2023, 14 days of base pay per year of service, and 24 days for fixed-term contracts, subject to caps tied to the national minimum wage. Part years are prorated. Check each employee’s service history against DGERT’s guidance.

What if we are below the threshold?

Then the collective procedure does not apply, but a redundancy must still follow the separate procedure for extinction of the work post under Article 367. It has its own notice and compensation steps, so it is not a shortcut.