The Labor Law, approved by Law no. 23/2007, of 1 August (hereinafter the Labor Law), in its article 124, lists the forms of termination of an employment contract, which are:

  1. Expiry
  2. Revocatory Agreement (Acordo revogatório)
  3. Cancellation by either party
  4. Termination by any of the contracting parties with just cause

With regard to the implementation of the forms of termination of the employment contract, it should be noted that the Labor Law1 and other complementary legislation2 establish the procedures and formalities that must be followed by the parties in order for the termination to be carried out legally.

One of the causes of expiry of the employment contract, listed by the Labor Law, is the supervening inability to carry out the work, being defined as total and definitive or only partial, when it is due to the employer's inability to receive the work, except if the inability is attributable to the employer3.

However, it is our experience that, contrary to the expiry due to the employee's retirement, the moment from which the expiry occurs due to employee's supervening incapacity, and from which the employer can communicate to the employee the termination of his/her employment contract, the subject which we propose to address in this article, is not clear.

It is common ground that, if the contract expires, and provided that the employee is eligible4 the same will seek sustenance from the social protection, and shall be entitled to a disability pension, granted by the National Social Security Institute (hereinafter INSS).

According to Article 32 of Decree 53/2007 of 3 December (approving the Regulation of Compulsory Social Security - hereinafter the Regulation), the employee is considered incapacitated for purposes of receiving a disability pension if he / she suffers a reduction of his / her physical or mental capacity, duly certified by a Health Board5 which renders him/her totally unable to work as a result of illness or a non-occupational accident.

The Regulation also establishes that the application for disability pension must be made by the disabled person or his/her legal representative, in a proper form, being due from the first day of the month following the request or the first day of the month following that in which the employee is recognised as incapacitated, if this recognition happens later7.

If, on the one hand, and as mentioned above, it is clear and unequivocal that, under Article 31 of the Regulation, the granting of the old-age pension (retirement) determines the expiry of the employment contract, on the other hand, we do not find a corresponding provision in subsection IV of the Regulation, which provides for the protection in the case of disability.

Thus, two lines of thought contradict themselves in the doctrine:

  • One that considers as the moment of expiry of the employment contract the date of receipt of the document from the National Health Board that confirms the incapacity of the employee to perform his/her duties
  • Another that argues that the expiry of the employment contract occurs upon receipt of the communication of the approval order of the disability pension from the INSS

We would emphasise that the problem of the moment of expiry of the contract is raised for the employer when, pending the communication of the approval order, the disabled employee, although not working.

  • Continues to accrue leave days8 and enjoys the benefits granted to other employees, such as medical aid, 13th salary, payment of school fees for school-age children, etc., which differs from the retirement situation, since the employee remains at the disposal of the employer
  • Receives a sickness allowance paid by the INSS, if eligible9

Accordingly, if we defend the theory based on analogy, of the rules established for protection in old age, which argues that the expiry of the employment contract occurs upon receipt of the notice of approval of the disability pension from the INSS, considering that the absence of the employee will be justified, he/she will continue to accrue leave days and enjoy the possible benefits attributed to the employees of the employer, representing a potential additional cost to the employer who, normally, in these situations has already hired another employee to occupy the position left by the disabled employee.

On the other hand, considering that the employee is normally supported by Social Security, the first theory that best protects the employer seems defensible, since, contrary to the expiry due to retirement, whose verification is conditioned by the confirmation of the verification of the requirements for the granting of the old-age pension, the expiry due to supervening inability does not depend on confirmation by the INSS, but on the Health Board, which will issue the document confirming that the employee is absolutely unable to perform his/her duties.

If this is the case, it is for the employer, when receiving the said document, to only prepare the letter of communication of termination of the employment contract by expiry, while the employee receives the sickness allowance and waits to receive the invalidity pension from the INSS.


1 Articles 125 to 136 of the Labor Law
2 Articles 28 to 36 read together with 81 of Decree 53/2007, of 3 December - Regulation of Compulsory Social Security
3 Article 125 (1) (b)
4 Article 33 (1) of the Regulation of Compulsory Social Security
5 The procedures for sending patients to the Health Board are provided for in Ministerial Diploma 130/2007 of 3 October, which approves the Regulation of Health Boards
6 Article 81 (1) of the Regulation of Compulsory Social Security
7 Article 36 (3) of the Regulation of Compulsory Social Security
8 Article 103 (3) (d) and 105 (1) of the Labor Law
9 Articles 19 and 20 of the Regulation of Compulsory Social Security

SAL & Caldeira Advogados LDA is a member of the DLA Piper Africa Group, an alliance of leading independent law firms working together in association with DLA Piper across Africa.

Originally published in the SAL & Caldeira Newsletter 2017, No 26, March 2017 and is reproduced with permission.