This content is from: Local Insights

Brazil: Reforms to the Labour and Employment Code

On July 13 2017, Brazil enacted Law 13.467 which changed many aspects of Brazilian labour and employment law (the Amendment).

Labour relations in Brazil have long called for a legislative update that takes into account new forms of work, giving greater dynamism and efficiency to the players involved in the labour contract. The speed of change in the world of labour has created legislative gaps due to the emergence of new scenarios not regulated by current laws.

The Amendment filled many of these gaps but left others open. It is true, however, that the changes introduced have, in general, given greater autonomy to both employees and employers, and also conferred greater power and flexibility to collective bargaining, allowing companies to negotiate a wider range of rights with unions.

An important change pertains to employees with college degrees and salaries above BRL11,062.62 (around $3,532). These employees will have greater flexibility to negotiate employment terms and conditions such as working hours, variable compensation schemes and use of arbitration for dispute resolution.

Outsourcing of any activity of a company, including its core business, has become expressly authorised.

The Amendment also introduces consensual termination, in which statutory severance is reduced by half.

It also possible to dismiss for cause employees who lose their licence to practice their profession. Collective dismissals and redundancies were equated to individual terminations in respect to relevant procedures and severance pay, waiving the need for consultation, prior approval or negotiation with the respective unions to be considered lawful. In addition, it is no longer mandatory to confirm employment terminations with unions or the Labour Ministry.

Shareholder liability is also affected by the Amendment. There is now a strict process to follow so that shareholders may be affected by labour liabilities, while departing shareholders can be held secondarily liable only with respect to the period in which they were shareholders of the company, provided that the relevant labour claim is filed within two years of their departure.

The joint liability of companies within an economic group has also changed. The simple identity of shareholders is not enough to evidence an economic group: the companies must be either controlled or managed by the same shareholder, or be coordinated and acting jointly in pursuing integrated/common interests.

Finally, although the union contribution is no longer mandatory, the unions still retain the monopoly on collective bargaining. The principle of union unity, according to which there may be only one trade union representing a profession in a given territory, remains in place.

Gisela da Silva Freire
and Viviane de Azevedo Rodrigues

Souza Cescon Barrieu & Flesch
Rua Funchal, 418 – 11º andar – Vila Olímpia
São Paulo / SP CEP 04551-060
T: +55 11 3089 6500

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