The Constitutional Court, in its Decision No. 272/2021, of 5 May, decided to declare the unconstitutionality, with general mandatory force, of the combined interpretation of the norms of the Labor Code and the Companies Code, in the part that prevented the joint liability of foreign companies which are in a relationship of reciprocal participation, ownership or of group with a Portuguese company, for claims arising from a subordinate employment relationship or its termination.

The Labour Code provides that, for claims arising from an employment contract, or from its breach or termination, overdue for more than three months, the employer and the company with which it is in a relationship of reciprocal participation, ownership or of group are jointly liable.

The Companies Code, on the other hand, determines the application of this matter related to affiliated companies only to companies headquartered in Portugal, which would lead to the non-joint liability of foreign companies.

However, the Constitutional Court understood that the combined interpretation of these legal norms cannot rule out the joint liability of companies headquartered outside Portugal. Otherwise, it would configure an inequality of treatment in a double sense:

a) between economic groups, since foreign companies wishing to associate themselves with Portuguese companies, through reciprocal participation or in a situation of control or group, could do so under the same terms in which they are authorized, but without the respective assets were responsible for credits arising from employment contracts entered into in national territory; and, more relevantly,

b) between employees of affiliated companies, insofar as, if the dominant company has its registered office located abroad, they could only demand from the Portuguese employer company the satisfaction of their labour claims.

In violation of constitutional principles, namely the principle of equality, the Constitutional Court ruled that it was unconstitutional.

As a result, it is clarified that foreign companies are jointly and severally liable for labour claims from employees of Portuguese companies with which they are affiliated (in relation to reciprocal, controlling or group shareholdings).