Article 334 of the Labor Code provides that an employer and its affiliate companies, with whom it shares reciprocal ownership or a dominant or group relationship as per Article 481 of the Companies Code, are jointly and severally liable for credits arising out of an employment contract, its breach or termination, which are overdue for more than three months.

In turn, Article 481, no. 2, of the Companies Code sets out that the affiliate companies regime applies only to companies based in Portugal, with three exceptions identified therein.

The Supreme Court of Justice decided – contrary to what has been defended by most legal scholars – that Article 481, no. 2, does not apply to the joint and several liability set out in Article 334 of the Labor Code and, therefore, said liability is extended to affiliate companies not only based in Portugal but also abroad.