Brazilian Labor Law Reform | What will actually change?

Brazilian Labor Law Reform | What will actually change?

In July 2017, Law 13.467/2017 was published to address the Brazilian Labor Law Reform (see full text here). The text introduces a number of changes to the Brazilian Labor Code (CLT) with respect to outsourcing and also social security legislation (Law 8.212/1991), changes that will become effective within 120 days counted of the publication on the 14th July.

Therefore, within such interim period, the rules currently in force remain valid and nothing changes. It is also important to note that there are discussions about an executive action to review some topics of the recently-approved law.

So, other changes may come about and, at this point, there is no clear scenario as to what will be the final text once the 120-day period elapses.

Nevertheless, such interim period will help to bring some clarity as to what changes may actually be introduced on employment contracts and what new hiring opportunities will come about.

Apart from the mains changes already reported on the media, such as splitting of vacation time, end of mandatory union fees, legalization of 12×36 work shifts and intermittent employment contracts, we point other changes that we consider of utmost relevance, including:

  • Time “of service” for the purpose of computing work shift: situations such as time for putting on/taking off work garment and commuting, whenever employer provides means of transportation, will no longer be deemed time at employer’s disposal.
  • Pain and Suffering (Moral Damages): stipulation of parameters and criteria for determination of moral damages, including express determination of moral damages applicable to legal entities.
  • Work Shift: changes were introduced on means of compensation and computation of mid-shift breaks, allowing reduction with due regard to the requirements and limits introduced by the new law.
  • Employment contracts with different consideration: employees with university degrees and salaries corresponding to twice the cap of Social Security benefit (General Regime) may include on their employment contract an arbitration commitment clause; also employment contracts shall be enforced as law.
  • Collective Labor Agreements: collective negotiations dealing with work shifts, annual time bank, breaks, among other topics (please see article 611-A of the new law) shall prevail over the legal provision.
  • Annual Release: employee and employer may agree on annual payment of labor liabilities at the Union.
  • Self-Employed Worker: express provision authorizing hiring of self-employed worker (individual) even on a personal basis. In such event, there will be no assumption of employment relationship whenever the other requirements of self-employment are present.
  • Homologation of Out-of-Court settlement: out of court settlement between employee and employer may be homologated in court as long as each party is represented by independent counsel and submit a joint pleading.
  • Bilateral termination of employment contract: a new modality of termination by mutual decision is created, with reduced costs of termination.

So, it seems clear that the Labor Law Reform will allow some advances in labor and employment relations, particularly as it will render more flexible the parties’ expression of free will. However, we are still adapting to these new rules and not certain as to how these changes will be construed by Labor Courts.

In any case, it is important to note that all actions toward more flexible labor procedures are conditioned to negotiations and compensation; therefore, there is no permission for unilateral changes meaning their bearings must be lawful exercise of free will, both as individuals and as unions. All as means to settle conflicts rather than dissimulating or defrauding labor rights.

Azevedo Sette’s Labor Law Team is ready to provide explanations and clear doubts on the recently-published law.