Labour & Employment

Last verified on Monday 22nd January 2018

Brazil

Leila Pigozzi Alves
De Luca Derenusson Schuttoff e Azevedo Advogados (São Paulo)
  1. 1.

    May foreign employers hire employees directly in your jurisdiction or is it necessary to act through a local subsidiary? Are secondments or loans of personnel lawful?

  2. The Brazilian Labour Law does not prevent a foreign employer from hiring employees to work in Brazilian territory. However, the foreign entity would need a Brazilian taxpayer number in order to comply with labour and Social Security obligations resulting from such employment relationship, since work performed in Brazil is generally subject to Brazilian Labour Law. In brief, although foreign companies are not prohibited from hiring employees in Brazil, there would be practical obstacles to comply with the Labour Law. In addition, it could trigger corporate and tax exposure.

    A foreign company can hire independent services in Brazil and outsourcing agreements are legal, provided they are not used to circumvent labour statutes. Any independent arrangement will be deemed invalid if the individual works as an employee in practice.

  3. 2.

    Is there a limit to the number (or ratio) of foreign employees an employer may have in your jurisdiction?

  4. Yes. The Brazilian Labour Code (CLT) provides for a one-third–two-thirds  ratio between foreign and national employees, applicable to both payroll and headcount. In other words, a Brazilian company with three or more employees can have a maximum of one-third foreign employees and pay a maximum of one-third of its total payroll to foreign citizens. The following situations allow the foreign citizen to be counted as Brazilian for the purposes above: Portuguese citizens; foreign citizens with authorisation to live in Brazil on a permanent basis, valid for a minimum of 10 years; and foreign citizens with Brazilian children or spouse.

  5. 3.

    May labour or employment agreements, and the termination of those agreements, be subject to any legislation other than that of your jurisdiction?

  6. As a general rule, an employment relationship is subject to Brazilian Labour Law if the work is performed in Brazilian territory. This general rule is applicable regardless of the employees’ nationality and of the location of admission and signature of the employment agreement. However, we envisage three possible scenarios in which a labour relationship governed by Brazilian Law could also be governed by the labour laws of other jurisdictions:

    • if the employment agreement sets forth benefits and guarantees pursuant to other countries’ legislation, they would apply in addition to the ones established by local law;
    • if the work is performed in Brazil under special authorisation by immigration authorities allowing the employment relationship to be kept abroad (eg, technical support from a foreign company – employer – to a Brazilian customer or partner to transfer technology to Brazil); and
    • temporary transfer of an employee to another country, in which case the applicable law would be of the foreign country for the duration of the transfer although some guarantees established by Brazilian law would also apply.
  7. 4.

    What are the requirements for an enforceable agreement? Are there any formalities that labour or employment agreements must adopt to be enforceable in your jurisdiction? Are fees, duties or taxes generated by any of them?

  8. In Brazil, employers and employees are not required to execute written employment agreements. According to the CLT, there is an employment agreement whenever there is an individual who personally works to another individual or entity, on a regular basis, upon payment and subject to direct orders and supervision. As a consequence, the employment conditions can be tacitly arranged. Employment conditions established by a written employment agreement signed by the employee and by the employer are enforceable provided that they are consistent with the CLT, which governs most aspects of an employment relationship in details. Although the employment relationship can be tacit, the employer is required to register it on the employees’ labour card (CTPS). An employment agreement subjects the parties to the applicable labour, social security and tax law. As a consequence, in terms of registration, the employer will also be required to register the main work conditions with the social security system (INSS), to the Ministry of Employment and to the Federal Bank ­handling the Severance Fund (FGTS). There are no fees, duties or taxes resulting from admission of an employee or registration of employment agreement per se. Still, for the sake of clarification, the cost of the employment ­relationship will include salaries, statutory and contractual benefits, contributions to social security and severance provision. In addition, it will create tax obligations (eg, withholding of income taxes).

  9. 5.

    What are the implications of hiring personnel without a clear, written, employment agreement in place? May this have any effect in the event of litigation?

  10. Because Brazilian Labour Law regulates most aspects of an employment relationship in a very detailed manner, in theory the parties would not need an employment agreement. However, it is recommended for an employer to have written instruments to govern certain aspects of the employment relationship because, in the event of litigation, labour courts tend to interpret unclear situations on behalf of the employee, who is considered the weaker party of the agreement.

    Since 11 November 2017, following the so-called Labour Reform (introduced by Law #13467), some space has been created for the negotiation of statutory labour rights and guarantees with high level employees, meaning employees with a diploma and with salaries over 11,291.60 reais. In addition, certain conditions such as home office and "zero hours" arrangements also require the pact to be in writing.

  11. 6.

    What are the employers’ obligations (social security and related benefits) regarding employees after contracting? Are any social benefits tax deductible? Are these applicable to foreign employees?

  12. The statutory labour rights include:

    • a national minimum wage of approximately US$270 per month;
    • 30 days of vacation per year;
    • a vacation bonus (one-third of the vacation payment);
    • a 13th salary;
    • Guarantee Severance Fund (FGTS) at 8 per cent of the monthly compensation;
    • a prior notice for termination of minimum 30 days and maximum 90 days, depending on the length of the employment;
    • indemnity for unfair termination equal to 50 per cent of FGTS account balance;
    • overtime payment for eligible employees;
    • enrolment in social security;
    • shared payment of transportation costs; and
    • weekly rest.

    Individual circumstances may also trigger other additional pay (eg, for occupational hazard, unhealthy work conditions and night shifts). In addition, there are also collective labour agreements that are applicable according to the business and location. They are mandatory regardless of union affiliation and valid for up to two years. Employment statutory costs are generally considered to be “operational costs” and therefore subject to income tax deduction, depending on classification by tax law and compliance with the legal conditions applicable.

  13. 7.

    What benefits, other than cash remuneration are employees in your jurisdiction entitled to? What severance entitlements may employees claim?

  14. The most important statutory labour benefits include:

    • a national minimum wage of approximately US$270 per month;
    • 30 days of vacation per year (accruing one-twelfth per month and payable on a pro rata basis in case of termination for any cause);
    • a vacation bonus (one-third of the vacation payment);
    • a 13th salary (accruing one-twelfth per month and payable on a pro rata basis in case of termination for any cause);
    • a Guarantee Severance Fund (FGTS) at 8 per cent of the monthly compensation;
    • a prior notice for termination without cause at employer’s initiative of minimum 30 days and maximum 90 days, depending on the length of the employment;
    • indemnity for termination without cause at employer’s initiative equal to 50 per cent of FGTS account balance (10 per cent for the government and 40 per cent to the employee);
    • overtime payment;
    • enrolment in social security;
    • shared payment of transportation costs; and
    • weekly rest.

    Other individual circumstances may also trigger other additional pay (eg, for occupational hazard, healthy work conditions, night shifts and day care for children). In addition, there are also collective labour agreements applicable according to the business and location. They are mandatory regardless of union affiliation and valid for up to two years.

  15. 8.

    What is the role of the unions in the relationship with foreign employers and employees?

  16. Unions and employers associations are legitimate representatives of employees and employers (respectively) in negotiations and litigation regardless of nationality. The most important role of unions is to negotiate collective labour agreements or bargaining arrangements with companies established in Brazil or with the employers’ associations representing their business sector. Salary adjustments and other collective work conditions are negotiated on an annual or biannual basis. Foreign employees with agreements governed by the Brazilian Labour Law are also represented by these local unions.

    The Labour Reform (Law 13467), in force since November 2017, has introduced a number of changes to the union model in Brazil, with impacts still to be felt. For instance, the Reform has eliminated mandatory contributions and the need to get union ratification of termination papers. On the other hand, unions’ authority to negotiate several aspects of the employment relationship has been significantly increased.

  17. 9.

    Do employees have the right to form unions? Is it mandatory for employers to honour this?

  18. Yes. The Brazilian Federal Constitution authorises employees and employers to create unions and employers associations regardless of governmental approval. They are, however, required to register with the Ministry of Employment because there can only be one union per business sector per location. It is the employer’s responsibility to identify the correct union representing its employees. Representation is compulsory and does not depend on affiliation.

  19. 10.

    May unions be an independent party to a labour controversy in your jurisdiction? What are their rights and duties towards the employer and unionised employees?

  20. Unions and employers’ associations cannot be considered independent parties because they are supposed to represent the employees and the business respect­ively. Unions are generally allowed to take legal actions to protect collective and individual interests of the employees they represent. Once a union is able to set forth a collective labour agreement or bargaining arrangement for a company or business sector, compliance is mandatory for the duration of the agreement. Law 13467 enacted last November 2017 has significantly increased the unions’ ability to negotiate important aspects of the employment conditions, which can now be validly waived and even suppressed by a collective bargaining arrangement.

  21. 11.

    May a union request, bring about or cause a stoppage? If so, in what cases and what remedies would be available to the employer?

  22. Unions are generally authorised to cause a stoppage after unsuccessful negotiations with employers, pursuant to the employees’ decision and provided they observe certain legal conditions, including prior notification of 48 or 72 hours, depending on the nature of the business. During the strike, any of the parties as well as the public attorney can file a collective lawsuit for the Labour Court of Appeal to decide on the legal grounds of the stoppage and on the merits of the claims. In practice, before that, labour courts act like mediators seeking an agreement to end the strike. During the strike, the employment agreements are suspended and therefore cannot be terminated. The days not worked cannot be deducted from salary, except if expressly negotiated with the union or if the strike is considered abusive by the labour court. The employer cannot hire substitutes unless necessary for the conservation of goods, assets and equipment. During the strike, the union shall guarantee sufficient number of employees to ensure essential activities listed by the law.

  23. 12.

    Which legislation governs the enforcement of international relationships or labour agreements provided for in international business contracts, and in international commercial proceedings, to be performed within your jurisdiction?

  24. As a general rule, the applicable legislation and jurisdiction is determined by the work location. This is to say that the Brazilian labour legislation will apply to the work performed in Brazil even if the parties had originally elected another jurisdiction. However, we envisage three possible scenarios in which a labour relationship governed by Brazilian law could also be governed by the labour laws of other jurisdictions as follows:

    • if the employment agreement sets forth benefits and guarantees pursuant to other countries’ legislation, they would apply in addition to the ones established by local law;
    • if the work is performed in Brazil under special authorisation by immigration authorities allowing the employment relationship to be kept abroad (eg, technical support from a foreign company – employer – to a Brazilian customer or partner to transfer technology to Brazil); or
    • temporary transfer of an employee to another country, in which case the applicable law would be of the foreign country for the duration of the transfer although minimum guarantees established by Brazilian law would also apply.
  25. 13.

    Which international treaties or conventions are applicable to labour or employment relations in your jurisdiction? Has your country made any reservations to or denounced any treaties of the International Labour Organization?

  26. Since the creation of the International Labour Organization (OIT) in 1919, Brazil has ratified 96 international treaties and conventions, of which 89 are still in force, as follows:

    Convention Title Status
    3 Maternity Protection Convention Revoked on 26 July 1961
    4 Night Work (Women) Convention Revoked on 12 May 1937
    5 Minimum Age (Industry) Convention Revoked on 28 June 2001
    6 Night Work of Young Persons (Industry) Convention In force
    7 Minimum Age (Sea) Convention Revoked on 9 Jan 1974
    11 Right of Association (Agriculture) Convention In force
    12 Workmen’s Compensation (Agriculture) Convention In force
    14 Weekly Rest (Industry) Convention In force
    16 Medical Examination of Young Persons (Sea) Convention In force
    19 Equality of Treatment (Accident Compensation) Convention In force
    21 Inspection of Emigrants Convention In force
    22 Seamen’s Articles of Agreement Convention In force
    26 Minimum Wage-Fixing Machinery Convention In force
    29 Forced Labour Convention In force
    41 Night Work (Women) Convention Revoked on 25 April 1957
    42 Workmen’s Compensation (Occupational Diseases) Convention In force
    45 Underground Work (Women) Convention In force
    52 Holidays with Pay Convention Automatically revoked on 23 September 1998
    53 Officers’ Competency Certificates Convention In force
    58 Minimum Age (Sea) Convention Automatically revoked on 28 June 2001
    80 Final Articles Revision Convention In force
    81 Labour Inspection Convention In force
    88 Employment Service Convention In force
    89 Night Work (Women) Convention In force
    91 Paid Vacations (Seafarers) Convention Automatically revoked on 24 September 1998
    92 Accommodation of Crews In force
    93 Wages, Hours of Work and Manning (Sea) Convention Not in force
    94 Labour Clauses (Public Contracts) Convention In force
    95 Labour Clauses (Public Contracts) Convention In force
    96 Fee-Charging Employment Agencies Convention Revoked on 14 January 1972
    97 Migration for Employment Convention In force
    98 Right to Organize and Collective Bargaining Convention In force
    99 Minimum Wage Fixing Machinery (Agriculture) Convention In force
    100 Equal Remuneration Convention In force
    101 Holidays with Pay (Agriculture) Convention Automatically revoked on 23 September 1998
    102 Social Security (Minimum Standards) Convention In force
    103 Maternity Protection Convention In force
    104 Abolition of Penal Sanctions (Indigenous Workers) Convention In force
    105 Abolition of Forced Labour Convention In force
    106 Weekly Rest (Commerce and Offices) Convention In force
    107 Indigenous and Tribal Populations Convention Automatically revoked on 25 July 2002
    108 Seafarers’ Identity Documents Convention Automatically revoked on 21 January 2010
    109 Wages, Hours of Work and Manning (Sea) Convention Convention not in force
    110 Plantations Convention Revoked on 28 August 1970
    111 Discrimination (Employment and Occupation) Convention In force
    113 Medical Examination (Fishermen) Convention In force
    115 Radiation Protection Convention In force
    116 Final Articles Revision Convention In force
    117 Social Policy (Basic Aims and Standards) Convention In force
    118 Equality of Treatment (Social Security) Convention In force
    119 Guarding of Machinery Convention In force
    120 Hygiene (Commerce and Offices) Convention In force
    122 Employment Policy Convention In force
    124 Medical Examination of Young Persons (Underground Work) Convention In force
    125 Fishermen’s Competency Certificates Convention In force
    126 Accommodation of Crews (Fishermen) Convention In force
    127 Maximum Weight Convention In force
    131 Minimum Wage Fixing Convention In force
    132 Holidays with Pay Convention In force
    133 Accommodation of Crews (Supplementary Provisions) Convention In force
    134 Prevention of Accidents (Seafarers) Convention In force
    135 Workers’ Representatives Convention In force
    136 Benzene Convention In force
    137 Dock Work Convention In force
    138 Minimum Age Convention In force
    139 Occupational Cancer Convention In force
    140 Paid Educational Leave Convention In force
    141 Rural Workers’ Organizations Convention In force
    142 Human Resources Development Convention In force
    144 Tripartite Consultation (International Labour Standards) In force
    145 Continuity of Employment (Seafarers) Convention In force
    146 Seafarers’ Annual Leave with Pay Convention In force
    147 Merchant Shipping (Minimum Standards) Convention In force
    148 Working Environment (Air Pollution, Noise and Vibration) Convention In force
    151 Labour Relations (Public Service) Convention In force
    152 Occupational Safety and Health (Dock Work) Convention In force
    154 Collective Bargaining Convention In force
    155 Occupational Safety and Health Convention In force
    158 Termination of Employment Convention Revoked on 20 November 1996
    159 Vocational Rehabilitation and Employment (Disabled Persons) In force
    160 Labour Statistics Convention In force
    161 Occupational Health Services Convention In force
    162 Asbestos Convention In force
    163 Seafarers’ Welfare Convention In force
    164 Health Protection and Medical Care (Seafarers) Convention In force
    166 Repatriation of Seafarers Convention In force
    167 Safety and Health in Construction Convention In force
    168 Employment Promotion and Protection against Unemployment Convention In force
    169 Indigenous and Tribal Peoples Convention In force
    170 Chemicals Convention In force
    171 Night Work Convention In force
    174 Prevention of Major Industrial Accidents Convention In force
    176 Safety and Health in Mines Convention In force
    178 Labour Inspection (Seafarers) Convention In force
    182 Worst Forms of Child Labour Convention In force
    185 Seafarers’ Identity Documents Convention In force

    Other international treaties are signed with other countries for immigration purposes.

  27. 14.

    Are arbitration agreements to resolve labour or employment disputes valid and enforceable in your jurisdiction? Is there any legislation in your jurisdiction governing the private arbitrability of labour or employment disputes? May controversies in labour or employment matters in your jurisdiction be resolved through private arbitration (in your jurisdiction or abroad), or in foreign courts?

  28. The majority of court precedents so far supported that the election of arbitration cannot limit the employees’ access to labour courts. In addition, those decisions would not be valid because employees could not validly waive statutory employment rights but towards court. However, the Labour Reform, implemented in November 2017 by Law 13467, now expressly mentions arbitration as a valid clause of an employment agreement, provided employee has a diploma and a salary over 11,291.60 reais. It is certainly too early to say that labour courts will start admitting arbitration as a valid way to limit employees’ access to courts because their prevailing opinion was based on constitutional principles that have not changed and would overcome ordinary law like the Reform’s.

    As regards jurisdiction, the Brazilian Federal Constitution establishes that Brazilian labour courts have exclusive jurisdiction over disputes resulting from work performed in the Brazilian territory.There are also precedents recognising the jurisdiction of Brazilian labour courts whenever there are relevant elements of connection with Brazil (eg, employee’s nationality, place of admission, location of the employer, etc). In all these cases, a decision from a foreign court would not limit the employees’ access to a Brazilian labour court or substitute a local decision, unless the employment relationship has no connection at all with Brazil.

  29. 15.

    Are mediation mechanisms available and legally enforceable in your jurisdiction? Do conciliation fora exist in your jurisdiction and is conciliation mandatory before litigation? Is conciliation conducted by labour boards or courts or by an independent body?

  30. The Brazilian Labour Code establishes a mediation system involving unions (CCJ). It has been created in 2000 in an attempt to reduce the number of individual labour claims but labour courts themselves rejected it based on general constitutional guarantees of access to courts and prevention from waiving employment statutory rights if not in court.

    As regards conciliation, it remains optional and not a requirement to access a Labour Court but the Labour Reform – recently enacted by Law 13467 – has just created an important incentive to it. Employers and employees are now allowed to go to court for ratification of extra judicial settlements, provided each party is represented by its own attorney. There will be no guarantee that the judge will ratify the settlement but if he or she does, it will be valid regardless of the nature and extension of the rights involved.

  31. 16.

    Does the law in your country require that labour or employment proceedings be held in a specific jurisdiction or place or require that proceedings be carried out in a specific language?

  32. Brazilian Labour Law provides that the jurisdiction is of the labour court with authority in the last territory where the employee (claimant or defendant) worked. Exception is made for employees who do not have a main work location because frequent travel is part of the agreement. In this case, jurisdiction is determined by the employee’s residence or to the location of the agency or branch that he or she is directly subordinated to. The labour claim must be in Portuguese, as well as all the documents brought by the parties. Documents and testimonies in other languages require sworn translation. A few terms in Latin are also validly used to refer to legal expressions.

  33. 17.

    Is there a concept in your jurisdiction providing for class-lawsuit in labour or employment matters? Does your law allow the consolidation of multiple labour or employment proceedings? Are human rights related grievances admissible in labour and employment proceedings?

  34. A class action may be filed by the union or by the Public Attorney’s Office for Labour Affairs before labour courts to enforce labour rights or to create or modify working conditions. A class action is filed on behalf of a group or category of employees referred as a group. There is also the possibility of a lawsuit filed by multiple plaintiffs if the claims are the same, against the same employer and subject to the same jurisdiction. A labour claim with multiple plaintiffs can be filed directly by the plaintiffs or by the union as their substitute. Different from the class action, this collective lawsuit requires identification of each plaintiff. According to the Federal Constitution, labour courts have jurisdiction over any dispute resulting from a labour relationship. As a consequence, labour courts have exclusive jurisdiction over grievances of human rights in a labour relationship, which actually constitute very common source of labour claims.

  35. 18.

    Can foreign lawyers serve as counsel in labour or employment proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel? Are their fees subject to local taxation?

  36. Regardless of nationality, a diploma obtained abroad needs to be confirmed by a public Brazilian law school, which normally requires additional study and tests. After that, the lawyer also needs to be approved by the Brazilian Bar Association, which also requires additional tests. Exception is made to lawyers registered with the Portuguese Bar who are accepted by the Brazilian Bar without further tests or confirmation of their diploma. The foreign lawyer registered with the Brazilian Bar Association can then act in Brazil with no special limitations, subject to the same duties and with the same professional rights of a Brazilian lawyer. Foreign lawyers may act in Brazil as consultants on foreign law.

  37. 19.

    Are labour or employment awards issued by foreign courts or arbitration courts recognised and enforced in your jurisdiction?

  38. Generally speaking, a foreign award does not limit the jurisdiction of Brazilian labour courts. If the foreign award is not challenged in its merits, it could be enforced by a Brazilian court after ratification by the Superior Court of Justice. However, if the decision is challenged in a Brazilian labour court with concurrent jurisdiction, the Brazilian court would have the authority to review all elements of the case and take its own decision.

  39. 20.

    May labour courts or boards grant interim relief? If so, how is that relief enforced? Does it apply to assets located abroad? Are these valid against unions?

  40. Yes. Labour courts can grant interim relief, provided there is consistent evidence of the credit and that waiting for a final decision would cause irreparable loss or jeopardise final enforcement. The relief shall be requested by the plaintiff since the judge cannot grant it voluntarily. Once relief is granted, the same labour court will proceed with immediate enforcement. For this purpose, the court may use agreements with public institutions to block bank accounts and forfeit credits, vehicles and real estate. An interim relief is a temporary decision to be cancelled and substituted by a final decision. The effects of the interim relief are applicable to assets located abroad, although actual enforcement will depend on the laws of that jurisdiction. There are no limitations to interim reliefs against unions.

  41. 21.

    Can labour courts or boards issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court of law lend its aid in enforcing such an order against a recalcitrant third party?

  42. A labour court can order any party or third-party to present documents, information and even to testify. Once notified, the witness is obligated to attend the hearing and commit to the truth. Non-attendance without just cause subjects the witness to a fine or even police force.

  43. 22.

    Can a party to a labour proceeding seek relief from the court or board? What is the scope of such relief?

  44. Considering that a board means the adjudicating body of the dispute but not a court of law, the answer is no. A labour court can grant a relief ordering the other party to pay or act in a certain way or to refrain from doing something.

  45. 23.

    Are the resolutions issued by a labour court or board final? What are the remedies available for the parties?

  46. There are several remedies to challenge court resolutions that depend on the type of proceeding and circumstances. Generally speaking, by virtue of a constitutional principle, all judicial decisions entitle the defeated party to file at least one appeal to review the entire case. Depending on the type of proceeding and grounds for appeal, there may be access to a third instance. The same applies to the enforcement proceeding. In addition, motions for clarification and interlocutory appeals are rather common. After the decision becomes final (no longer subject to appeals) the only remedy against it may be an annulment action based on limited grounds listed by the law. The information above refers to judicial decisions on ordinary labour claims. In terms of statutory labour rights, arbitration is subject to judicial review within the applicable statute of limitations.

  47. 24.

    What are the grounds for challenging an award and what is the period of time a party has to challenge that award?

  48. The grounds for an appeal are essentially: the laws and regulations; international conventions and treaties; other court orders and decisions; collective labour agreements and bargaining arrangements; constitutional principles and guarantees; legal contractual provisions; and conflicting court precedents in similar cases. There are several ways to challenge a court award depending on the circumstances. In an ordinary labour claim, an appeal may be filed within eight days. A motion for clarification may be filed within five days. Although the purpose of such motion is not to modify the award, the modification sometimes results from the clarification or correction requested. If the award is not subject to appeal, it may be the case of independent lawsuits (ie, a writ of mandamus or annulment action).

  49. 25.

    If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the labour courts or boards in normal circumstances or is the right to sue not waivable? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?

  50. Until recently, all labour courts were of the opinion that the right to sue an employer would not be generally waivable as statutory employment rights are all upheld as a matter of public policy.

    But since 11 November 2017, following the so-called Labour Reform (introduced by Law #13467), some space has been created for the negotiation of statutory labour rights and guarantees with high level employees, meaning employees with a diploma and with salaries over 11,291.60 reais. For those employees, there is now express legal reference to the parties’ right to validly introduce an arbitration clause to the employment agreement.

    Because the modifications to the legislation are very recent, there has not been enough time for courts to change position. In fact, we cannot even say that that will be the case because the constitutional grounds of these new rules are being challenged themselves.

  51. 26.

    Does the law provide that post-award interest accrues on an unpaid award?

  52. Yes. The Brazilian Labour Code (CLT) provides that labour debts are subject to monetary correction to reflect inflation and to interests of 1 per cent per month. According to Law 13647, enacted in November 2017 as part of the Brazilian Labour Reform, attorney’s fees are to be awarded to the prevailing party. Amount is to be arbitrated by the judge and can vary from 5 per cet to 15 per cent to the claim not granted to the plaintiff or lost by the employer. In case of partial award of claims, each party shall pay attorney’s fees to the other, proportional to their loss. Because this rule is very recent, it is not clear yet if courts are applying it for cases filed before 11 November but that are still ongoing.

  53. 27.

    Can a foreign award be enforced if the award has been set aside by the courts?

  54. Generally speaking, a foreign award can be reviewed by a Brazilian labour court. However, a foreign award not challenged in its merits can be enforced by a Brazilian court after ratification by the Superior Court of Justice.

  55. 28.

    Are employment agreements for definite periods or seasonal jobs valid?

  56. Yes. Although the employment for an indefinite period of time is the general rule, there are exceptions. Employees can be hired for a definite period of time directly by the employer – based on an employment agreement for a limited period of time or for intermittent work – or indirectly, through a temporary services agency.

    An employee can be directly hired for a limited period of time for (i) probation up to 90 days, (ii) services of a temporary or transitory nature and (iii) corporate activities that are not permanent. In (i) and (ii) the term is limited to the duration of the respective condition and cannot be longer than two years, including renewals.

    A company may also hire an employee for a limited period of time using a temporary agency duly registered with the Minister of Employment for that purpose. In this situation, the individual is employed by the agency but put temporarily under the orders and directions of the company, which is jointly liable for the payment of employment rights. A company can only hire individuals through temporary agencies to cover temporary needs of the company resulting from the temporary substitution of regular and permanent employees or an extraordinary increase in the amount of work. The maximum duration of this type of agreement is of 180 days, renewable for an extra 90-day period, totalling maximum 270 days.

    Law 13647, which enacted the Brazilian Labour Reform on 11 November 2017, has also created the “zero hours” agreement for intermittent work, allowing companies to hire employees and pay them only when they are actually called to work. Details of this type of arrangement are currently governed by Provisional Measure # 808, in force until May 2018. In parallel, scholars challenge the constitutional grounds of this type of arrangement.  

  57. 29.

    Does the law allow probationary or initial training periods? If so, how long may they last?

  58. Yes. The law authorises a probationary initial period – which is supposed to include training – of maximum 90 days (45 days renewable for other 45 days). There are, however, collective labour agreements establishing reduced probationary periods so the limitation can be shorter, depending on the business and location.

  59. 30.

    Are employees hired under any of the foregoing modalities entitled to all labour benefits and social security?

  60. Employees hired for a definite period of time, under probation or through temporary agencies or for intermittent work, are all entitled to all labour benefits and social security except for severance payments if terminated at the end of the event justifying the transitory arrangement and before its maximum duration, where applicable. After that, the employment agreement is automatically extended for an unlimited period of time, entitling the employee to severance payments in the event of termination without cause.

    Temporary employees are also entitled to all statutory benefits, payable by the temporary agency. Intermitent work or “zero hour” arrangements entitle employees to statutory benefits payable proportionate to the time of actual call.

  61. 31.

    Is outsourcing lawful? Are there special rules or penalties associated with it?

  62. Court Precedent #331 of the Superior Labour Court considered outsourcing to be legal for labour purposes only if the services were not directly related to the services taker’s core business. Although Precedent #331 has not been formally cancelled, Law #13429 enacted March 2017 now expressly allows outsourcing regardless of the business of the contracting party.

    Even in case the outsourcing is considered to be legal the services taker is secondarily liable for the compliance with labour obligations resulting from the employment agreements entered by and between the services provider and its employees. This is to say that even under lawful outsourcing agreements, the services taker can be forced to pay for the services provider’s labour debts in case the latest becomes insolvent. 

  63. 32.

    Are restrictive covenants, such as non-compete and non-solicitation undertakings lawful and enforceable?

  64. There is no legislation governing non-solicitation and non-competition agreements entered by and between (former) employees and employers.

    During the employment agreement, the employee is generally prevented from being in direct or indirect competition with the employer. Non-compliance is subject to disciplinary penalty up to termination for cause – depending on the details of the case – without limitation to the employee's obligation to indemnify the employer for losses and damages caused.

    However, labour courts tend not to confirm non-competition and non-solicitation pacts surviving termination based on a general Constitutional Principle of Freedom of Employment.

    The (few) court precedents accepting non-competition pacts after termination of the employment relationship were based on certain requirements:

    • compensation for the duration of the pact, proportional to the limitations undertaken by the former employee;
    • reasonable limitation to the duration of the pact; and
    • clear indications of the businesses, positions and regions in which the former employee cannot work.
  65. 33.

    Outline any provisions in your jurisdiction’s law for the gig economy.

  66. Although Brazil has just made an extensive labour reform, it has not addressed gig economy specifically. Therefore, it remains dealing with the matter from the perspective of how independent is the work, as opposed to the work under subordination (ie, under supervision and direct orders) that triggers mandatory application of employment statutes.

    As a reference, the majority of the court precedents so far agree that Uber drivers are not employees – and therefore not entitled to statutory benefits – due to their level of independency.  

  67. 34.

    In brief, what advice do you have with respect to labour or employment relationships and agreements for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction? What are the red flags?

  68. For a foreign client with a possible business deal in Brazil, it would be important to check the characteristics of the transaction for the possibility of employment succession. The acquisition of a business in Brazil generally causes the transfer of employment agreements and existing labour liabilities to the new owners or controllers. It would also be important to check if the characteristics of the business deal could be interpreted as the creation of an "economic group", triggering joint labour liability. As regards employment agreements, the Brazilian Labour Code covers almost all employment conditions in a detailed manner. The ability of the parties to avoid or waive statutory labour rights and obligations is very limited.

    The Labour Reform in effect since November 2017 has changed more than 100 topics of the existing Labour Code, including some very sensitive topics such as elimination of mandatory contributions to unions, possibility to waive statutory labour rights through negotiations with white-collar employees and unions, “zero hour agreements”, termination of employment for mutual agreement and endorsement of extra judicial settlements, just to name some. It might however be too early to implement some of these changes because their constitutional grounds are dividing opinions. In addition, some are regulated by a Provisional Measure (#808) in effect only until 22 February 2018 (although subject to renewals).

    The answers provided above are general and not exhaustive.    

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Questions

  1. 1.

    May foreign employers hire employees directly in your jurisdiction or is it necessary to act through a local subsidiary? Are secondments or loans of personnel lawful?


  2. 2.

    Is there a limit to the number (or ratio) of foreign employees an employer may have in your jurisdiction?


  3. 3.

    May labour or employment agreements, and the termination of those agreements, be subject to any legislation other than that of your jurisdiction?


  4. 4.

    What are the requirements for an enforceable agreement? Are there any formalities that labour or employment agreements must adopt to be enforceable in your jurisdiction? Are fees, duties or taxes generated by any of them?


  5. 5.

    What are the implications of hiring personnel without a clear, written, employment agreement in place? May this have any effect in the event of litigation?


  6. 6.

    What are the employers’ obligations (social security and related benefits) regarding employees after contracting? Are any social benefits tax deductible? Are these applicable to foreign employees?


  7. 7.

    What benefits, other than cash remuneration are employees in your jurisdiction entitled to? What severance entitlements may employees claim?


  8. 8.

    What is the role of the unions in the relationship with foreign employers and employees?


  9. 9.

    Do employees have the right to form unions? Is it mandatory for employers to honour this?


  10. 10.

    May unions be an independent party to a labour controversy in your jurisdiction? What are their rights and duties towards the employer and unionised employees?


  11. 11.

    May a union request, bring about or cause a stoppage? If so, in what cases and what remedies would be available to the employer?


  12. 12.

    Which legislation governs the enforcement of international relationships or labour agreements provided for in international business contracts, and in international commercial proceedings, to be performed within your jurisdiction?


  13. 13.

    Which international treaties or conventions are applicable to labour or employment relations in your jurisdiction? Has your country made any reservations to or denounced any treaties of the International Labour Organization?


  14. 14.

    Are arbitration agreements to resolve labour or employment disputes valid and enforceable in your jurisdiction? Is there any legislation in your jurisdiction governing the private arbitrability of labour or employment disputes? May controversies in labour or employment matters in your jurisdiction be resolved through private arbitration (in your jurisdiction or abroad), or in foreign courts?


  15. 15.

    Are mediation mechanisms available and legally enforceable in your jurisdiction? Do conciliation fora exist in your jurisdiction and is conciliation mandatory before litigation? Is conciliation conducted by labour boards or courts or by an independent body?


  16. 16.

    Does the law in your country require that labour or employment proceedings be held in a specific jurisdiction or place or require that proceedings be carried out in a specific language?


  17. 17.

    Is there a concept in your jurisdiction providing for class-lawsuit in labour or employment matters? Does your law allow the consolidation of multiple labour or employment proceedings? Are human rights related grievances admissible in labour and employment proceedings?


  18. 18.

    Can foreign lawyers serve as counsel in labour or employment proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel? Are their fees subject to local taxation?


  19. 19.

    Are labour or employment awards issued by foreign courts or arbitration courts recognised and enforced in your jurisdiction?


  20. 20.

    May labour courts or boards grant interim relief? If so, how is that relief enforced? Does it apply to assets located abroad? Are these valid against unions?


  21. 21.

    Can labour courts or boards issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court of law lend its aid in enforcing such an order against a recalcitrant third party?


  22. 22.

    Can a party to a labour proceeding seek relief from the court or board? What is the scope of such relief?


  23. 23.

    Are the resolutions issued by a labour court or board final? What are the remedies available for the parties?


  24. 24.

    What are the grounds for challenging an award and what is the period of time a party has to challenge that award?


  25. 25.

    If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the labour courts or boards in normal circumstances or is the right to sue not waivable? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?


  26. 26.

    Does the law provide that post-award interest accrues on an unpaid award?


  27. 27.

    Can a foreign award be enforced if the award has been set aside by the courts?


  28. 28.

    Are employment agreements for definite periods or seasonal jobs valid?


  29. 29.

    Does the law allow probationary or initial training periods? If so, how long may they last?


  30. 30.

    Are employees hired under any of the foregoing modalities entitled to all labour benefits and social security?


  31. 31.

    Is outsourcing lawful? Are there special rules or penalties associated with it?


  32. 32.

    Are restrictive covenants, such as non-compete and non-solicitation undertakings lawful and enforceable?


  33. 33.

    Outline any provisions in your jurisdiction’s law for the gig economy.


  34. 34.

    In brief, what advice do you have with respect to labour or employment relationships and agreements for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction? What are the red flags?


Other chapters in Labour & Employment