Brazil: Labor Reform: Analysis Of The First Year Of Enforcement Of Law No. 13,467/2017

After more than a year of the entry into force of Law No. 13,467/2017 ("Labor Reform"), many issues/matters have not yet been judged/pacified by the Superior Courts.

Regarding The Application Of The Rules Of Material Law

To all legal relations constituted or consummated before November 11th, 2017, are not applicable the rules brought by Law No. 13467/2017, in respect to the acquired right, incorporated into the legal patrimony of the employees (article 5th, XXXVI, of the Brazilian Federal Constitution).

Regarding The Application Of Rules Of Procedural Law

The lawsuits filed during the term of the legislation in force prior to the Reform, i.e.; before November 11th, 2017, cannot be affected by the new rules introduced by Law No. 13,467/2017, whenever they establish obligations for the parties or can cause damages to the litigants, in compliance with due process of law, avoiding procedural surprises.

Excepting this premise are rules that do not affect the jurisdictional provision per se and do not cause any material damages to the parties, which may be applied immediately to pending and future acts, in compliance with acts already performed under the aegis of the previous law.

Economic Group

Before the Labor Reform

  • It was considered an economic group whenever one or more companies – even though each company has its own legal personality – were under the direction, control or administration of another company, constituting an industrial, commercial or other economic activity group.
  • Those companies were jointly and severally liable for labor obligations (the main company and each subordinated company).

After the Labor Reform

  • It is considered an economic group whenever one or more companies, each having its own legal personality, are under the direction, control or administration of another, or even when, even though each one is autonomous, belong to an economic group.
  • Those companies are jointly and severally liable for labor obligations.
  • It does not characterize an economic group the mere identity of members, being, though, necessary to demonstrate integrated interest, effective communion of interests and joint action of its member companies.
  • The retiring partner will be secondary liable for company's labor obligations relating to the period in which he was a partner.
  • The retiring partner will only be jointly and severally liable when a fraud in the corporate change is proven.

Status

  • The mere identity of members does not characterize an economic group, being adopted the case law already set by the Superior Labor Court.
  • The mere existence of family relationship between the partners is not enough for the recognition of the economic group between the companies.
  • To be considered an economic group, there must be an effective communion of interests and joint action between the companies.

Paid Vacation

Before the Labor Reform

  • Vacation could be annually, and only in exceptional cases, granted in 2 periods, one of which could not be inferior to 10 consecutive days.

After the Labor Reform

  • As long as there is the acquiescence of the employee, vacation can be enjoyed in up to 3 periods, one of which cannot be inferior to 14 consecutive days and the outstanding cannot be inferior to 5 consecutive days, each.

Status

  • The segmentation of the vacation period is being accepted by the Labor Courts, peacefully.

Bank Of Hours

Before the Labor Reform

  • Should be adjusted by agreement or collective bargaining agreement entered into with the Union.
  • The accumulated hours could be compensated in the maximum period of one year.

After the Labor Reform

  • Can be adjusted by individual agreement.
  • The accumulated hours should be compensated in the maximum period of one year, if agreed with Union.
  • The accumulated hours should be compensated in the maximum period of 6 months, if agreed directly with the employee.

Status

  • There are no decisions yet regarding this legal matter.

Time Of Effective Work

Before the Labor Reform

  • The time that the employee was available to the employer was counted as effective work.

After the Labor Reform

  • It will not be counted as effective work time when the employee, by his own choice, stays in the company's premises, as well as enters in the company's premises to perform particular activities, among others: religious practices; rest; recreation; study; feeding; social relation activities; personal hygiene; changing clothes or uniforms.

Status

  • The changes brought by Law No. 13,467/2017 do not reach situations already regulated by the previous law, as a result of the principle of non-retroactivity of laws.

Part-Time Job

Before the Labor Reform

  • It was considered part-time job the work which maximum duration did not exceed 25 hours per week.

After the Labor Reform

  • It is considered part-time job the work which maximum duration does not exceed 30 hours per week, without the possibility of additional weekly hours, or even the work which the duration does not exceed 26 hours per week, with the possibility of adding up to 6 additional hours per week.
  • Payment of overtime with an increase of 50% over the normal hourly rate.
  • Overtime may be compensated up to the week immediately following its execution or its payment must be made on the payroll of the subsequent month, if they are not compensated.

Status

  • There are no decisions yet regarding this legal matter.

12x 36 Working Scale

Before the Labor Reform

  • The was no legal regulation by the Labor Code.
  • Precedent 444, of Superior Labor Court ("TST"), emphasizes that the validity of the scale in comment should be exceptional, when provided by Law, Collective Agreement or Collective Bargaining Agreement. In addition, the Precedent states that national holidays should be paid in double.

After the Labor Reform

  • The 12×36 scale day will be agreed by the parties, by means of Individual Written Agreement, Collective Agreement or Collective Bargaining Agreement.
  • Please note that Precedent 444, of TST, was not cancelled.
  • Employees rendering services in overtime will not need authorization to work in unhealthy environment.

Status

  • There are no decisions yet regarding this legal matter.

Routine Overtime

Before the Labor Reform

  • Precedent 85, of TST, provides that work in overtime, as a routine, could jeopardize the agreement for compensation of working hours. Therefore, the hours that exceeded the ordinary weekly working hours should be paid as overtime and, in the case of those destined for compensation, only the additional pay for extra work should be paid.

After the Labor Reform

  • The overtime rendered as a routine does not jeopardize the agreement for compensation of working days and the bank of hours.
  • Please note that Precedent 85, of TST, was not cancelled.
  • Salaries include payments due for weekly paid rest and rest during national holidays.
  • National holidays and night work extensions will be compensated.
  • Employees rendering services in overtime will need authorization to work in unhealthy environment.

Status

  • There are no decisions yet regarding this legal matter.

Break For Meal And Rest

Before the Labor Reform

  • The non-granting or partial concession of the minimum period for this break, for both urban and rural employees, implied the total payment of the corresponding period and not only the term suppressed, with an increase of at least 50% over the hourly rate.
  • Such payment was considered salary for all labor/social security purposes.

After the Labor Reform

  • Failure to grant or a partial concession of the minimum break for meals and rest to urban and rural employees implies payment of an indemnity only for the period that has been suppressed, with an increase of 50% over the hourly rate.

Status

  • There are no decisions yet regarding this legal matter.

Intermittent Employment Agreement

Before the Labor Reform

  • There was no regulation by the Labor Code.

After the Labor Reform

  • It is considered intermittent work the service provision with legal subordination, not continuous, with alternated periods of service and inactivity, depending on the type of activity of the employee and employer.
  • Every 12 months, the employee acquires the right to enjoy, during the next 12 months, one month of paid holidays, in which period he cannot be called to provide services by the same employer.

Status

  • In June 2019, the Supreme Court will decide the validity of the intermittent employment agreement.

Hours In Itinere (Time Spent By Employee To Commute)

Before the Labor Reform

  • The hours spent by the employee were computed in the working shift, if it was difficult to reach the workplace or it was not served by public transport and the company provided the transportation.

After the Labor Reform

  • The time spent by the employee will not be computed in the working shift anymore.

Status

  • The changes brought by Law No. 13,467/2017 do not reach situations already regulated by the previous law, as a result of the principle of non-retroactivity of laws.

Home Office

Before the Labor Reform

  • There was no regulation by the Labor Code.
  • In other to equate the face-to-face subordination with the one arising from telematic means, in 2011, the paragraph 1 was added to art. 6, of the Labor Code, to clarify that the telematic and computerized means of command, control and supervision are equated, for purposes of legal subordination, to the personal and direct means of command, control and supervision of the work of third parties.
  • The employee who worked in the home office system, should have his work shift controlled, as long as there were technological means to exercise such controls.

After the Labor Reform

  • The provision of services in the home office system must be expressly provided on the employment agreement.
  • This written agreement shall provide all dispositions on the responsibility for the maintenance or supply of technological equipment, necessary infrastructure and reimbursement of expenses incurred by the employee. Such utilities, when fully granted by the employer will not be incorporated into employee's compensation.
  • The employer will be responsible for educating the employees on precautions related to health and safety, in order to avoid work-related diseases and accidents.
  • The employees will sign a term of responsibility, committing themselves to follow instructions provided by the employer.
  • There will be no control of the working hours.

Status

  • There are no decisions yet regarding this legal matter.

Remuneration

Before the Labor Reform

  • Benefits such as food allowance, travel allowances, premiums and allowances, should be part of the remuneration, if exceeded 50% of employee's salary.

After the Labor Reform

  • Benefits such as premiums and allowances, regardless of their value, even if paid in an usual basis, no longer will be part of the remuneration. Therefore, they are not accounted for in the collection of labor and social security charges.

Status

  • The Superior Labor Court has recognized, in a lawsuit filed prior to the Labor Reform, that the value known as a hiring bonus, has a salary nature and has repercussions on the FGTS deposit in the month in which it is paid and in the 40% fine upon employee's termination. The thesis uniforms the jurisprudence.

Outsourcing

Before the Labor Reform

  • Precedent 331, from TST, only allowed outsourcing of specialized services not related to the core business of the contracting company.
  • The hiring of employees by interposed company was illegal, characterizing an employment relationship directly with the contracting company, except in case of temporary work.
  • The irregular hiring of an employee, through a contractor, did not characterize an employment relationship with the direct, indirect or foundational Public Administration organs, but the public entities responded, secondarily, if their misconduct was evidenced, especially in the inspection of compliance of the contractual and legal obligations of the service provider as an employer.
  • The employer's failure to comply with the labor obligations implied the secondary liability of the hiring company in relation to those obligations, provided that it has participated in the procedural relationship and also appears in the judicial enforcement order. The secondary liability of the service provider covers all the amounts resulting from the conviction related to the period of the rendering of the services on its behalf.

After the Labor Reform

  • It is considered outsourcing, the hiring of third parties for the execution of any of the company's activities, including its core business activity.
  • Outsourced employees will be entitled to the same working conditions as direct employees, such as: food; transport; medical care; training. The law does not require equality of treatment between the outsourced workers and the employees of the service-taker company, but care must be taken with the discrimination. The Federal Supreme Court will judge this matter to determine if the outsourced employees shall have the same rights of the service-taker company's employees.
  • The terminated outsourced employee cannot provide services to the same company as a direct employee or as an independent contractor, before an 18-month term, counted from the date of his/her termination.

Status

  • Decision of the Supreme Court with ex tunc effect. In light of the recent decision of the Supreme Court, the Labor Court decided to dismiss the claims formulated in the lawsuit, as they were exclusively based on the unlawful declaration of outsourcing.
  • The company can outsource any of the company's activities, including its main activity.

Independent Contractor

Before the Labor Reform

  • Independent contractor was the one who conducted his activity on his own, independently and without subordination.

After the Labor Reform

  • Independent contractor, even when exclusive and continuous, should not be considered an employee, when hired according to the legislation.

Status

  • The independent contractor, who does not have employees, is not an employer, and also, not an employee as well. For this reason, the independent contractor does not have any of the Union's protections, since he assumes the risk of the activities.

Unhealthy Conditions Of Work For Pregnant Women

Before the Labor Reform

  • It was ensured to pregnant or nursing employee that worked under unhealthy conditions the removal, regardless of the degree of unhealthiness, during pregnancy and nursing, from activities, operations or unhealthy places.

After the Labor Reform

  • Only pregnant women exposed to the maximum degree of unhealthiness will be removed immediately from the activities. Pregnant professional women working in minimum and medium degrees of unhealthy conditions of work can only be removed by presenting a medical certificate.

Status

  • The current decisions are that exposure to unhealthy agents during pregnancy is repelled by the legal system, which recognizes health and motherhood as fundamental rights. The exposure of pregnant women violates the fundamental rights and damages the dignity of the employee.

Severance Indemnity Fund – "Fgts"

Before the Labor Reform

  • Employee was only entitled to the balance of the FGTS account, in case of termination without cause by the employer, also being entitled to a 40% fine on top of the balance.

After the Labor Reform

  • Employee will continue entitled to the balance of the FGTS account, in case of termination without cause by the employer, also being entitled to a 40% fine on top of the balance.
  • The employment agreement may also be terminated by mutual agreement, when the employee will be entitled to 20% of the FGTS fine, and the maximum of 80% of his/her FGTS balance.

Status

  • There are no decisions yet regarding this legal matter.

Termination Of Employment Agreement By Mutual Consent

Before the Labor Reform

  • There was not regulation by CLT.

After the Labor Reform

  • Termination of the employment relationship may also arise from a mutual consent between the company and the employee. In this case, the employee is entitled to receive half the amount of the prior notice, but won't receive the unemployment insurance.

Status

  • In a recent decision issued by the Labor Court of the city of Paracatu, Minas Gerais, the judge ruled a case of termination of employment by mutual consent. Since the case did not have any evidence of a lack of consent that could invalidate the employee's signature in the termination documents, the judge acknowledged the validity of the termination by mutual consent and rejected the employee's request for condemnation of the defendant to the payment of the installments due in the event of termination without cause at employer's discretion.

Mass Layoffs

Before the Labor Reform

  • Due to jurisprudential construction, mass layoffs without previous negotiation with the category union was prohibited.

After the Labor Reform

  • Individual or collective unmotivated dismissals are allowed for all purposes, and there is no need for prior authorization by any union or the signing of a collective agreement for their effectiveness.

Status

  • There are no decisions yet regarding this legal matter.

Ratification Of Termination Of Employment By Labor Unions

Before the Labor Reform

  • The validity of a termination of employment, in force for more than 1 year, was only valid when formalized with the assistance of the respective union or the Ministry of Labor.

After the Labor Reform

  • There is no longer any need for assistance from the union or the Ministry of Labor.

Status

  • There are no decisions yet regarding this legal matter.

Collective Agreements

Before the Labor Reform

  • They prevailed over the Law, if they were more beneficial to the employee.

After the Labor Reform

  • They will only prevail over the Law when they are discussing the following topics:
    • Working shift, observing the Federal Constitution;
    • Break for meal and rest, respecting the minimum limit of 30 minutes;
    • Home office/Telework;
    • To classify the degree of unhealthiness;
    • Extension of working hours in unhealthy environments, without prior permission from the competent authorities of the Ministry of Labor;
    • Profit sharing.

Status

  • There are no decisions yet regarding this legal matter.

However, we understand that companies should take a certain caution to negotiate a. the degree of unhealthy conditions of work; b. overtime in unhealthy conditions, without prior permission from the competent authorities of the Ministry of Labor.

Union's Fees

Before the Labor Reform

  • It was due to the union by all those who participated in an economic or professional category, or a liberal profession, in favor of the representative union of the same category or profession, without any opposition right.

After the Labor Reform

  • It is due to the union by all those who participate in an economic or professional category, or a liberal profession, represented by their entities, under denomination of union contribution, once it is previously and expressly authorized.

Status

  • The Supreme Court decided to declare the constitutionality of the provision that extinguished the obligation of union contribution.

Salary Contribution For Social Security Purposes

Before the Labor Reform

  • The amount due as medical or dental care provided by the company, including the reimbursement of expenses with medicines, glasses, orthopedic appliances, medical and hospital expenses and similar, if did not cover all employees and managers of the company, integrated the salary contribution by its total value.

After the Labor Reform

  • The amount related to medical or dental care, whether it is for the employee or a dependent, including the reimbursement of expenses with medicines, glasses, orthopedic appliances, prostheses, orthoses, medical expenses and similar, even when granted in different types of plans and coverages, do not integrate the employee's salary for any purpose.

Status

  • There are no decisions yet regarding this legal matter.

Labor Courts – Jurisdiction

Before the Labor Reform

  • In the absence of legal or contractual provisions, the administrative authorities and the Labor Courts should, as the case may be, decide in accordance with the case law, by analogy, by fairness and other general principles and rules of law, especially labor law, and, also, according to habits and customs, comparative law, but always so that no class or private interest prevailed over the public interest.

After the Labor Reform

  • Precedents and other statements of jurisprudence issued by the Superior Labor Court and the Regional Labor Courts may not restrict rights legally established, nor create obligations that are not provided by law.
  • The Labor Court, in the examination of the Collective Agreements, should focus exclusively on the essential requirements of the legal business.

Status

  • There are no decisions yet regarding this legal matter.

Free Access To Justice

Before the Labor Reform

  • Any plaintiff who declared that was unable to pay the costs of the proceedings was entitled to the benefit of free access to justice.
  • It was up to the judges and presidents of the labor courts, to grant, upon request or ex officio, the pro bono benefit, including transfers and instruments, to those who received a salary equal to or lower than twice the legal minimum, or declared, under the penalties of the law, that was not in a position to pay the costs of the proceedings without prejudice to his own or his family's support.

After the Labor Reform

  • The plaintiff must prove in the records that is in an economic disadvantage compared to the company and cannot afford the procedural costs.
  • The judges and presidents of the labor courts can decide, in any instance, upon request or ex officio, to grant the pro bono benefit, including transfers and instruments, to those who receive a salary equal to or lower than 40% of the maximum limit of the benefits of the General Social Security System.

Status

  • In the State of Minas Gerais, the judges considered that the collection of the costs of the beneficiaries of the pro bono benefit violates the constitutional principles of isonomy, the right of the jurisdiction and the granting of free access to justice to those who need it.

Domestic Employee

Before the Labor Reform

  • The work of the domestic employee was governed by Complementary Law No. 150/2015.
  • If the domestic employer appeal from a judicial decision, he should pay the full value of the court deposit to present the appeal.

After the Labor Reform

  • The work of the domestic employee will continue to be governed by Complementary Law No. 150/2015.
  • If the domestic employer appeals from a decision, it will be guaranteed the payment of half of the amount of the court deposit.

Status

  • There are no decisions yet regarding this legal matter.

Extra-Patrimonial Damages

Before the Labor Reform

  • There was no regulation by CLT.

After the Labor Reform

  • Extra-patrimonial damage is considered an action or omission that offends the moral or existential sphere of the individual or legal person.
  • It will be considered responsible for the extra-patrimonial damage those who carried out the offense against the defended legal right, in proportion to the action or omission.
  • The reparation for the extra-patrimonial damage may be claimed cumulatively with the compensation for material damages resulting from the same harmful act.
  • The court will fix the repair to be paid, in one of the following parameters. The accumulation is forbidden:
    • For offense of light nature – up to three times the amount of the employee's salary;
    • For offense of medium nature – up to five times the amount of the employee's salary;
    • For offense of serious nature – up to twenty times the amount of the employee's salary;
    • For offense of very serious nature – up to fifty times the amount of the employee's salary.

Status

  • In the list of extra-patrimonial damages, there are violations of the rights of the personality or the dignity of the human person, referring to legal situations protected by the legal system that do not have pecuniary measures, such as moral damages, aesthetic damages and damages to the image. In other words, the extra-patrimonial damage is a type of moral, aesthetic and image damage, which is why it is perfectly possible to cumulate the respective indemnities (in this sense, Precedent 387, Superior Court of Justice).
  • It has not been established in jurisprudence, a parameter to identify the nature of the injury.
  • Exceptionally, moral damage is presumed, that is regardless of the proof of the great psychological anguish suffered by the victim (in re ipsa).

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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