Outsourcing after collective dismissal in Portugal: banned

Were you let go in a collective dismissal and then, soon after, the company hired an outside firm to do your work? Portuguese law bans that for 12 months.

This guide explains the rule in Art. 338-A of the Labour Code, why it exists, what the Constitutional Court has already decided about it, and why the labour reform that wanted to scrap it was rejected.

An example first

What the law forbids (Art. 338-A)

Art. 338-A is titled "Prohibition on resorting to the outsourcing of services". It was added to the Labour Code by Law 13/2023 (the Decent Work Agenda).

The rule is simple to grasp:

It is not allowed to buy services from a third party to meet needs that were ensured by a worker whose contract ended in the previous 12 months through collective dismissal or dismissal for extinction of the job position.

Three points to remember:

• It lasts 12 months. The clock starts on the date the contract ended.
• It covers both objective dismissals. Collective dismissal (Art. 359) and extinction of the job position (Art. 367). In both, the company has no fault of the worker to invoke.
• What counts is the real role. The name of the contract with the outside firm does not matter (service provision, outsourcing, retainer). What matters is whether the service you did moved outside the company.

The penalty (no. 2). Breaking this rule is a very serious administrative offence, attributable to whoever benefits from the service purchase, that is, the very company that dismissed and then outsourced.

Why this exists: "dismiss in order to outsource"

Collective dismissal and extinction of the job position exist for real situations: the company closes a section, changes technology, shrinks because of the market. They do not exist to swap workers who have rights for cheaper external services.

Art. 338-A exists to stop this trick. If the service is still needed (so much so that the company goes outside to get it), then the reason for the dismissal was probably not real.

[Interpretação corrente:] outsourcing within the 12 months works as an alarm signal. It shows the post did not disappear, it just changed hands.

The Constitutional Court has already upheld the rule

This ban was challenged. The Ombudsman asked the Constitutional Court to assess whether Art. 338-A respected the Constitution, arguing it limited the freedom of private economic initiative too much (Art. 61 of the Constitution).

The Court answered in Ruling 555/2025 of 2 July 2025. The decision was clear: Art. 338-A is not unconstitutional.

The Court's reasoning:

• The rule protects job security, a right guaranteed by the Constitution (Art. 53).
• The limit on business freedom is adequate, necessary and proportionate: it only lasts 12 months and only catches the specific case of dismissing and then outsourcing right after.
• The goal is to prevent objective dismissal from being used as a bridge to outsourcing.

In short, this is not a fragile rule. It has already passed the toughest test.

The labour reform wanted to scrap the rule, but it was rejected

[Proposta chumbada:] the Trabalho XXI labour reform proposed to repeal Art. 338-A, that is, to end the ban and let companies outsource right after a collective dismissal.

It did not pass. On 19 June 2026, the Assembly of the Republic rejected the labour package in the first plenary vote. PSD, IL and CDS-PP voted in favour. PS, Chega, Livre, PCP, BE, PAN and JPP voted against. Outsourcing was, in fact, one of the points that blocked a deal.

What this means for you today:

• The Art. 338-A ban stays in force, exactly as it is.
• The 12 month rule still applies to anyone dismissed in a collective dismissal or through extinction of the job position.

A heads up: the Government has said it wants to try again to pass the reform. The topic may come back. Until then, and until any change is published in the official gazette (Diário da República), the current Labour Code applies, with the ban intact.

What you can do if this happened to you

If you were dismissed in a collective dismissal or through extinction of the job position and the company outsourced your work afterwards, you have cards to play.

1. Keep proof of the outsourcing. Signs that an outside firm came in to do your service: colleagues who stayed, ads from the provider, new badges, invoices, witnesses. Note the dates.

2. Check the 12 month window. The ban counts from the end of your contract. If the outsourcing happened within that year, it falls inside the rule.

3. Challenge the dismissal in time. You have 60 days from the termination to file the court claim (Art. 388). It is a short deadline. Do not let it pass.

4. If you win, what you get. If the court rules the dismissal unlawful, you are entitled to reinstatement in the post or to compensation of 15 to 45 days of base pay and seniority payments per year of service, plus back pay from the dismissal to the judgment (Art. 391).

5. Complain to the ACT. Since outsourcing within the 12 months is a very serious administrative offence, you can report it to the Authority for Working Conditions.

Useful links

→ Collective redundancy in Portugal: how compensation is calculated

→ Can my employer fire me? Check if it is legal

→ How to file an ACT complaint in 10 minutes

→ Labour reform 2026 in Portugal: what changes for dismissal

This guide is informational and does not replace individual legal advice.