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New legislation on social security contributions (Codigo Contributivo), to become effective from January 2010, will give the Portuguese government the right to sanction employers who have not registered temporary and contract staff with the social security authorities.
Social security payments evasion has been a problem in Portugal for many years. The government has now decided that if an employer is found to have evaded social security on a temporary or contract employee, the employer can be forced to take the temporary or contract employee on as a permanent employee with everything that implies in terms of social security payments and redundancy.
Benjamim Mendes, employment lawyer at Portuguese law firm ABBC told business daily Diario Economico "this is a form of sanction for those companies which try to evade social security payments. If companies are found out to have avoided registering temporary and contract staff, they are forced to turn a temporary employment situation into a permanent employment situation."