UNDERSTANDING BRAZILIAN LABOR
AND EMPLOYMENT LAW
April/2012
São Paulo - Rio de Janeiro - Belo Horizonte
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MAIN SUBJECTS
1. BRAZILIAN LABOR LAW - PRINCIPLES
1. Brazilian labor law – principles
2. Employment labor law
3. Employment contracts
4. Outsourcing
5. Applicable laws
6. Structure of labor court and agencies
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1. BRAZILIAN LABOR LAW - PRINCIPLES
 Main Principles:
 Brazilian Labor Law is guided by the following main principles:
• Protection of the employee: “unconscionability” defense;
• Application of the most favorable rule to the employee;
• The inalienability of Brazilian labor rights;
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1. BRAZILIAN LABOR LAW - PRINCIPLES
 Main Principles:
• The right to maintain the most favorable condition and the
impossibility to change the labor contract in detriment of the
employee;
• The impossibility to reduce the employee salary;
• Intangibility of the employee´s salary;
• Facts and evidence prevail over any formal agreement;
• The job continuity principle.
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2. EMPLOYMENT LABOR LAW
 Employment labor law - Features:
• Labor laws are complex and compliance with them is mandatory
• They are socially relevant
• Employers and employees are not allowed to waive or dispose of the
labor rights provided in laws even when they agree to do so
• Courts can decide that an employment relationship exists even if the
parties agree otherwise and if the requisites for the existence of such
relationship are met
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2. EMPLOYMENT LABOR LAW
 Employment labor law - Features:
• Brazilian laws and Government stimulate hiring an employee
• Compliance with labor laws is essential
• Companies interested in investing in Brazil have to hire professionals:
 As employees
 As service providers
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2. EMPLOYMENT LABOR LAW

Employment bond – Requirements:
(common to all employment contracts)
• Individuality: only individuals can be employees;
• Onerosity: employee needs to receive monetary compensation;
• Subordination: employee provides services under subordination;
• Habituality: services provided on regular basis;
• Personality: employee cannot be replace by any other person.
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3. EMPLOYMENT CONTRACTS
 Different types of employment contracts (2 groups):
• Employment contract for a term or a set period (exception)
• Employment contract for an indefinite period (rule):
 The most important according to laws (the job continuity
principle) and
 Used as a point of reference with regard to all other types
of contracts
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3. EMPLOYMENT CONTRACTS
 Employment contracts - Features:
• A formal agreement is not a mandatory requirement for hiring an
employee
• The employment contract can be made in writing, orally or implied
from the relationship
• A written employment contract is always recommended
 All legal rights and duties involved in the employment
relationship must be clearly stated in the contract
• Most provisions in an employment contract are already set by law or
collective agreement
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3. EMPLOYMENT CONTRACTS
 Employment contracts - Features:
• Provisions are mandatory
• Employers already know, when hiring an employee, what they are
required to pay
• Employer must not negotiate or change working conditions to the
detriment of workers
• The risks inherent to the employer´s activities must be taken by the
employer:
 The employer is not allowed to transfer such risks to the
employees
 This makes the difference between an employment bond
and outsourcing
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4. OUTSOURCING
 Outsourcing related labor laws
• No specific law regarding outsourcing
• Few laws outside the CLT related to this matter
• The law of temporary work in cases of:
 an extraordinary increase in the production
 need to replace an ordinary employee in temporary leave
• Difficulty in identifying whether outsourcing is complying with labor laws
or not
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4. OUTSOURCING

Precedent 331 – Superior Labor Court
• To be used when there is no legal provision
• Precedent 331 establishes:
o The labor bond will not be recognized in cases of hiring a service
provider for 3 types of services:
 cleaning and maintenance services;
 surveillance services;
 specialized services not related to the main activity of the
contracting party provided the requirements of personality
and direct subordination are not present.
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4. OUTSOURCING
 Situations that represent risks of recognizing a labor bond:
 Outsourcing does not refer to cleaning and maintenance services or
surveillance services
 The service provided is related directly to the main activity of the
contracting party
 The service provider is subordinated to the contracting party
(subordination and personality)
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4. OUTSOURCING
 Unlawful outsourcing – Consequences:
 The situation will be considered as illegal
 According to Brazilian labor law facts and evidence prevail over any
formal agreement
 Documents and written contracts not valid if reality shows the
relationship masks a real employment bond
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4. OUTSOURCING
 Unlawful outsourcing – Consequences:
 Employment bond will be recognized as such before the Labor Court
 Contracting party will be forced to pay to the service provider all benefits
and rights owed in a labor bond
 Subsidiary responsibility
 Even in a licit outsourcing situation, contractor has subsidiary
responsibility for rights and payment in case service provider fails to pay
the employees
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5. LAW THAT CAN BE APPLIED
 Applicable laws that rule labor issues:
•
Brazilian Constitution: enacted in 1988 – main existing rules on
article 7:
The protection of all employment relationship – dismissal is only
allowed to dismiss an employment with the payment of
indemnification;
ii. The right to receive unemployment allowances;
iii. The right to maintain a severance pay fund (FGTS);
iv. The impossibility to reduce the employee´s salary;
v. The right to receive the 13th salary;
vi. 30 day vacation period;
vii. The statute of limitation o any labor claims;
viii. The limit of the employee´s daily and weekly work hours which are 8
and 44.
i.
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5. LAW THAT CAN BE APPLIED
 Applicable laws that rule labor issues:
•
Brazilian Labor Law (CLT): enacted during a populist government in
1943 and since then has remained mostly unaltered
•
Decisions from the Superior
Jurisprudence Guidelines
•
Specific Federal Laws
•
Collective Bargaining Agreement and Health and Safety rules
São Paulo - Rio de Janeiro - Belo Horizonte
Labor
Court:
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súmulas
and
6. STRUCTURE OF LABOR COURT
AND LABOR AGENCIES
 Structure of Labor Court:
 Specialized Federal Court: court structure only to rule on labor
cases
o 3 instances:
• Trial Court: labor claims are filed at trial court;
• Labor Court of Appeal: an appeal can be filed to the Labor Court
of Appeal;
• Superior Labor Court.
 On some specific cases, Brazilian Supreme Court
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6. STRUCTURE OF LABOR COURT
AND LABOR AGENCIES
 Brazilian Labor Agencies:
 Apart from the judicial system, there are other institutions
responsible for enforcing Labor Laws:
•
Ministry of Labor: District Agencies responsible for auditing
companies. Notices of Violation;
•
Labor Public Prosecutor: supervising companies – collective
damages – Class Action - active and voluntarily audit companies;
•
Unions: related to the company´s main Activity - mandatory by law.
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