Brazil: Validation Of The Voluntary Dismissal Program (Pdi) By The Brazilian Supreme Court

One mechanism frequently used by companies especially in times of economic crisis such as that currently hitting the Brazilian society is the Voluntary Dismissal Program - PDI or PDV. Some other situations may also justify implementation of plans of this nature, such as the need to replace workers, reduct costs or redeploy the staff.

The incentives to join the PDI may vary and go beyond a financial reward.  The grant of a certain benefit for a certain period (for example, the maintenance of worker's health care plan), the donation of an automobile, the payment of salaries for a certain period may also represent incentives to the worker's voluntary dismissal.

It should be pointed out that joining the plan voluntarily enables an employee to separate from the company and earn higher benefits than those normally received in routine cases of employment termination.

As it happens, in exchange of such extraordinary benefits the worker, frequently assisted by the Labor Union, undertakes to grant full and irrevocable discharge of the employment contract and claim nothing further in the future.

However, although in practice this obligation undertaken by employees had the purpose of giving a legal certainty to employer to the effect that it would not be subject to litigation in court, this agreement was not being validated by the Labor Courts.  Even with the receipt of extraordinary benefits and grant of discharge of the employment contract, the employee would go to the courts seeking rights that according to employee, had not been provided for in the agreement related to the PDI.

The Labor Court, which not only deemed a worker the weaker party in the labor relationship but also considered that the full discharge of the employment contract granted by employee would only be valid in case of a detailed description of all negotiated rights, did not prevent the filing of labor claims even after employee's acceptance to join the PDI.  Such opinion by the Superior Labor Court - TST is found in Case Law Instruction no. 270 of the Individual Settlements Subsection - SBDI-1, which only grants discharge of the portions and amounts listed in the Instrument of Employment Termination, as well as in Case Law Instruction no. 356 of the SBDI-1, which does not allow any offsets.

However, on April 30, 2015, the Federal Supreme Court - STF reviewed the opinion of the Labor Courts.

The Federal Supreme Court (Extraordinary Appeal 590.415 - Santa Catarina*) examined a case and Justice Ministro Luís Roberto Barroso rendered an opinion pointing out that the employee who joined of the PDI and executed an agreement with employer had earned an extraordinary incentive nearly seventy-eight (78) times the amount of such employee's highest remuneration, whereas the amount earned by worker in a regular termination  would never reach such levels. 

Likewise, in the same unanimous decision the STF considered that joining the PDI entails a full and unrestricted discharge of the employment contract, provided that the negotiation had the assistance of the union and this condition is provided for in the collective agreement and all other documents executed by employee. The intervention by the union, according to the STF, would balance the negotiation, as the employee would no longer be deemed the weaker party, subject to employer's will. 

The decision, which had  general repercussion and thus may be extended to other cases with same subject matter, represented a significant improvement and an encouragement to use PDIs as alternatives for companies to survive in times of economic crisis.

Under this scenario, the validation of the collective agreement executed with the intervention of the union was crucial to sustain the companies and the unions themselves, to the extent that in case of dismissal by the Federal Supreme Court, the collective bargaining would end up belittled and its use would be clearly uncertain, what could even result in a serious limitation to the union's representativeness. 

The world trends to encourage collective bargaining, as seen in the Convention no. 9898/1949 and Convention no. 154/1981 of the International Labor Organization, which further to supporting the validity of such negotiations, also motivates its use to settle disputes.

Likewise, collective agreements with unions in Brazil promote dialogue, provide for the negotiation of mutual concessions and ultimately, motivate self-settlement and relieve the handling of lawsuits in the courts.

It is important to point out that the general repercussion of the PDI is already felt in decisions rendered by the Regional Labor Courts in the State of São Paulo in May and August of the current year, which expressly adopted the opinion of the STF (e.g. CASE 0002736-64.2012.5.02.0462 - TRT/SP and CASE no. 0002419-82.2013.5.15.0102 - TRT 15th REGION).

We believe that soon the TST may re-evaluate the terms of Case Law Instructions no. 270 and 356, both of the SBDI-1, which as detailed above, represented hindrances for the full acknowledgment by the courts of the PDI, especially the effects resulting from full discharge of the employment contract.

Thus, by preserving the underlying constitutional principles and ratifying the possibility of using the collective bargaining as a means for self-settlement of disputes as well as validating the union's powers, the STF not only safeguarded relevant provisions in the Federal Constitution but also nurtured the companies with the hopes that collective agreements will be effectively complied with. 

* The decision  with acknowledged general repercussion was rendered on April 30 during judgment of Subject 152, related to proceeding RE 590415, where litigants were BANCO DO BRASIL S/A (SUCCESSOR OF BANCO DO ESTADO DE SANTA CATARINA S/A - BESC) and CLAUDIA MAIRA LEITE EBERHARDT, and will be applicable to all cases which litigate the same subject matter and affect 2,396 proceedings directly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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