The Equivalent Mechanism (ME) is an alternative means to the FCT, through which the employer grants its workers a guarantee equal to that which would result from their membership of the FCT, i.e. the guarantee of partial payment (up to 50%) of the compensation for termination of the employment contract.

It is a mechanism designated by the employer and managed by a private entity subject to the supervision of Banco de Portugal or Instituto de Seguros de Portugal and that is legally authorised to exercise the management and marketing of this instrument, which should be identified as ME.

The constitution of a given instrument as a MoU is preceded by prior communication to the competent authorities and depends on the issuance of a prior opinion on the conformity of such an instrument with the objectives and interests that the regime aims to protect with the creation of the FCT.

Unlike the FCT, the employer may choose to join different MEs for its employees, as long as this does not result in discriminatory practice towards any worker.

The initial option for FCT or ME may, at any time, be reversed, and the employer may request in www.fundoscompensacao.pt the transfer of FCT to ME or vice versa.

The regime applicable to the MoU is broadly the same as that applicable to the FCT, including the administrative offence regime.