In a recent decision, the Supreme Court addressed an important question relating to the day-to-day activities of companies operating in Brazil: is the outsourcing of services allowed without restriction or should it be limited to non-core business activities, as set out by Precedent 331 of the Superior Labour Court? This decision is relevant because it will affect the standards adopted by the Brazilian labour courts in relation to outsourcing.
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.