Up Again Portugal: Premises and Workplace

Employment

1. What are the key things that employers have to consider in relation to social distancing in the workplace, e.g. open plan or spacing of desks, use of shared equipment, limited access to communal facilities, canteen / restaurant, etc.?

Under to Resolution of the Council of Ministers no. 33-A/2020, in facilities where trade and service activities take place, measures must be taken to guarantee a minimum distance of two meters between people, including customers. Therefore, workstations and access to communal facilities must be adapted in order to ensure this requirement is complied with.

Additionally, companies must comply with the recommendations issued by Directorate General for Health. Although new recommendations are expected in the near future, Orientation no. 006/2020 of 26.02.2020 remains in force. According this, as well as Decree-Law no. 20/2020, 1 May, companies must approve a contingency plan including measures to prevent contamination and the risk of infection of employees, including:

  • establishing an isolation area;
  • setting specific procedures to provide alerts and communications (on hygiene procedures, use of masks, social contact);
  • defining responsibilities (for example, contacts for reports); and
  • identifying health professionals and their contacts.

2. What key hygiene and/or infection prevention measures will employers have to take to ensure a safe workplace e.g. provision of adequate handwashing facilities, regular deep cleaning of offices, etc.?

Retail stores and service establishments must provide alcohol-based sanitiser for employees and customers and promote the daily and regular cleaning and disinfection of areas with a large amount of contact (including workspaces, equipment, objects and surfaces). Companies must also promote the cleaning and disinfection, after each use, of payment terminals and other objects, surfaces, products and utensils that have direct customer contact.

Employees must use masks or visors in stores, service and educational establishments and daycare centres.

Guidance on specific requirements for hygiene and infection-prevention measures as enacted by the General Directorate for Health (Direção-Geral da Saúde - DGS) must be complied with by employers.

Real Estate

3. Are there any specific obligations, liabilities or duties of conduct imposed on landlords,  tenants or visitors with respect to the use or re-use and decontamination of premises; care, cleaning and maintenance of the exclusive and common areas; reporting requirements and/or measures in case of identified infections; health and safety issues - e.g. recommissioning water systems to avoid virus, installation of plexiglass screens, moving desks to comply with distancing. remodulation of fire prevention strategies (entrance/exit routes)? Is any distinction made between asset classes?

In light of the enacted restrictions to the circulation of people and running prohibition of establishments open to public, in some cases landlords may adopt adequate measures in the leased premises to prevent the entrance in running establishments, for instance offices, of people in general (stopping people other from workers of the tenants that may attempt to enter the premises).

In leased premises, tenants must comply with the health and safety requirements imposed under the COVID-19 measures. The tenant is responsible for compliance with the safety and health measures in the common areas (for example, reception or mail), notably the creation and implementation of contingency plans. All health and sanitary measures under Portuguese Law must be respected, particularly the recommendations of World Health Organization and the Portuguese Health General Directorate (DGS).

There is no distinction between asset classes.

4. Are there any rent suspension measures and/or stay of recourses and actions (including eviction) or any Government support initiatives such as a furloughed building grant scheme (if so, maybe only a part of the building should be re-occupied)? When rent suspension measures are available, what is the usual payment mechanism and timing agreed to by the parties?

The Portuguese Parliament has approved a law enacting an exceptional and temporary framework of payment delay in the residential and commercial rents.

Residential leases

Tenants with a 20% income decrease, provided that they give prior notice to the landlord of this circumstance, may suspend and defer rent payments for the state of emergency period and its following month, but said rents shall be paid, in instalments, until a maximum period of 12 months from the emergency period.

Landlords can only terminate the lease due to non-payment of rents by the tenant if they do not make the payment until by this maximum period of 12 months.

Tenants in this situation can apply for interest-free loans from the Institute of Housing and Urban Rehabilitation. Landlords can also apply for interest-free loans from the Institute.

Commercial leases

Businesses carrying out the following activities in leases may be entitled to suspend and defer rent payments for the state of emergency period and its following month, but those rents shall be paid in instalments by a maximum period of 12 months:

  • closed-to-public retail trade establishments
  • recreational, leisure and entertainment activities
  • cultural and artistic activities
  • sports activities
  • activities in open spaces, public spaces and streets, or private spaces and streets similar to public roads
  • games and betting spaces
  • restaurant activities, with some exceptions
  • spas or similar establishments

This list is not exhaustive.

The lack of rent payment during the state of emergency and in the following month cannot be used as a ground for termination of the lease or eviction. No penalties are applicable to the tenant.

The Portuguese Parliament has enacted a new law enacting a framework through which the residential and commercial leases shall not end, by expiration, until 30 June 2020 (upcoming law will extend it to 30 September 2020). It also suspended the effects of any opposition to renewal in residential and commercial leases made by the landlord.

However, if a tenant proceeds with termination during the period of rent suspension or deferral, such rents shall need to be fully and immediately paid.

Judicial eviction procedures are suspended until further legislation is enacted in cases when the tenant is in a fragile state due to lack of their own housing.

5. Are there specific tax reliefs on payment or collection of rent instalments? Do they apply subject to actual payment or regardless? Do they apply generally or only to specific asset classes?

To date, there are no specific tax reliefs on payment or collection of rent instalments in connection with the pandemic.

There are beneficial tax regimes available for individual landlords to incentivise longer-term leases, as well as incentives for individual and corporate landlords for lease agreements for housing purposes. These are, however, unrelated to the current situation.

6. Are there any measures regarding relief from the performance of real estate-related contractual obligations?

In leases, tenants with a 20% income decrease, provided that they give prior notice to the landlord of this circumstance, may suspend and defer rent payments for the State of Emergency period and its following month, but these rents shall be paid, in instalments, by a maximum period of 12 months from the emergency period.

As for other real estate-related contracts, each case will depend on the contract’s wording in. For example, construction agreements may include applicable force majeure provisions.

7. Are there any credit facilities in place to mitigate loss of income for landlords?

Landlords with a 20% income decrease can also apply for interest-free loans from the Institute of Housing and Urban Rehabilitation.

8. Is there any relief from loan repayments / enforcement of loans secured against properties?

Deferral of loan monthly repayments was enacted for own permanent residential borrowers, SMEs, individual entrepreneurs, social-support private institutions, and associations, provided that certain requirements apply, such as having residency in Portugal, not being insolvent, not being in default on tax and social security payments, and not being in default of any payments to the institutions for more than 90 days.

Under this legislation, until 30 September 2020, the financing institutions must

  • not terminate loans or facilities;
  • extend terms for periods equal to this period; and
  • suspend repayments with the necessary further adjustments.

9. Are public services necessary to complete the sale, acquisition or other operation of real estate assets or companies or to establish the right to open for business (planning authorities, notary public, Land Registry, Companies’ Registry, etc.)?

The right to open for business is determined by the Portuguese Government.

As for completion of sale, acquisition or other operation of real assets, notaries are necessary (notaries are private in Portugal), as well as the Land Registry for the applicable registrations.

Planning authorities are required only if the real estate assets require a certain license prior to their sale and acquisition (for instance, a use permit issued by the respective municipality).

As for completion of sale, acquisition or other operations of companies (not assets) , they are commonly subject to private contracts (and therefore no need for notaries in principle), but Companies’ Registry services are necessary.

10. Are there any specific processes or protocols available to consummate real estate operations enabling them to comply with any required social distancing (e.g. electronic signature, etc.)?

Yes. For now, electronic signature is admissible for private contracts only.

The Portuguese Government is preparing legislation to allow notary deeds and other notary instruments to be executed with social distancing.

In regard to the Land Registry, there’s a possibility that some registration requests related to real estate assets could be made online through a dedicated website.

11. Are contractors who were carrying out works within the premises obliged to resume them? Can building sites reopen when they were closed down? Are there any specific provisions in relation to certain asset classes authorising continuation / resumption of works (e.g. healthcare structures)?

Construction is deemed an activity where remote working/teleworking is not possible, and so contractors must resume works (if they stopped during the state of emergency), except where the company’s activity is suspended due to the decision of the site owner, the government or the health authority.

Building sites may reopen provided safety, hygiene and health measures recommended by the health authorities (namely protection and safety equipment to avoid contagion and social distancing) are adopted and complied with.

No specific provisions were enacted authorising the continuation/resumption of construction works regarding certain asset classes.

12. Are there remedies or contractual arrangements available to address impossibility or delay for a party to handover premises to another which are/were to be constructed or refurbished, or for such other party to take over those premises?

Without prejudice to specific commitments the parties had agreed or are willing to agree, Portuguese law provides two remedies:

  • Total and permanent impossibility of handover/takeover the premises resulting in a “loss of interest in the performance” allows for the termination the contract, and extinction of any obligations arising thereof.
  • Temporary impossibility, causing a delay in handover/ takeover, means the contract still needs to be complied with, and resulting delay is not an underperformance; so no penalties for delay apply, and deadlines should be extended for the duration of the impediment.

13. Has the duration of validity of administrative authorisations pertaining to development/construction of real estate assets (in particular planning authorisations) been extended?

For the duration of the exceptional COVID-19 situation, both statute of limitation and prescription periods regarding all types of administrative procedures are suspended.

This exceptional suspension regime will remain in force until legislation establishing its end is enacted.

Litigation and Regulation

14. Is the use of disclaimers for visitors or others coming on to the site of business useful for limiting potential future COVID-19 claims?

Companies are obliged to establish a contingency plan adapted to specific site conditions, in accordance with the instructions and guidelines issued by public health authorities. In addition, under the Portuguese Labour Code, site owners, and their directors and managers, may be held jointly responsible with any contractors for site workers/ visitors’ compliance with legal provisions, potential breaches, or payment of any related fines.

A disclaimer, when the above is not complied with, does not exempt COVID-19-related claims. However, provided full compliance of legal provisions is ensured, the disclaimer may add an additional layer of coverage to the site owner if it helps remind that a number of obligations also fall on workers/visitors.