The idea of your boss being able to lower your salary without your consent seems absurd, but there are cases in which Portuguese law opens loopholes that allow this possibility, and others in which it considers it a serious infraction.
According to article 129, no. 1, subparagraph d) of the Labor Code, it is expressly prohibited for the employer to “reduce the worker’s remuneration”, except in cases provided for by law. This means that any cut in basic salary is only permissible if it is associated with a proportional reduction in working time or results from a duly formalized mutual agreement.
When can the salary be reduced?
According to Ekonomista, the Labor Code provides for three exceptional situations in which wages can be legally reduced. The first occurs when the change results from a collective labor regulation instrument, that is, a convention, collective contract or other agreement between unions and employers. Outside of this context, a simple agreement between employer and worker has no legal validity.
The second exception is found in article 119 of the Labor Code. This article allows the reduction of remuneration by agreement between the parties, as long as there is authorization from the Authority for Working Conditions (ACT). This is an exceptional mechanism, normally applied in contexts of business crisis, which requires proof of economic need and administrative validation.
The third exception concerns cases in which the worker moves from full-time to part-time. In these situations, the salary reduction is proportional to the new workload and considered legitimate.
What happens if the reduction is illegal?
When a company unilaterally reduces wages without legal framework or the employee’s consent, it is committing a very serious offense, in accordance with article 554, no. 3, subparagraph b) of the Labor Code. This infraction may result in significant fines for the employer and, in certain cases, constitutes a reason for the employee to terminate the contract with just cause, under article 394, paragraph 2, subparagraph b).
In these cases, the worker can lodge a complaint with the Working Conditions Authority (ACT), including anonymously, or request legal support from Social Security.Salary cuts and the impact on companies
Other situations in which there may be cuts
According to , there are also specific contexts in which salaries can be reduced indirectly, such as:
- Financial difficulties of the company that lead to a temporary reduction in working hours;
- Judicial executions on maturity, for debts or compensation;
- Financial disciplinary sanctions;
- Discounts relating to benefits granted by the employer, such as food, housing or transport.
A final warning: everything must be notified and authorized
Any salary reduction must be notified in writing and have the worker’s authorization. If this does not happen, the company is violating the law. Even if the cut is temporary, it must be proportionate and transparent.
In case of doubt, the worker should always ask ACT or an employment lawyer for clarification. Portuguese legislation expressly protects the right to retribution, and knowing the law is the first step to not losing money.
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