Huge Labour Law Reforms in Brazil
By Leonardo Mazzillo and Alessandra Marcondes D’Elia, WFaria Advogados
Recently, the Brazilian Congress has approved the country’s first major review of labour rules in more than seven decades, substantially modifying the Consolidation of Labour Laws (‘CLT’), promulgated in 1943.
Although it was an important milestone in the country’s legislation at the time, the CLT was created at a time when there were no major technologies in the country and a considerable part of its population still lived in the countryside.
Since then, the aforementioned legislation has undergone considerable changes; maintaining, however, its essence, which has proved incompatible with the growth of the cities, the development of the Brazilian economy, the emergence of new technologies and the consequent development of new labour relations.
This situation, coupled with the government’s interest in implementing a reform agenda, has led to a broad change in labour legislation in the largest economy in Latin America. In this scenario, Law No. 13467/2017 was created, which does not completely revoke the CLT’s regulations, but changes hundreds of rules set forth in it.
These changes have been strongly criticised by trade unions, which may face budgetary restrictions stemming from the end of the compulsory union contribution, as well as their participation in the dismissals of workers, which has been indispensable until now. The changes were also criticised by proworker groups, under the arguments of precariousness of labour relations and loss of rights.
On the other hand, the reform was well-received by critics of the inflexible structure of Brazilian labour justice, who appreciate greater liberty in their labour relations. For this group, one of the most notable changes in the law is the possibility that individual agreements between companies and employees prevail over legislation in some relevant subjects, such as working hours, profit sharing plan and the work hours bank. This list does not include some rights considered essential, such as the minimum wage, Employee’s Dismissal Fund (‘FGTS’) and standards related to medicine, health and the safety of workers.
Another highlight is the possibility of including an arbitration clause in contracts signed between employers and employees who receive more than twice the maximum amount of the benefits of the General Social Security System (about BRL 11,000.00 or USD 3,500.00). Such a prediction, compatible with the spirit of the new law, places greater emphasis on agreements reached between the parties and ensures greater agility in conflict resolution.
In addition, some procedural changes –- such as the limitation for free justice benefits and the possibility of workers being condemned to the payment of labour costs and of defeated party’s fees - tend to reduce the number of labour lawsuits, discouraging the filing of unfounded lawsuits or with low chances of success.
Lastly, the changes arising from Law 13467/1207 will become effective on 13 November 2017, four months after its promulgation.
Leonardo MazzilloWFaria Advogados, São Paulo, Brazil
T: +55 11 3018 7878
WFaria Advogados is a law firm specialising in corporate law, headquartered in São Paulo, with operations in the main states of Brazil, which focuses mainly on legal assistance to major companies in the domestic and international markets from different economic sectors.
Leonardo Mazzillo is senior partner at WFaria Advogados and a specialist in Tax Law, Pensions Law and Labor Law. He is the coordinator of the areas of Specialised Tax Litigation, Tax Liability Management, Pensions Law and Human Capital, including labour compliance and consulting. Leonardo holds a law degree from the Pontifical Catholic University of São Paulo (PUC-SP), a postgraduate degree in Tax Law from the same institution and a postgraduate degree in Labor Law and Labor Procedure from Escola Paulista de Direito.
Alessandra Marcondes D’EliaWFaria Advogados, São Paulo, Brazil
T: +55 11 3018 7878
Alessandra Marcondes D’Elia is full lawyer at WFaria Advogados, a specialist in Labor Law. Alessandra holds a law degree from the Pontifical Catholic University of São Paulo (PUC-SP) and a postgraduate degree in Material and Procedural Labour Law from the same institution.
Published: Winter 2017 l Photo: gavergani - Fotolia.com