Portuguese employers seek more time to access €451 million left in labour compensation fund

Portugal’s Fundo de Compensação do Trabalho (FCT) is back on the social dialogue agenda. According to ECO, employers have yet to withdraw €451 million from the fund, with a little over two months remaining before the current deadline. Business organisations argue that more time is needed.

What can the fund be used for?

The FCT was established during the financial crisis to help finance dismissal compensation. Employer contributions ended in 2023, and regulated withdrawals became possible from 2024.

Permitted purposes include certified staff training, worker housing investments, certain projects benefiting both employers and employees, and dismissal compensation. The number of withdrawals may depend on the balance held by the employer.

A company fund is not an individual worker payment

The request by employer groups, including the CIP, is not an approved extension. Any change would require a formal decision and the appropriate legal framework.

The €451 million balance does not mean the money will be paid directly to individual workers. Employment-related severance entitlements continue to be governed by applicable labour law and each worker’s circumstances.