Information regarding Legislation

At the heart of Portugal’s temporary employment ecosystem lies a robust regulatory framework, meticulously overseen by the Instituto do Emprego e Formação Profissional – Instituto Público (IEFP, I.P.). This venerable institution stands as the gatekeeper, ensuring that only those agencies meeting stringent criteria can operate within the nation’s borders.

For those seeking to navigate this landscape, whether as a client or a job seeker, the process of verification is paramount. The journey begins with identifying the TWA’s headquarters, a crucial first step in unraveling the legitimacy of an agency. Armed with this information, one can then embark on a quest through the digital corridors of the IEFP’s official registry, accessible at IEFP.  This portal serves as a beacon of transparency, illuminating the path for those seeking assurance in their employment endeavors.

The significance of this certification process cannot be overstated. It stands as a bulwark against malpractice, a shield protecting the rights and interests of all parties involved in the intricate dance of temporary employment.

International Operations

Portuguese TWAs must adhere to domestic regulations even when operating internationally:

•       TWAs incorporated and with tax residency in Portugal must fulfill all legal and mandatory requirements of their home country.
•       These requirements apply to activities outside Portugal, regardless of the regulatory environment in the third country.
•       Compliance with Portuguese regulations is non-negotiable for international operations.

Understanding the distinction between these two arrangements is crucial for legal compliance:

Labour Leasing:

1. Employees are made available for unspecified work performance.
2. Invoicing is based on the number of hours worked.
3. Work instructions and supervision are provided exclusively by the client.
4. The client decides on the number of employees and their qualifications.
5. The client is responsible for the work environment and procedures.
6. Working hours and holidays are primarily determined by client needs.

Contract for Work and Services:

1. Specific, agreed-upon services or outcomes are owed to the client.
2. Invoicing is based on anything BUT the number of hours worked.
3. Work instructions and supervision are provided exclusively by the service provider.
4. The service provider decides on staffing and qualifications.
5. The service provider is responsible for work procedures and environment.
6. The service provider determines working hours and holidays.
7. A civil liability insurance policy is required for the service provider.

Engaging in illegal worker leasing can result in severe repercussions:

1. Financial Liability: If a TWA fails to pay worker salaries, the client may be held responsible for payment.
2. Operational Suspension: Detection of illegal or undocumented foreign workers can lead to immediate suspension of activities.
3. License Revocation: TWAs may have their licenses revoked or indefinitely suspended.
4. Client Penalties: Clients may be banned from using leased workers for extended periods.
5. Heavy Fines: Both TWAs and clients may face fines potentially reaching hundreds of thousands of euros.
6. Criminal Charges: Clients, even in other EU/EEA countries, may become involved in criminal investigations by Portuguese authorities.
7. International Crime: Unauthorized labor leasing, especially involving third-country nationals, can be interpreted as facilitation of illegal immigration, a priority crime in the EU.

The Portuguese Social Security system, in its wisdom, has unfurled a digital banner of verification. To ensure compliance and authenticity of documents:

1. A1 Certificate Verification: Portuguese Social Security provides an online service to verify individual PDA1 documents.
2. Verification Process: Enter the verification code found on the last pages of A1 certificates and add it here. 

Navigating the landscape of temporary employment in Portugal requires diligence, thorough understanding of regulations, and strict adherence to legal requirements. Both TWAs and their clients must prioritize compliance to avoid severe legal and financial consequences while benefiting from the flexibility of temporary employment arrangements. Regular verification of certifications and documentation is essential in maintaining a lawful and efficient working relationship in this sector.

If you have any questions or queries, we are available to answer any queries and questions, our contact details.

The A1 or PDA1 certificate shows which national Social Security and Labour Law legislations a worker is subject to, that is, that apply to the worker.  The A1 or PDA1 certificate is issued by the Social Security institution where the worker habitually resides (the sending country).  It is a fundamental document within the context of intra-EU posting or worker mobility within the EU and EEA.

All workers legally employed in country “A” by a TWA that are temporarily seconded or leased to a client (user undertaking) in country “B” must possess an A1 certificate or prove that it has been requested. Mere proof or request is considered satisfactory (or sufficient) for up to 3 months after the workers have been leased by almost all the Labour Inspection Authorities within the EU and EEA.  This tolerance period is provided because many of the Social Security institutions within the EU and EEA only issue the A1 certificates several weeks or months after they have been requested by the TWA established in another EU or EEA country. (Note: Portugal´s Social Security body is actually better than most in this regard).

Not all clients (user undertakings) in the host (or, receiving) countries aware of the existence and/or the importance of the A1 certificate, but those that are refuse to work with foreign TWAs unable or unwilling to provide these certificates (or, at least, proof of request) within a reasonable period of time.

Why do clients (user undertakings) in the host (or, receiving) countries consider the A1 certificates so tremendously important?  Because they want to be certain that the workers that have been leased to them are, in fact, legally employed by the TWA established in another EU or EEA country,  also they want to be certain that the workers were authorized to be temporary deployed, don´t want to be at risk of having to pay social security contributions, wage tax to their own national authorities, don´t want to risk committing infractions and paying heavy fines and are aware they may also have to pay the salaries of the leased workers if the TWA established in the other EU or EEA member state fails to do so – which is always a possibility if the workers have not been legally employed.

As one can see, the A1 certificate serves for many purposes. It greatly safeguards the client (user undertaking) that leases the worker from a TWA established in another EU or EEA member state from enormous risks.

A TWA established in Portugal that does not possess a license to engage in temporary employment activities is NOT eligible to receive A1s.

The TWA license (in Portuguese, “alvará”) must be uploaded to Social Security´s web portal for each individual A1 certificate that is submitted. Failure to so will inevitably result in rejection of the request.

Below, a caption of the Portuguese Social Security web platform. Shown are the documents that must be uploaded when submitting a request for an A1 certificate – the permit (=license) is one of the documents required. As one can observe, in Portugal, the process of requesting and obtaining an A1 certificate is no stroll in the park – it is considerably demanding.

If a TWA (Temporary Work Agency) incorporated and with tax residency in Portugal does not fulfil the legal and mandatory requirements to engage in temporary work agency activities in its home country, then it also cannot engage in the same activities outside Portugal regardless of whether or not the same activity is or is not the object of regulation in the third country.

Let´s imagine that an unlicensed (therefore, rogue, illegal or clandestine) TWA established in Portugal wishes to second or lease workers temporarily to a vegetable farm client in the Netherlands for a period of 6 months.  Is it possible? Well, “possible” it is.

Any Portuguese or Non-EU worker in Portugal holder of a valid residence permit can hop on an airplane and fly off to the Netherlands where they are free to enter. The real question is, is it legal or permissible for a non-EU citizen to work there?

In stark contrast to what one finds in Portugal, the Netherlands temporary work agencies (in Dutch “Uitzendbureaus”) are subject to extremely loose and soft regulation – and no surety/guarantee is required to engage in this activity. This is the case despite the Netherlands being one of the countries in the world where temporary work agencies and the use of temporary or flex workers (in Dutch, “Uitzendkracken”) is most widespread and intensive.

When it comes to the degree of rules, control, regulation and investment required to operate a temporary work agency – Portugal and the Netherlands stand on diametrically opposite poles.  While it is true that the fundamental freedom to provide services enshrined in the EU Treaty, does not, in principle, allow Netherlands to restrict the right of any non-established Portuguese company (including TWAs) to provide services within its borders under exactly the same terms and conditions that local companies are subject to, other factors must be taken into consideration.

The freedom for a non-established Portuguese incorporated TWA to provide services in the Netherlands only applies if firstly the TWA is legally entitled to provide services within the borders of its home jurisdiction. A TWA established and tax-resident Portuguese and non-established in the Netherlands may only conduct business in this country if it fulfils the requirements to do so. 

Failure to act in accordance with this rule constitutes a blatant violation of EU legislation on Fair Competition as defined in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). 

However, the Portuguese TWA and its Dutch vegetable farm client, used in this example, would not only be engaging, together, in illegal competition practices they would also be engaging in technically and unquestionably criminal activity quite serious in nature and consequences.

If you would like to know more information regarding of the consequences of Illegal Worker Leasing and how to verify the legitimacy of the A1 Certificate, you can find more information here.  

According to the 90/180-day rule found in article 3 (1) of Regulation (EU) 2018/1806 of the European Parliament and of the Council, non-EU/EEA nationals may remain in EU member states of the Schengen Area for a maximum of 90 days within any 180-day period.

However, the right to “stay” does not, per say, entail the right to carry out a professional activity when travelling outside the EU or EEA member state that has issued the residence permit and in which the worker officially resides.

The right to “stay” does not mean, nor can it be interpreted as the right to work – either under employment or as independent worker.

If this is so, then where does the right for non-EU workers to work in other EU or EEA member states other than the one in which they reside derive from?

The right of non-EU nationals (also referred to as third country nationals) employed by a company based in a European Union (EU) or European Economic Area (EEA) member state to be posted and temporarily provide service to a company based in another EU or EEA member state arises from the European Court of Justice´s (ECJ´s) interpretation of the Article 56 TFEU (freedom to provide services).

Article 56 of the Treaty on the Functioning of the European Union (TFEU) prohibits restrictions on the fundamental right of any natural or legal person to conduct business anywhere within the EU regardless of the member state in which the person is established. It is one of the 4 fundamental freedoms of the European Single Market – the “four freedoms” of the EU single market being: free movement of goods, services, capital, and people.

To whom does the Van de Elst ruling apply?

The Van der Elst ruling applies to all non-EU/EEA employees holding a valid EU/EEA residence permit.

Requirements

• A formal agreement must exist between the employer in the EU/EEA member state seconding the worker and the client in the EU/EEA member state for which the service is to be provided
• The TCN must be a legal resident in the country where he is effectively employed
• The TCN must be in possession of an employment contract with the employer which is temporarily posting him/her to another EU or EEA member state.

The Nature and duration of posting and the issue of work permits

It is important to note and should always be remembered posting is temporary in nature – that is, posting allows to provide service in another EU/EEA member state for a limited duration – not for an indefinite period of time.

As a matter of fact, in paragraph 4 of Decision Nr. A3, dated 17th of December 2009 of The Administrative Commission for the Coordination of Social Security Systems within the EU it is stated that “the anticipated duration of the posting cannot exceed 24 months in total” (sic)  – referring specifically to an initial period of 12 months, plus a 12 month extension if required.

Furthermore, Paragraph 3(c) of Decision Nr. A2, dated 12th of June of 2009 The Administrative Commission for the Coordination of Social Security Systems within the EU states that “once a worker has ended a period of posting, no fresh period of posting for the same worker, the same undertakings and the same Member State can be authorized until at least two months have elapsed from the date of expiry of the previous posting period” (sic). This means that once a worker´s posting mission has terminated, he/she can only be posted again once a period of at least 2 months has elapsed.

From our experience we have learned that one of biggest and most concerning misconceptions held by many, particularly by clients in the EU/EEA member states to which workers are posted regards the need for posted non-EU worker to be in possession of a work permit.

The concern clients harbour, although misplaced, is quite understandable. In most, if not all, EU/EEA countries, a work permit is required for a TCN to enter and work in their territories. However, this is only the case when an employer established in a given EU/EEA member state wishes to sponsor the work visa application of TCN living outside its borders. In other words, a work permit is only required when the client wants to hire the TCN directly – that is, have the worker on its own payroll.

Posting represents a totally distinct reality. The non-EU worker is temporarily posted by his/her legal employer in the country in which he lawfully resides to temporarily provide service to a client (i.e. user undertaking) in another EU/EEA member state. As we have shown, the 1994 Van der Elst ruling determined that under Article 56 of the Treaty on the Functioning of the European Union (TFEU), a moral or legal person established in EU/EEA member state A must be free to conduct business in EU/EEA member states B, C, D, etc without restrictions.

What is a “work permit”?

Essentially, a work permit is nothing more than a “permission” to work. But, within the context of posting, such permission is not only unwarranted, it is inadmissible. A moral or legal person established in EU/EEA member state A does not require “permission” to temporarily post workers that he legally employs to a user undertaking established in EU/EEA member state B. If the authorities in EU/EEA member state B were to request a work permit they would be doing so in clear violation of EU law.

In fact, on the last page of “The Judgement of the Court” regarding Case C 43/93 (Van Der Elst) the Justices concluded that their decision must be “(…) interpreted as precluding a Member State from requiring undertakings which are established in another Member State and enter the first Member State in order to provide services, and which lawfully and habitually employ nationals of non-member countries, to obtain work permits for those workers from a national immigration authority(…)” (sic).

In a similar case regarding the posting of workers, the Court of Justice held the following in Danieli & C. Officine Meccaniche SpA (C-18/17, Nov. 14, 2018, ECLl:EU:C:2018:904):

“Having regard to all of the foregoing considerations, the answer to the second question must be that Articles 56 and 57 TFEU must be interpreted as meaning that a Member State is not entitled to require that third-country nationals posted to an undertaking established in another Member State by an undertaking also established in that other Member State for the purpose of providing a service in the first Member State have a work permit.”