Regulation & Law

Brazil Changes Labor Laws

Earlier this year, amidst all the hardships of the current situation of the country, President Temer announced his intention to change the labor laws of Brazil.

Earlier this year, amidst all the hardships of the current situation of the country, President Temer announced his intention to change the labor laws of Brazil.


The population was divided on whether the changes would be positive and on July 11th, the Brazilian Senate approved the new laws, which were sanctioned by Mr. Temer two days later, in Brasilia.  The laws will come into effect in November 2017.

 

What Drove the Changes?

According to the Brazilian government, the alterations made to the labor laws came as a necessity, due to the economic turmoil of the country and  aim to fulfill three different objectives.

 

1. Increase employment: Before the change in  regulations, Brazil had strict terms under which someone could be hired and deviating from them was be illegal. In order to stimulate employers to hire more professionals, the government created more flexible laws, with the goal of making it easier to bring a worker onboard.

 

2. Alleviate the strain on Brazilian legal system: Many judicial disputes in the country rise due to labor conflicts, with employees accusing companies of breaching the terms of the labor laws. As the new regulations allow for negotiation between workers and their employers, the government predicts that this will reduce the number of legal disputes, thus reducing the workload of the courts.

 

3. Foster a more transparent relationship between employer and employee: Both parties will have the freedom to create their own agreements, instead of relying on complicated regulations that were often misinterpreted by either the employer or the employee. With all that said, a question must be answered.  

 

What Will Change?

On April 11th, it was reported that the labor laws would change in approximately one hundred parts. Below is a summary of the most significant alterations.

 

  • Working hours: the professional can now work up to 12 hours in one day, with 36 hours of rest, respecting the limit of 44 hours per week (or 48, including four extra hours), corresponding to 220 hours per month. In the previous version of the law, there was a limit of two extra hours per day, with the limit of 44 hours per week.
  • Payment: The payment of a minimum wage will not be mandatory in the case of remuneration for productivity. Moreover, employers and employees will be able to negotiate payments that are not part of the salary, such as bonuses, commissions and awards. This changes the previous text of the law, which stated that the payment for productivity could not be inferior to the minimum wage of the working class. Commissions, tips and bonuses were considered part of the salary.
  • Home office: This type of work was not contemplated in the previous iteration of the Brazilian labor law. Now, all of the equipment the worker uses at home will be formalized via contract, including electricity and internet connection.
  • Negotiations: Collective agreements can prevail over the legislation. This way, unions and companies can negotiate working conditions that are different from those established by the law, even if they do not mean an improvement over the conditions foreseen by the law. Previously, it was possible to have negotiations, but only if they raised the working conditions above the standards foreseen by the law.
  • Representation: In companies with at least 200 employees, workers will be able to pick three colleagues to represent them in negotiations with the board of directors. The previous law provided the possibility of only one representative in enterprises with over 200 workers.
  • Vacation: Can now be split up to three parts, upon negotiation, but one of these periods cannot be inferior to 14 days and the remaining cannot be lower than five days each. In the previous law, the 30 days could only be split in two segments, but one of them could not be inferior to 10 days.
  • Hours in the company: Will not be counted as worked hours the activities that are performed inside the perimeter of the company, but that are not related to the activities established in the contract, such as studying, eating, interaction with workers, personal hygiene and change of clothing. In the previous law, every moment when the worker was at the disposal of the company, regardless of carrying orders, counted towards the working hours of the day.
  • Rest: The resting interval within the working hours can be negotiated, if it is of at least 30 minutes. Additionally, if the employer does not concede the minimum interval for lunch or grants it partially, the indemnity will be of 50% of the value of the work hour. In the old law, the worker had the right to at least one hour and, at most, two hours of interval in an eight-hour shift.
  • Transportation: The time a worker uses to go from his home to the workplace will not count towards the total of hours worked that day. In the previous law, the moments of transportation contributed to the total of hours worked, if the worker resided in a local of hard accessibility that does not provide public transportation.
  • Intermittent labor: While the previous laws did not approach the subject, the new regulations state that the worker must be paid for the hours or days worked. He will have the right to receive vacations, FGST (Guarantee Fund for Length Service), pension fund and Christmas bonus (13th salary). It should be written in the contract the value of the work hour, which cannot be less than the minimum wage or less than other workers who perform the same task.
  • Part-time work: In the previous law, it was prohibited for a part-time worker to have extra hours and the employee could not work for more than 25 hours per week. The worker had the right of 18 days of vacation, which could not be traded for money. In the new law, however, the part-time staff can work for up to 30 hours, but without the possibility of extra hours, or he can work for 26 hours, or less, with up to six extra hours. One third of the vacations can now traded for money.
  • Outsourcing: The new laws state that a company cannot fire an employee and rehire him as an outsourced worked prior to the period of 18 months. Moreover, the outsourced professional must have equal working conditions as the full-time employees of the company.
  • Moral damage: In the previous law, the judges stipulated the values concerning moral damages. In the new law, it is stipulated that the maximum indemnity for a case of moral damage shall be of 50 times the value of the last salary paid.
  • Pregnancy: The previous law prohibited pregnant woman from working in unhealthy conditions and there was no time window to warn the company about the pregnancy. According to the new law, pregnant woman can now work in unhealthy conditions, so long as the company obtains a certificate attesting that there is no risk for the mother or the baby.
  • Time bank: In the previous law, the excess of hours worked in one day, can be compensated in another, so long as it does not exceed 10 hours. Now, the worker and the employer can create an agreement in this regard.
  • Contract breach: The homologation of the contract had to be made by trade unions, as per the former law. Now, the homologation of the breach can be done in the company, in the presence of attorneys of the employees and the employer, which can be assisted by the trade union.
  • Effective period of collective norms: Negotiated terms do not need to be incorporated into the contract. Syndicates and unions can lay out the period of effectiveness of collective conventions, as well as the maintenance of the rights established by them.
  • Contribution to the worker’s union: It was mandatory in the previous law, but now it is optional.
  • Legal disputes: According to the previous law, the worker could miss three judicial audiences. The honorary concerning the investigation were paid by the Union. Moreover, who starts the dispute does not need to cover any costs. As per the new regulations, the employee must attend to the audiences of Justice and Labor and, if the judge rules against him, he will need to pay for the costs of the process.

 

Reactions to the New Law

Opinion in Brazil is divided  on the new regulations. Specialists were quick to share their takes on the new labor laws. Supporting the changes, Fernando de Holanda Barbosa Filho, researcher of Applied Economics at Getulio Vargas Foundation, argued: “The changes are of great importance, because they allow employers and employees to sit at the same desk, analyze which aspects need to be adjusted and reach an agreement on how to perform these adjustments. It will be very important. The changes also have the potential to reduce labor costs, increase the number of legal workers and favor the possibilities of employment. I see the changes as a means to reduce unemployment on the long run.”

 

Not everyone sees the changes in a positive way, however.The professor of labor law at Ibmec, Ivan Garcia, aserts that they will have a negative impact for workers. “These changes will worsen the working conditions, as they will add flexibility to rights that aim to protect  workers. Moreover, they lost an opportunity to grant the rights of home office professionals, concerning labor accidents or diseases caused by their jobs, such as bruises due to a repetitive effort.”

 

As the labor laws will change, law firms will see a chance in their workload. To see the best offices in Brazil for labor litigation, click here: http://leadersleague.com/en/rankings/2017-ranking-of-the-top-law-firms-in-brazil-labor-litigation

 

And to see the top offices on large scale labor litigation, click here: http://leadersleague.com/en/rankings/2017-ranking-of-the-top-law-firms-in-brazil-large-scale-labor-litigation

 

C.S.

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