Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Mattos Filho is a Brazilian law firm structured to provide clients with top-notch services in various legal areas in a coordinated and integrated manner. The firm allocates the best resources to meet its clients’ specific demands, working in multidisciplinary teams whenever necessary. This work dynamic allows the firm to deliver tailor-made solutions to its clients and enhance its understanding of their businesses, while remaining a relevant partner. Mattos Filho is a leader in approximately 30 practice areas and industries, working continuously to ensure that all these practices are benchmarks for the market. The firm’s comprehensive knowledge of the market and its clients business’s needs are examples of its efforts to stay at the forefront in providing legal services.Show more
Employment & Benefits
Almost one year on from the enactment of Law 13467/17 (the labour reform), early feedback suggests that the reform has proved to be an effective and positive change. In particular, the reform has increased the use of remote workers, reduced the imbalance of power between employers and employees, made union contributions voluntary and reduced the number of labour-related lawsuits.
When the labour reform came into force, it amended the provision requiring employees to pay annual contributions to relevant unions, instead making union contributions optional. After the reform was enacted, more than 15,000 lawsuits were filed to challenge union contribution-related matters. The Supreme Court recently ruled that the end of mandatory union contributions was constitutional.
The recent labour and employment reform enacted in Brazil has introduced important changes to labour and employment relations. One of the principal changes is the introduction of arbitration for the resolution of employment disputes. Although the changing law requires a change of mindset, employers should take advantage of it and begin to consider the possibility of instituting arbitration for certain employment contracts.
In Brazil, employees who work overtime are entitled to statutory premium pay at one-and-one-half times the regular rate. In the past, the courts often voided compensatory time off agreements and granted overtime payment claims to employees on the grounds that their employer had failed to comply with legal requirements. However, the 2017 labour reform introduced more flexible requirements, which should curb litigation on compensatory time off agreements and encourage their use.
The discussion regarding the legal nature of awards is not new to Brazilian labour courts, especially because amounts paid as awards could be considered salary, obliging the employer to include the award in the employee's salary and pay him or her every month or include this amount as a basis for determining the employee's labour rights. The legislative branch has tried to clarify this matter, defining the legal nature of awards, as well as the concept and legal criteria for their application.
The use of outsourcing has historically been uncertain in Brazil, particularly in relation to the outsourcing of a company's core business. However, once in force, the labour reform will create a scenario of greater legal certainty for outsourcing because it expressly authorises the outsourcing of any activities, including a company's core business.
According to a precedent established by the Superior Labour Court, the acquiring company is not liable for the labour debts of other companies within a corporate group that encompasses the acquired company, provided that the entities – at the time of the transaction – were creditworthy or economically viable, except in the case of bad faith or fraud. However, a recent reform to the Labour Code will enter into force in November 2017 and may change the existing understanding in this regard.
The need to modernise the procedural rules applicable to the labour procedure has long been a concern in Brazil. As such, it was well known that labour relations were being modernised and that the law did not satisfactorily account for this progress. In light of this, the newly enacted Law 13,467/2017 will introduce, among several changes not seen in prior legislative amendments, equal treatment of litigating parties and greater legal certainty for both litigating parties and Brazilian society as a whole.
The recently approved labour reform has amended several articles of the Labour Code and Laws 6,019/1974 (temporary employment), 8,036/90 (severance fund) and 8,212/1991 (social contributions). The legislation still protects the constitutional rights of workers. However, it seeks to modernise labour relations by creating rules and defining concepts which allow workers, companies and unions to have more freedom to negotiate their rights.
Struggling against one of the most severe financial and political crises, the government has adopted an agenda that aims to spur an uptick in the economy and reduce the unemployment rate, which hovers around 13%. In this regard, the government has proposed labour and social security reforms. However, some employee unions are urging a general strike across the entire country to obstruct these reforms.
Brazil recently underwent an unprecedented political and financial crisis. In view of this scenario, recovery of the country's economic growth and political stability is paramount. In order to reduce unemployment and modernise the labour regime, the government has proposed a labour reform, based on Bill 38/2017. The bill sets out a meaningful change in the Labour Code by amending, excluding and including several articles.
The Supreme Court recently rendered two decisions on labour and employment matters that may be understood as the beginning of the reforms promised by Brazil's new president. The cases centred on employees' right to expenses for commuting to and from work and Brazil's working hours regime. These first steps by the Supreme Court are a positive sign of what is to come in the near future.
Brazil's laws provide protection to women, minors, disabled individuals and the elderly. This protection encompasses, among other things, rights to maternity leave, job security and equal treatment, regardless of gender, age, marital status, sexual orientation, religious beliefs, nationality or skin colour. While employers may provide training programmes to encourage non-discrimination, key performance indicators may not be appropriate to this end.
Law 13,301 recently introduced new rights and rules which have extended the duration of maternity leave for mothers of newborns infected with a disease transmitted by the yellow fever mosquito. According to the new rules, employees who are eligible for maternity leave must receive an additional 60 days of leave if their child is infected by any of the diseases transmitted by the yellow fever mosquito, including the Zika virus and Chikungunya fever.
Under Brazilian law, the courts can schedule public hearings in order to invite legal experts and the general public to debate important matters to be decided by the courts. The Superior Labour Court recently organised a series of public hearings to discuss relevant labour matters, including whether asking job candidates to provide clearance certificates for criminal records constitutes grounds for moral damages.
Mediation is one of the most important principles of labour dispute resolution. However, despite the growing number of labour claims, the number of mediation proceedings has remained stagnant and research shows that there has been little improvement in this regard. This scenario may change in the near future, as Congress recently took steps to encourage parties (and courts) to resolve disputes – including labour disputes – through mediation.
Law 13,257/2016 was recently enacted, extending paternity leave from five days to 20 days. The law is part of a project launched by the government to protect children and is restricted to employees who work for companies enrolled in the Citizen Company Programme.
The Superior Labour Court recently ruled on a case filed by an employee who was dismissed eight months before completing the vesting period established in the company's stock option plan. The court ruled that the dismissal was unlawful, as the company had maliciously intended to prevent the employee from purchasing stock. The employee was granted indemnification in lieu of the stock option.
The Ministry of Labour and Employment recently issued new rules on drug testing which require all professional drivers involved in road passenger transport and road cargo transport to undergo drug testing. The rules may help employers and employees to avoid labour accidents and provide adequate treatment for drug-addicted employees.
Provisional Measure 680 – which launched the Employment Protection Plan (EPP) – has finally entered into force. Under the new law, companies now have until December 31 2016 to participate in the plan. The EPP seeks to protect formal jobs and encourage negotiations between employers and employees.
A national anti-bullying programme was recently introduced by Law 13,185. The programme provides a framework for creating, developing and disseminating policies to counter bullying. Employers must consider how to address these issues – in particular, when bullying occurs outside the workplace, as seems to be the case with most cyberbullying.
Provisional Measure 664/2014 was recently converted into Law 13.135, which introduced new conditions and measures. For example, under the provisional measure, an employee had to be injured or ill for a minimum of 30 days before claiming continuous pay; the new law has reduced that period to 15 days. Further, the law has increased a spouse's pension entitlement to 100% of the deceased person's retirement salary.
The Supreme Court recently suspended the effects of the Superior Labour Court's decision which made the Special Extended Consumer Price Index the applicable index to adjust outstanding labour-related debts. Further, the period for which an employee must be unable to work before he or she can claim continuous pay has been reduced to 15 days. Finally, the 'dirty' list (ie, a list of companies with employees working in conditions akin to slavery) has been reinstated.
The Supreme Court recently issued a preliminary injunction granting the Civil Court of Children and Youth the power to issue entertainment work permits to minors. The injunction was granted based on the Supreme Court's understanding that although all labour matters should be decided by the labour courts, the issue of work permits to minors is a civil matter, as it is considered a voluntary procedure.
Companies involved in labour suits were taken by surprise by a recent Superior Labour Court ruling on an incidental proceeding challenging the constitutionality of the index used to adjust outstanding labour-related debts. In its ruling, the court held that labour debts must be adjusted based on the Special Extended Consumer Price Index and rejected the use of the referential rate to adjust such debts.
The government recently launched the Employment Protection Plan, which allows companies in crisis to reduce employees' working hours – and proportionally, their salaries – by up to 30% for up to 12 months. Its success will depend on how optimistic companies are in relation to when their crisis is likely to end and whether they will be able to adhere to all related obligations.
Changes to Brazil's outsourcing rules are expected following the House of Representatives' recent approval of a new draft law. In contrast to the existing provisions on outsourcing, the draft law would allow any part of a company's business to be outsourced, rather than only non-core activities as at present. Companies hope that the new law will make outsourcing less bureaucratic and more unrestricted.
The Superior Court recently approved a collective preliminary injunction to suspend the terms of Ordinance 540/2004 that partially regulated the Ministry of Labour and Employment's 'dirty' list, which contained all employers found to have employees working in conditions akin to slavery. As such, two important public banks recently resumed the financing of employers that were on the dirty list.
The government recently amended the rules on guaranteed pay and unemployment insurance. The first measure extends the period for which an employee must be unable to work due to a work-related illness or injury before he or she can make a claim to receive one year of continuous pay. The second sets forth a regressive grace period before employees can claim unemployment insurance.
A new Ministry of Labour resolution allows parties to enter into temporary employment contracts for terms longer than three months, permitting temporary employment contracts to be extended for an additional six months. Companies must not only comply with temporary employment law and the new resolution, but also monitor the way in which temporary workers are terminated in order to avoid any repercussions.
Amid press reports of alarm over the number of work permits for children under 14 issued by minor courts, a broad discussion recently took place with the aim of defining, among other issues, the courts' competence for issuing work permits to minors. This is now returning to the labour courts, instead of being the responsibility of the common justice courts.
The highest body of the Superior Labour Court recently issued a decision that broadens the construction of the Labour Code provisions on transfer allowances. Companies should therefore review their practices on a case-by-case basis and reconsider their policies for transfers of employees to other workplaces in order to prevent controversies in future.
The Ministry of Culture recently introduced the cultural voucher, an employee benefit that seeks to stimulate worker interest in cultural endeavours. Employers are not obliged to provide the benefit (which amounts to R50 each month), but those that wish to do so must sign up for the ministry's Workers' Cultural Programme and comply with all provisions of the law.
The new Anti-corruption Law, which provides penalties against legal entities in the event of corruption, was recently issued. The strict law has substantial ramifications for employee relations, given the potential administrative and civil liability of legal entities. Where the authors of alleged crimes are managers and employees, the existence of internal mechanisms and procedures will be taken into account when applying penalties.
A new law was recently enacted to amend the legal regime governing employee profit sharing. The primary change introduced by the new law is the replacement of employee committees with parity committees in negotiations for the granting of profit sharing. Other changes affect information requests, health and safety criteria, payment schedules, arbitration and effectiveness. A limited income tax exemption has also been introduced.
A new decree regulating the exploitation of ports in Brazil is expected to become law shortly. The aim is to optimise sea freight, reduce the average time for operations and increase competitiveness. The changes brought by the new decree cover a number of issues involving port workers; trade unions have argued that it will threaten labour rights and grant privileges for privatisation.
A new regime governing the retirement of disabled persons will enter into force in November 2013. The new legislation acknowledges the right of disabled persons to retire and defines the term 'disability'. Further, it lays out the criteria for retirement and the method by which a retired insured disabled person's monthly income is calculated. The government will issue an implementing regulation to facilitate compliance.
Congress has passed a constitutional amendment extending to persons who work in homes ('domestic employees') a number of rights protected by the Federal Constitution, including compliance with minimum wage requirements and rights to maternity and paternity leave. While it is too early to predict the impact of these new laws on domestic workers, labour costs are certain to rise.
The rise in the use of IT systems in Brazil has led to repercussions for employers, in particular in relation to monitoring those who use the Internet for leisure activities while at work (eg, sending private emails or visiting online social networking sites). A number of tools exist to protect employers from the risks that arise as a result of employee use of technology in the workplace.
Environment & Climate Change
Article 3 of the Law of Environmental Crimes constitutes Brazil's sole provision regarding legal entities' liability. This clause intended to help to increase legal certainty by restricting the circumstances under which a company may be held criminally liable to those where there is evidence of wilful misconduct by its senior executives or board. However, an examination of court practice shows that many federal and state prosecutors have failed to comply with these legal requirements.
In November 2017 the new Immigration Law, which is regulated by Decree 9199/2017, came into force. Later in the year, the Brazilian Immigration Council issued Resolution 6/2017 in order to align its policies with the Immigration Law. By introducing the new resolution and the changes to the guidelines set out in the regulatory decree, the Immigration Council has amended the rights of immigrants who work on board foreign vessels or platforms in Brazil.
White Collar Crime
Despite the steps taken by Brazil to fight corruption in recent years, it remains one of the main challenges for the country. Mindful of this, the new government – which came into power in 2018 on the back of its vow to fight corruption – has promised a series of measures to tackle the issue. The measures include toughening prison sentences for corruption-related crimes, separating investigations involving high-level officials and making illegal campaign donations a criminal offence.
The new year started with a new government taking office. Naturally, this has led many to speculate what the government's priorities and policies will be. In particular, enforcement policies are receiving more attention than during previous inaugurations, largely due to the widespread corruption scandal following Operation Car Wash and the appointment of Sergio Moro (former lead judge overseeing Operation Car Wash) as the minister of justice.
The Superior Court of Justice recently appraised a noticeable theme regarding personal data protection from a criminal law perspective: the validity of police evidence obtained from smartphones without a specific judicial order to do so. The precedent has had a strong effect on investigations of varying scope and importance. Two recent examples occurred in the wake of high-profile anti-corruption and anti-money laundering investigations.
A recent review has detailed the limited application of corporate criminal liability and the indirect legal consequences that companies may face following criminal investigations targeting individuals. Corporations may face harsh administrative and civil penalties for business crimes which only individuals can be held liable for. This is especially true where cross-border investigations result in white collar crime regulations becoming increasingly denationalised and tougher than ever before.
Brazilian law's limited establishment of corporate criminal liability does not mean that companies cannot be seriously affected by criminal law enforcement and subject to an extensive range of substantive and procedural matters. Companies' executive boards are not always prepared for such matters, which – especially when criminal investigations attract considerable media attention – can also raise serious and costly reputational issues.
After years of extensive anti-corruption investigations launched by Operation Car Wash, the national and international legal community have recognised that Brazil's enforcement of regulatory and criminal matters has become stronger than ever. While work is still needed, it is clear that the use of settlements and plea deals in Brazil is here to stay and that these methods have radically changed the local enforcement landscape.