Employment Compensation Funds were established to ensure the payment of statutory compensation to employees in specific employment situations. Employers’ contributions may be redeemed when legal requirements are met.
Traditionally, redemption has been allowed in cases such as:
- Payment of statutory compensation to the employee following termination of employment.
- Company closure, dissolution or liquidation.
- Situations where the employee does not acquire full entitlement to compensation, allowing partial or full recovery.
From 2024 onwards, the scope of eligible uses has been expanded to include:
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Employee training and professional development, for example:
- technical or specialist training courses.
- mandatory or certified training programmes.
- professional re-skilling initiatives.
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Housing-related support for employees, including:
- contributions towards residential rent.
- support with mortgage repayments.
- housing assistance linked to geographic mobility.
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Additional employee social benefits, such as:
- funding or upgrading staff canteens, refectories or meal provision in kind.
- food-related welfare benefits.
- other legally permitted social support measures within HR policies.
These changes position Employment Compensation Funds as a broader human resources management tool rather than merely a termination-related mechanism. Nevertheless, it is crucial to emphasise that the deadline for redemption ends on 31/12/2026, after which the right may expire.
Conclusion
Redeeming Employment Compensation Funds now offers companies a dual opportunity: recovering accumulated amounts and investing in employee development and welfare. With the deadline set for 31 December 2026, timely and well-structured action is essential.
Nominaurea with offices in Lisboa and Oporto supports companies in identifying eligible redemption grounds, applying the new purposes introduced in 2024 and providing comprehensive advice on labour, tax and accounting matters. Consult our team of chartered accountants and payroll specialists.
