PORTUGAL LAW AND PRACTICE Contributed by: Joana Torres Fernandes, José Manuel Pereira da Costa, Danielle Avidago, Javier Mateo, António Pratas Nunes, Joana Loureiro Veríssimo, Madalena Mourão and David Serras Pereira, LVP Advogados
4. Employment Law 4.1 Nature of Applicable Regulations
3.4 Management Structures Portuguese law provides for different management structures, particularly in public limited companies (SA), while private limited companies (Lda) follow a simpler model. In an Lda, management is carried out by one or more directors who are responsible for the day-to-day oper - ations of the company. There is no requirement for a supervisory body, although one may be established voluntarily. In an SA, companies may adopt one of several gov - ernance models: • a one-tier model, consisting of a board of directors and a statutory auditor; • a two-tier model, with a management board and a supervisory board; or • a model combining a board of directors with an audit committee. These structures allow flexibility depending on the size and complexity of the business. 3.5 Directors’, Officers’ and Shareholders’ Liability Directors and officers are subject to duties of care, loyalty and compliance with the law. They must act in the best interests of the company and may be held liable for damages resulting from breaches of these duties. Liability may arise towards the company, sharehold - ers or third parties, particularly in cases of negligent management, unlawful acts or failure to comply with statutory obligations. In certain circumstances, direc - tors may also incur criminal or administrative liability. Portuguese law recognises the principle of separate legal personality, meaning that shareholders are gen - erally not liable beyond their capital contributions. However, in exceptional cases, courts may disregard this separation (piercing the corporate veil), particu - larly where there is abuse of the corporate structure, fraud or misuse of the company to harm creditors.
Employment relationships in Portugal are governed by a structured set of legal sources, including the Labour Code, supplementary legislation, collective bargain - ing agreements, case law and individual employment contracts. Labour rules are predominantly mandatory in nature, reflecting the protective function of employment law. As a general principle, they establish minimum stand - ards that cannot be waived or reduced by agreement. However, Portuguese labour law also recognises an important role for collective bargaining, allowing col - lective bargaining agreements, in specific matters expressly provided for by law, to derogate from statu - tory rules within the limits established by the Labour Code. Collective bargaining agreements play a central role in shaping working conditions and may be extended to non-signatory employers and employees through administrative extension orders, ensuring consistency within sectors and preventing distortions of competi - tion. Case law, particularly from higher courts, contributes to the interpretation and consistent application of labour rules. In an international context, under the Rome I Regula - tion, the parties may choose the law applicable to the employment contract. However, such choice cannot deprive the employee of the protection afforded by the mandatory rules of the country where the work is habitually carried out. As a result, employees work - ing in Portugal will generally benefit from Portuguese labour law protections, even when employed by for - eign entities. Individual employment contracts give effect to the employment relationship and must comply with the applicable legal and collective framework, allowing deviations only where more favourable to the employ - ee.
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