CNJ advances in regulating labor agreements with broad settlements, aiming to reduce litigation, promote legal certainty, and encourage formal employment
On September 30, the National Council of Justice (CNJ) took an important step to encourage negotiation between employers and employees, expedite conflict resolution, and reduce the number of cases filed in Labor Courts. The initiative highlights the need to address high litigation rates, which create legal uncertainty and discourage the formalization of employment contracts and investments in the country.
Although labor lawsuits had decreased after the 2017 Labor Reform—which changed rules for granting legal aid and introduced attorney's fees for unsuccessful claims, increasing the risk of filing lawsuits—it also introduced "Voluntary Jurisdiction," a formal process for the judicial ratification of extrajudicial agreements negotiated between employers and employees.
According to the CNJ, the number of lawsuits in Labor Courts significantly dropped, with 1.7 million new labor claims registered in 2018, compared to 2.6 million the previous year. However, the number of cases has risen again in recent years, with around 5.4 million cases pending in 2023, similar to the figures recorded before the Labor Law changes took effect in 2017.
Nevertheless, there is still resistance in Labor Courts to granting full and reciprocal settlements between the parties, which leaves employers and employees uncertain about the possibility of future claims.
Thus, Resolution No. 586, of September 30, 2024, recognizes that agreements may be negotiated directly between employers and employees or through pre-litigation mediations. Full, broad, and irrevocable settlements will be subject to explicit stipulation of settlement effects, legal representation by lawyers or unions, the absence of coercion or legal defects, and ratification by judges or Judicial Centers for Consensual Dispute Resolution (Cejusc-JT).
Full settlements will not apply if not expressly stated in the agreement and will not cover claims related to:
- (i) occupational accidents or illnesses not mentioned in the agreement;
- (ii) facts or rights that the parties were unaware of at the time of the agreement;
- (iii) claims not represented in the agreement, with values specifically excluded.
During the first six months from September 30, 2024, the Resolution will only apply to agreements involving amounts exceeding 40 minimum wages (approximately R$ 56,000), with the goal of assessing its impact. Partial ratification of the agreement will not be allowed.
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