Discussion on current Brazilian Employment law challenges in becoming part of the legal sysem

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BRAZILIAN EMPLOYMENT REFORM
The rigidness of the Brazilian Employment Laws has always been viewed by some portion of
financial market analysts as sensitive point towards the country's economic growth, as well as to be one
of the causes to high unemployment rates. Employers in Brazil have to face a very intricate Employment
law environment which is costlyand almost does not allow freedom of contractby the parties.
The Employment Law also unionises much of industry including professional and technical areas.
In 2017 the Brazilian Employment framework was reviewed. Aims from the government were to transform
the rigid employment law into a more flexible job market, enabling effectiveness to both employers
and employees, economic and employment growth, as well as to reduce litigation in the field.
Nonetheless the expected Brazilian Employment Law Reform, scheduled to be enforced last November
seems to have brought more doubts and legal insecurity rather than solutions so far. A
significant portion of the judicial system including judges and the Employment public prosecutor’s office have
voiced their opposition making public statements regarding the unconstitutional context of many
topics of the reform.
That is because Brazil is under a Civil Law System which follows the concept of the hierarchy of laws.
Generally speaking the whole legal system must to be conformed with constitutional principles and statements.
The written Brazilian Constitution settles the main principles, rights and protections regarding employment yet
none of these principles, rights and protections are modified by the Reform. These fundamental and basic
rights of employees are untouchable at a constitutional level meaning federal law reform must
to be conformed to the Constitution otherwise such reforms are unlikely to be enforced. The Brazilian Superior
Employment Court is expected to release a formal view of the some controversial topics of the reform.
Indeed, there are many points to be clarified once the reform has touched around 100 topics of Federal
Employment Law. Due to the diversity of topics as well as legal facets regarding each of them, it is beyond the
bounds of possibility to go deeply in all the themes at once. However, it is fair enough to state that some of
those topics are likely to be declared unconstitutional while many others not. For instance, the Court is to rule
whether the reform should affect employment contracts signed before November
2017 or only new ones.

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Another issue relates to maximum working hours. By contrast to UK, employees in Brazil are not
allowed to choose to work longer by an "opting out" agreement. An employee may work a maximum of 8 hours
daily or 44 hours weekly being allowed to carry out a maximum of 2 hours overtime per day. This results with
an additional payment of at least 50% of his original hourly salary.
Here we find an example of challenges between reform and practice. An employer wants to negotiate overtime
with their employee to work and then be compensated with “time-off” in the future rather than paid. Before the
Employment Reform when parties intended to compensate overtime with “time-off” it could only be done with
the approval of a Union representative. The Reform allows employer and employee to sign an
agreement to compensate the overtime within a period of 6 months without having the prior authority of the
Union representative. Where the concern exist, if this process were to be adopted now the Reform could be
challenged by the Court because the action does not conform to the Brazilian constitution.
How should companies handle properly the uncertainty legal scenario? There is no straightforward answer.
Many preventive measures are available in order to assess the risks and mitigate an increase of Employment
claims such as:
It is a common procedure in Brazil to manage some issues such as working hours, length of breaking
time, profit share programs, among others via an agreement signed with the Employees' Union. This
is a powerful tool to pacify Employment conflicts.
Before deciding to apply new Employment rules to your organisation companies should consult an
employment lawyer with the capacity to advise on Brazilian Employment Law, as well on employment
Court's approach to specific matters.
Outcomes of employment law reform in Brazil are still relatively unstable. The key to managing the
employment law environment is to be aware of the complete scenario and putting attention to possible legal
and financial outcomes.
Particia Guanciale
Advogada – Brasil
On behalf of Nabas International Lawyers
The article was written merely for information and discussion purposes and should not be considered a legal opinion for any
specific business operation.
2018. Copyright reserved to NABAS INTERNATONAL LAWYERS (part of the Cubism Law Group)