Brazil: Brazilian Labor And Employment Retrospective

Taking advantage of the beginning of one more year, we kindly invite you to read our Retrospective in Brazilian labor and employment matters, of 2014. We brought Brazilian labor and employment matters to rethink about issues that may impact your day-by-day activities. The matters discussed herein are both procedural and routine related.
The matters discussed below are based on changes in the legislation and more relevant precedents during 2014:

1. Temporary Work: Through the Ordinance No. 789, from April 2, 2014 published in June, 2014, the Brazilian Labor Ministry brought relevant change in the length of the temporary employment agreement based on replacement of regular and permanent workforce. In light of the legislation, the temporary work cannot exceed three months, unless the Brazilian Labor Ministry authorizes the extension of the agreement. The Ordinance that previously governed this matter (Ordinance No. 550, from March 12, 2010) used to allow the extension of the temporary employment agreement for three additional months, so the temporary work could reach the total length of six months. With the new Ordinance, the temporary work, based on replacement of regular and permanent workforce, may be engaged and extended for a period higher than three months, provided that, at the time of the engagement/extension, there be circumstances that justify the engagement of temporary worker for more than three months. Moreover, the new Ordinance increases to nine months the total length of the temporary employment agreements, based on replacement of regular and permanent workforce. The length of the temporary employment agreements based on extraordinary increase of services continues limited to three months, maintained the limitation of three months for extension

2. Outsourcing: In May of the last year, the Brazilian Supreme Court, in the Extraordinary Appeal (ARE) 713211, recognized the general repercussion of outsourcing. In this case law, the Brazilian Supreme Court may limit the concept of support-activity and main-activity, limiting the hypothesis of outsourcing. Currently, outsourcing is governed by the Case-Law 331, of the Superior Labor Court. In light of the referred Case-Law, it is possible to outsource surveillance and cleaning services, as well as specialized support services, provided that there is no personality and direct subordination between the contractor of the services/principal and the outsourced worker. Given the general repercussion of outsourcing, we expect that the Brazilian Supreme Court will dig deeper the concept of support-activity, reducing the high number of lawsuits discussing this matter.

3. Guarantee Insurance in the Labor Courts: Given the publishing of the Law No. 13.043, of November 13, 2014, the guarantee insurance has been a way of guarantee also in the labor collections. The referred law changed the tax collections law, to insert the guarantee insurance as a way of guarantee of tax collections. Said change in the legislation impacts in the labor collections, once the article 889 of the Brazilian Labor Code sets forth that the tax collections law is applicable to the labor collections, provided that compatible with the labor proceeding. For the purpose of guaranteeing the labor collection, among others, the guarantee insurance policy must be issued by indefinite length or be conditioned to the final solution of the lawsuit.

4. Impacts of the New Brazilian Civil Code of Procedure in the Labor Proceeding: Currently, the Brazilian Civil Code of Procedure is applicable to the labor proceeding, provided that compatible with the labor proceedings. The subsidiary application of the Brazilian Civil Code of Procedure to the labor proceedings, nowadays, is set forth by the article 769 of the Brazilian Labor Code. The article 15 of the new Brazilian Civil Code of Procedure will ratify the content of the article 769 of the Brazilian Labor Code. Considering that the Labor Courts have being applying some articles of the Brazilian Code of Procedure to the labor proceedings, for example, the summon of the debtor for the payment in fifteen days, through the attorney of the debtor (in light of the Brazilian Labor Code, the debtor is personally summoned, to pay in 48 hours, proceeding considered by some judges as less favorable to the worker when compared with the proceeding determined by the Brazilian Civil Code of Procedure), it is important to pay attention to the changes that the new Brazilian Civil Code of Procedure will bring.

5. Changes in the Appeals before the Labor Courts: Since the end of the third quarter of 2014 it is in full force and effect the law No 13.015/2014, which goal is to made the proceedings go faster in the Labor Courts. Said law modified specially the legal provisions of the Brazilian Labor Code which govern the special appeals in the Labor Courts, that is, the appeals filed before the Superior Labor Court. One of the main changes is the obligation attributed to the Labor Court of Appeals (2nd level of jurisdiction) of making uniform their own decisions. Then, the Superior Labor Court will be charged to unify the decisions of the Labor Courts of Appeals when the Labor Courts of Appeals adopt different positions for the same matter. Another important change refers to the ruling of repetitive appeal. Given the change in the Brazilian Labor Code, appeals deemed repetitive shall wait for the ruling of the first case, so the decision of this first case will be adopted to the suspended lawsuits.

6. Statute of Limitations of the Severance Fund ("FGTS"): In accordance with the legislation on FGTS, with the Precedent No. 362, of the Superior Labor Court, and with the Precedent No. 210 of the Superior Court of Justice, it is of thirty years the statute of limitations to claim the FGTS. However, recently, the Brazilian Supreme Court, has defined that the statute of limitations to claim the FGTS is of five years, once the FGTS, as a right of the urban and rural workers, is subject to the statute of limitations sets forth by the item XXIX of the 7th article of the Brazilian Constitution. In light of the Brazilian Constitution labor rights can be claimed within two years after the termination of the employment agreement, limited to five years, counted retroactively, as of the filing of the lawsuit. Said decision was made in the appeal (ARE) 703212 ruled on November 13, 2014. To avoid damage for the creditors of FGTS based on the thirty-years statute of limitation, the reporter judge, Minister Gilmar Mendes, offered the following transitional rule: for the cases which statute of limitations begin after the ruling of the appeal herein discussed, it applies the five-years term. However, for the cases which statute of limitation was ongoing at the time of the ruling of the appeal herein discussed, it applies the period that occurs first: thirty years, counted as from the initial term of the credit, or five years, counting as from the ruling in reference.

7. Position of the Labor Courts on Penalty of the Severance Fund ("FGTS"): The article 16 of law No. 8.036/1990 grants the faculty for the non-employee director receiving FGTS. In turn, the article 18 of that same law establishes the penalty of 40% over FGTS in case of termination without case by the employer. This legal provision is silent about the 40% over FGTS for the non- employee director. The Superior Labor Court, in the precedent (RR) 295-23.2010.5.03.0052, held on November 26, 2014, recognized that the employer did not have to pay the penalty of 40% for a non- employee director, because on the corporate by-laws of the company it was established that the non- employee director could be dismissed at any time. For the Superior Labor Court, the possibility of the non-employee director be dismissed at any time or on a determinate date, depending on the wording of the corporate by-laws, cannot be interpreted as termination at employer will.

8. Moral Damages Arising from Excess of Overtime: The Superior Labor Court understands that the employee who excessively performs overtime or work more than the limit of 8 hours sets forth by the Brazilian laws, shall receive indemnification for moral damages. In accordance with the Superior Labor Court, the excessive work is against constitutional principles such as the right to life, individual and social welfare, non-commodification of work and appreciation of the job. The referred decision of the Superior Labor Court, in the case law (AIRR) 1399-02.2012.5.15.0099 , from November 26, 2014, recognizes that the employer should have to pay compensation for moral damages to the employee who performed five additional hours, , during a period of one year. Said decision was based on the violation of the right of rest and the communion with the family.

9. 15-Minutes Break for Women before Overtime: The Brazilian Supreme Court recognized that the article 384 of the Brazilian Labor Code is compatible with the Brazilian Constitution. Said article is inserted in the chapter of the Brazilian Labor Code that governs the women's work protection. The referred article ensures the entitlement to a 15-minutes break for women, in case of overtime. There is no controversy about this matter before the Superior Labor Court. Thus, once this right is violated, the employer can be ruled to pay this period plus additional of 50%. Said ruling took place in the precedent (RE) 658312 , from November 27, 2014, by majority of votes of the members of the Brazilian Supreme Court. The reporting judge said that it could exist legal provisions which give different treatment between people, provided that said different treatment is proportional and occurs for equalizing differences. To highlight this argument, the reporter judge mentioned some matters to be considered, such as the historical exclusion of women in the labor market and the accumulation of professional and home activities.

10. Limitation to the Payment of Monthly Pension: The employee who suffers occupational accident or acquires occupational disease has, among others, the right to receive a pension correspondent to the job to which the employee becomes unable, totally or partially. The payment of the pension starts when the medical treatment finishes. Regarding the final term of the payment, there is controversy in the Labor Courts. Usually, the final term can match with the retirement or expected time of life of individuals, among other criteria. However, recently, the Superior Labor Court, while ruling a lawsuit (RR-2773-98.2011.5.02.0471), has defined that the monthly pension has to be paid on a lifelong term. Said decision was based on the article 950 of the Civil Code, which does not establish limit to the pension herein discussed.

11. Nullity of Resignation Non Ratified by the Union: In accordance with the first paragraph of article 477 of Brazilian Labor Code, the resignation of the employee with more than one year of service will only be valid if the union which represents the employee or the Brazilian Labor Ministry ratifies the resignation. The ratification is essential to the validity of the termination, either at the employee or the employer initiative. In the precedent (AIRR) 107-07.2012.5.01.0055, the Superior Labor Court understood that even when the employee handwrites the resignation, if the resignation is not ratified, the resignation will be deemed as nonexistent. Therefore, the employers that do not ratify the termination of their employees, especially when arose from resignation, will assume the risk of be sued and ruled on the payment of severance owed in case of termination at employer will.

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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