Brazil: Alternative Forms Of Settlement Of Labor Disputes (Or Non-Judicialization Of Conflicts)

Upon the enactment of Law No. 13.467 / 2017 ("Labor Reform"), two new institutes were created: the Annual Discharge Term, through which employees and employers may, annually, formalize the term of discharge/release of the obligations to give and to do, inherent to the employment agreement, with the acquaintance and participation of the professional union and the Ratification of the Out-of-Court Agreement, which allows employees and employers to settle an agreement on allowances inherent to the employment agreement, before the Conciliation Section of the Labor Court.

Both institutes were introduced aiming at privileging the principle of autonomy and also making prevail the terms negotiated by the parties over the legislation.

In this sense, it was also introduced, along with the Labor Reform, an article that authorizes the inclusion of an arbitration clause in employment agreements (i) in which remuneration exceeds twice the maximum established for the benefits of the Social Security System* and (ii) provided that the initiative to submit to arbitration is made by the employee himself or by his express consent.

Arbitration is a more incisive way of conflicts resolution, relying the situation to be defined by an exempted arbitrator, expert in the matter discussed, who decides the controversy without any interference of the parties. His decision has the force of a court ruling and is definitive, since it does not admit any appeal against it.

Currently, only employees who receive a compensation of over BRL 11,291.60* may recourse to arbitration.

However, there are still concerns about the use of the Arbitration Chamber to resolve conflicts involving individual labor rights.

This is because, article 1, of Law No. 9.307/1996, provides that only disposable rights may be submitted to arbitration.

As individual labor rights provided by law are, in essence, indisposable and so cannot be waived, in theory they are not subject to be negotiated outside the Court's procedural context.

By the Labor Reform, it is questionable whether the individual labor right can be freely negotiated, since the law, when amended the wording of the Labor Code, promulgated in 1943, exalted the principles of autonomy and "prevalence of the negotiated over the legislated", treating differently the employees who receive higher remunerations.

From what can be observed, little by little, the arbitration is being introduced in the labor scenario, as an alternative way to achieve the intended protection, outside Labor Courts.

It is clear that, apart from the legal question, the greatest challenge that currently exists is the reluctance of society and the Judiciary itself to submit cases to be sorted out by arbitration as a legitimate form of conflict resolution.

It is rooted in Brazilian culture the dependence of the State for the solution of conflicts, especially the labor conflicts, since the consolidated understanding of the Courts, before the recent amendment of the Labor Code, brought by Law No. 13.467/2018, was for the annulment of the arbitration award or annulment of any out-of-court agreement involving individual labor rights, as a safeguard to economic hypo sufficiency, inherent to the status of employee and that could interfere with individual free will.

Thus, it was justified the need for state intervention or, by express constitutional authorization, at least, of the entity representative of the professional category, as a mean of avoiding distortion of legal and constitutional precepts.

The objective of the legislator, when implementing said law, was to increase the autonomy of both parties, employer and employee, as well as soften the collective conception that the employee is hypo sufficient and cannot negotiate his/her own rights directly with the employer.

The above question is well mirrored by the Judiciary. According to a statistic carried out by the Superior Labor Court itself, only in 2017, 2,648,463 (two million, six hundred and forty-eight thousand, four hundred and sixty-three) cases were filed, out of that 37.7%1 were settled.

It should also be noted that, in the past, an attempt was made to establish a form of settling out-of-court agreements in labor matters, through the Quasi-judicial Labor Committees, established by the Labor Code.

Referred Committees were established between companies and unions, by the jointly appointment of members, with the attribution of trying to reconcile individual labor conflicts.

However, as a result of several frauds identified in the composition of the Committees, the Judiciary began to annul the agreements settled therein, returning to the "square one" regarding out-of-court agreements to solve conflicts.

"Out-of-court agreement signed before the Quasi-judicial Labor Committee, with the purpose of satisfying relevant allowances related to the end of the employment relationship for significantly lower amounts than those due under the law, affronts rights and guiding principles of employment relations. Impossibility of validation, under penalty of this Specialized Justice teaches and encourages bad employers to interpret irregularly the intention of the legislator when creating the Committees, causing manifest losses to the employee, hypo sufficient in the employment relationship." (Case Law 01657.2006.024.02.00-7)

From a strictly legal point, provided that the requirements listed above are fulfilled, resulting from the literal reading of article 507-A, of the Labor Code, all disputes inherent to the employment agreement may be settled through arbitration.

And there are many advantages that arise to the parties that submit cases to arbitration, among them:

  1. Flexibility of choice as to the form and type of arbitration. In that sense, since there is no violation of good customs and public order, based on the principle of autonomy of the will, the parties involved may agree on the rules of arbitration;
  2. Choice of referee. The arbitrator's choice shall be made by the parties, that may appoint more than one arbitrator;
  3. Referees may be experts in the subject;
  4. Celerity. After the delivery of the arbitration award, a second merit analysis will not be accepted, reducing the reasonable duration of the process;
  5. Confidentiality. Unlike the judicial process, the parties may request confidentiality during the process of arbitration, which will be enacted immediately, without going through a value judgement;
  6. Principles of contradictory and broad defense. The arbitration does not prevent the participation of the parties, guaranteeing the contradictory and broad defense;
  7. Economy. An arbitration procedure may be economically more advantageous for the parties.

In this sense, the option for the arbitration process shows that the parties have chosen this alternative means of conflict resolution, aiming at maintaining a relationship between them.

On the other hand, in spite of the above mentioned advantages, there are also aspects that can reduce the efficiency and effectiveness of the arbitration procedure:

  1. Lack of coercive power. In case of non-compliance of the arbitration award, the parties must resort to the Judiciary to enforce said decision;
  2. Risk of annulment. The arbitration procedure may be annulled in the procedural scope, when irregular;
  3. Suspicion of the referee. Once the arbitrator is chosen by the parties, there is a risk of choosing a partial arbitrator;
  4. Economy. Depending on the case, the arbitration process may be more expensive than a judicial proceeding.

It is worth mentioning that, in order to reduce the processing time of the judicial lawsuit, a goal was created in the Labor Court as a whole, so that the time for processing the cases was reduced.2

This is because, in average, the duration of labor proceedings is 5 years, while, in arbitration, the resolution of conflicts takes from 8 to 18 months.

Based on the cultural background mentioned above and the quite recent introduction of arbitration in the labor sphere, there is much instability and legal insecurity to be confident enough while submitting dispute resolutions arising out of the employment agreements to the arbitration chambers.

Finally, there is the figure of mediation, which aims, through a mediator, to "recover" the dialogue between the parties, fomenting negotiations until, spontaneously, they reach an agreement in a friendly way.

It happens that mediation (Law No. 13.140/2015) is not applied to the labor proceeding, as it is a mechanism that resembles the conciliation in the way it is already adopted by Labor Courts, being available to the parties at any time during the due course of the lawsuit, according to article 764, of Brazilian Labor Code: "The individual or collective lawsuits submitted to the Labor Courts' ruling will always be subject to conciliation."

The single paragraph of article 42, of the aforementioned law, stipulates that, in the labor sphere, mediation in labor relations shall be regulated by a proper law, which, to date, has not occurred.

Footnotes

[1] http://www.tst.jus.br/web/estatistica

[2] For the year of 2017, the target was 200 days for Lower Courts, 200 to 300 days for Regional Courts and 410 days for the Superior Court.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ana Lúcia Pinke Ribeiro de Paiva
Stella Neves Ferreira Piauí
Marília Chrysostomo Chessa
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions