Artificial Intelligence and Algorithms in Employment Relationships: What Does the Portuguese Labour Code Say?

Artificial Intelligence Entered the Portuguese Labour Code in 2023

Law no. 13/2023 of 3 April introduced, for the first time, express references to algorithms and artificial intelligence systems into the Portuguese Labour Code.

These amendments reflect the growing use of technological tools in areas such as:

1. recruitment and selection of candidates;
2. performance evaluation;
3. allocation of tasks;
4. monitoring of professional activity;
5. determination of working conditions;
6. creation of professional profiles.

The legislator sought to address two main risks: the lack of transparency in automated decision-making and the potential discrimination of workers.

The Prohibition of Discrimination Also Applies to Algorithms

One of the most significant amendments was made to article 24 of the Portuguese Labour Code. Protection against discrimination in access to employment and working conditions now expressly extends to decisions taken through algorithms or artificial intelligence systems.

In practice, this means that employers remain responsible for the effects of systems used to select candidates, assess workers or support management decisions, even where such decisions are partially based on automated processes. In other words, the fact that a decision is generated by a technological tool does not relieve the employer of potential liability.

The Duty to Inform Employees

The legislator also sought to address the opacity often associated with algorithmic systems.

Under article 106 of the Portuguese Labour Code, employers must provide information regarding the parameters, criteria, rules and instructions on which algorithms or other artificial intelligence systems are based whenever they affect:

1. access to employment;
2. retention of employment;
3. working conditions;
4. profiling activities;
5. monitoring of professional activity.

This obligation applies whenever such tools influence decisions that are relevant to employees.

Information Must Be Updated

The obligation to provide information is not limited to the hiring stage.

Whenever changes are made to the criteria or operating methods of these systems, the information previously provided must be updated and communicated to employees in accordance with article 109 of the Portuguese Labour Code.

Rights of Works Councils

Works councils also benefit from specific rights in this area.

Pursuant to article 424 of the Portuguese Labour Code, employee representative bodies are entitled to receive information concerning the parameters, criteria, rules and instructions on which algorithms or artificial intelligence systems used by the company are based whenever such systems affect decisions relating to employment, working conditions, or the monitoring of employees’ activities.

This measure is intended to ensure greater scrutiny over the use of these technologies in the workplace.

What Should Companies Do?

Considering the current legal framework, companies are advised to:

1. identify the algorithmic systems used in human resources processes;
2. assess whether those systems influence decisions concerning employees or candidates;
3. document the criteria used;
4. implement appropriate human oversight mechanisms;
5. comply with the information obligations established by the Portuguese Labour Code;
6. review internal regulations, HR policies and privacy notices.

Conclusion

Contrary to what is sometimes assumed, the Portuguese Labour Code not only contains provisions relating to artificial intelligence but also does not prohibit its use. However, it requires that AI be used in compliance with the fundamental principles of transparency, information and non-discrimination.

In a context where algorithm-assisted decisions are becoming increasingly common, companies should ensure that these technologies are used responsibly, transparently and in a manner compatible with employees’ rights.

The Labour Law Department of Belzuz Abogados, S.L.P. – Sucursal em Portugal, composed of lawyers with extensive experience in employment-related matters, including recruitment, workforce management and termination of employment relationships, remains available to assist companies in assessing and managing these issues, ensuring legally sound solutions aligned with best labour law practices.