Amendments to the legal frameworks of the Portuguese Labour Compensation Fund (FCT) and the Labour Compensation Guarantee Fund (FGCT) – The money is there, don’t lose it!
Main Changes
Decree-Law 115/2023 was published on 15 December 2023, introducing important changes to the LCF and LCGF regimes, including the ending of the obligation to join and contribute to the LCF and the suspension (until the end of the Medium-Term Agreement for the Improvement of Incomes, Wages and Competitiveness – 2026) of new memberships and the obligation to make payments to the LCGF.
LCF is converted into a closed fund aimed at:
- Supporting the costs of and investment in workers’ housing.
- Supporting other investments agreed upon between employers and employees’ representative structures, including in daycare centres and canteens.
- Financing the qualification and certified training of employees.
- Pay up to 50% of the compensation due for termination of the employment contract of employees included in the LCF, calculated in accordance with article 366 of the Labour Code.
Employers can use the amounts in the LCF accounts (for one or more of the above purposes) until 31 December 2026. Mobilisation can be done up to two times in the case of a balance of less than €400,000.00 or up to four times in the case of higher balances.
Depending on the purpose(s), mobilisation of the amounts may require consultation or agreement with the employees’ representative structures or, in their absence, with the employees themselves.
Entry into force and effects
Except for the matter related to the strengthening of the LCGF, Decree-Law 115/2023 entered into force on 1 January 2024.
We stress, however, that according to the information provided on the Compensation Funds website, the merger of individual accounts into a single global account per employer, among other operations, will entail limitations to the portal’s functionalities, and it is estimated that these accounts will be available for consultation as of 15 February 2024.
Also, the interface for entering reimbursement requests is still being developed, and it is estimated that this will also be available from 15 February 2024.
Labour Department
Hugo Martins Braz | Tiago Lopes Fernandez
