Understanding labor relations in Brazil continues to be a significant challenge for Brazilians and foreigners.
The Labor Reform, consolidated in Laws 13429 and 13467/2017, heavily amended the Consolidated Labor Laws (CLT), in an attempt to modernize the complex and frequently unintelligible legislative, administrative and judicial structure, reduce intervention of the State in labor relations and give more autonomy to the trade unions and to certain categories of employees (considered “hypersufficient”).
The principles inherent to Brazilian Labor Law, which seek to protect the employee against the disciplinary and economic power of the employer, remain unchanged, however, or have been attenuated to a minimum degree.
12.2. EMPLOYMENT RELATIONSHIP – ALTERNATIVE FORMS OF CONTRACTING – “HYPERSUFFICIENT” EMPLOYEE
In order to constitute an employment relationship in Brazil, four simultaneous requirements need to be fulfilled: personal service, regularity, economic dependency and subordination.
Subordination is the most important aspect for defining whether a relationship is one of employment or work. The other conditions are common to other types of contract.
The Labor Reform did not change the nature of the employment relationship, maintaining the above concept unaltered, although it reviewed/widened the notion of an economic group, permitted the outsourcing of the company’s core-activity and the re-hiring of employees after termination of their contract.
As for the economic group, the Reform expressly excluded from the legal definition for the purpose of establishing the joint liability of companies the mere fact that the partners/shareholders are the same. It is necessary for the configuration of the group to show a common interest, the effective community of interests and the joint activity of the companies forming part of it.
As regards the outsourcing of the core activity, although this represents a great advance, putting an end to the dichotomy between core and non-core activities, sanctioned by Precedent 331 of the TST, it is a fact that, if it is sought to disguise the features of an employment relationship, and evidence of such is produced by the injured party or by the authorities, the purported civil relationship will be converted into one of employment, with all the consequent legal sanctions, in their most varied forms.
In the event of re-hiring of employees, a period of 18 months must be observed between the termination of one contract and the beginning of the other, whether as an employee of an intermediate company or as partner in a service company (Pejotização), unless the owners or partners in the latter company are retired. It is not possible, therefore, to dismiss and immediately re-hire a worker on an irregular basis, unless he is retired and, evidently, the conditions inherent to an employment relationship are not in place.
The employment relationship is expensive, since it attracts direct costs for the company. These may be summarized as follows:
i) Welfare contribution of 20% of the remuneration paid to the employee, to which is added labor accident insurance (from 1% to 3%, which percentage is subject to alteration depending on the aggressive nature of the working environment), and contribution to third parties (agencies representing the economic sector to which the employee belongs) – Sistema S – (average rate of 5.8%),
ii) FGTS – paid on the basis of 8% of the salary, it is deposited monthly by the employer in a specific account for each employee, who can only withdraw the funds in the events expressly stipulated by law, such as dismissal without cause, termination of a contract for a definite term, retirement, purchase of home, death and serious illness, among others,
iii) 30 days’ vacation, divided into not more than 3 periods, if the employee agrees, one of which not less than 14 days and the others of 5 days, after each period of 12 months’ work, plus a 1/3 bonus. The employee may convert 1/3 of the vacation period to which he is entitled into a pecuniary payment, amounting to the remuneration due for those days. The grant of vacation after the 12-month period following acquisition of this right by the employee subjects the employer to payment of double the sum due, pursuant to article 137 of the CLT,
iv) 13th salary, based on the employee’s full remuneration.
The employee also has to pay social welfare contributions, at rates between 8% and 11%, according to the remuneration he receives, up to the limit of 11% of the contribution salary ceiling. He is also subject to income tax, at a rate of 7.5%, 15%, 22.5% or 27.5%, depending on his remuneration, unless he receives a share of the profits with a separate and more favorable rate of tax.
These are the direct costs, which may be complemented as a result of special aspects of the employment relationship, such as rights stipulated by a Collective Agreement, overtime etc.
The employment relationship must be entered in the appropriate document, which in the case of the company is the employee’s registration card and for the employee the work and social security booklet. All information concerning the employment relationship must also be entered in the E-social, Digital System of Fiscal Entry of Tax, Welfare and Labor Obligations, introduced by the federal government in order to unify and consolidate all the data of workers in a single document, for all purposes.
12.2.1. ALTERNATIVE FORMS OF CONTRACTING
The Labor Reform created two new forms of employment. One is intermittent employment, where the worker is paid for the work actually done on an hourly basis, since under this system work periods and periods of inactivity are alternated.
The hourly remuneration may not be less than what is paid to the company’s regular employees. The contract must be in writing and, in addition to payment for hours worked, the employee will be entitled to proportional payment for vacation, FGTS and 13th salary. The amounts paid are subject to the welfare contribution by both parties.
The second consists of telework, defined by article 75 of the CLT as “… the provision of services preponderantly outside the employer’s premises, with the use of information and communication technology that, by its nature, does not constitute external work”.
It should be noted, however, that the sole paragraph of the legal provision referred to expressly states that “The attendance at the premises of the employer to carry out specific activities that require the presence of the employee at the establishment does not affect the existence of the telework regime”.
Therefore, even if the worker appears at the employer’s premises in order to carry out duties that require his presence, such as meetings, training, rendering of accounts, production of documents etc., this fact does not annul the legal exception stipulated in this article.
By way of an exception to the provision of article 443 of the CLT, that authorizes an individual work contract by means of a tacit, express, verbal or written agreement, article 75-C provides that “The rendering of services under the telework system must be expressly stipulated in the individual work contract, that shall specify the activities to be performed by the employee”.
In the same way, imposing exceptional formality for a telework contract, it is possible to alter the regimes that require personal attendance and telework, provided there is a mutual agreement to that effect between the parties, in accordance with a contractual amendment.
For the performance of telework, the employee needs a structure that enables him to carry out the work. The worker who falls under this legal exception must be guaranteed the regulation of the contractual conditions in a written contract, including the structure and the means for performing the services.
Having stipulated the contractual conditions, and the employer having opted to provide the technological means to enable the worker to exercise his activities, which our professional experience shows to be predominantly the case, especially because of the need for compatibility of such means – the operational systems of the companies among other factors – these items do not form part of the employee’s remuneration.
Finally, but of no less importance, the CLT requires the employer to instruct the employees covered by this regime, expressly and ostensibly, regarding the precautions that must be taken in order to avoid work-related illness and accidents. The employee, in turn, must sign an undertaking to the effect that he will comply with the employer’s instructions.
12.2.2. THE “HYPERSUFFICIENT” EMPLOYEE
The Labor Reform introduced a new text for article 444 of the CLT, allowing the free stipulation of the contractual conditions of an employee with a university degree and who receives a monthly salary equal to or higher than twice the maximum limit of benefits under the Social Welfare General Regulations to have the same legal effectiveness and preponderance over the collective agreements, as regards those matters that may be negotiated and that are detailed in article 611-A.
The said Law now permits the stipulation of an arbitration clause, for the resolution of disputes arising from the situation of an employee whose remuneration exceeds twice the maximum limit of benefits under the Social Welfare General Regulations, provided this occurs on the initiative of the employee or with his express agreement.
12.2.2.i. FREEDOM TO CONTRACT
The change in question, which is significant in our opinion, permits greater freedom to contract than was previously authorized by the caput of article 444 of the CLT, and guarantees that the contractual conditions stipulated between employer and employee, that fulfill the requirements therein specified, are as effective as the collective agreement.
In other words, negotiations entered into between an employee considered “hypersufficient”, in accordance with the definition contained in the sole paragraph of article 444, and the employer are valid, effective and binding on the parties, provided of course that they respect the limits referred to above.
12.2.2.ii. ARBITRATION FOR RESOLUTION OF LABOR DISPUTES
As referred above, the Labor Law now permits the stipulation of an arbitration clause.
Considering that the arbitration procedure is specialized and involves costs for the parties, it should be used sparingly and only in contracts the characteristics of which justify the inclusion of this method of dispute resolution.
12.3. DURATION OF WORK
The normal duration of work is 8 hours per day and 44 hours per week. Other limits, whether lower or higher, are permitted, as provided in special legislation relating to a given category of worker or collective labor agreements.
In order to establish a working schedule of 44 hours a week, the employee should work 4 hours on Saturdays, which is becoming more and more unusual in Brazil, one of the reasons being to reduce indirect costs (such as transport, meals, water and electricity). Companies therefore opt to introduce these 4 hours in the working days from Monday to Friday, with the employee starting to work a few minutes extra on these days, to make up for his absence on Saturday.
With the Labor Reform, there are now 2 options for part-time contracts. In the first, the contract will be for up to 30 hours a week, with no provision for overtime. In the second case, the contract will be for up to 26 hours per week, up to 6 hours’ overtime being permitted.
The employee may work overtime, subject to a maximum of 2 hours. As an exception to the limit of 2 hours’ overtime per day, the new CLT permits, by means of an individual or collective agreement or convention, a working day of 12 hours followed by 36 hours’ rest, with the intervals for refreshment and rest being observed or remunerated. It is also permitted to establish a working day of 12 hours, subject to the limit of 220 hours per month.
The remuneration due for overtime is at least 50% more than for a normal hour. Some collective labor agreements stipulate percentages higher than the rate provided for by law, principally for the purpose of discouraging employers from allowing overtime.
Habitual overtime forms part of the employee’s remuneration, for the calculation of vacation pay, 13th salary, prior notice, FGTS etc.
Overtime worked may be remunerated by the employer otherwise than by the payment of cash. In Brazil this is called the Hour Bank (compensatory or comp time) system, a procedure whereby the excess time worked one day is compensated by partial or total rest on another. The Labor Reform introduced an important modification, permitting an Hour Bank agreement to be made directly between the employee and employer, provided that compensation for the overtime is made within a period of 6 months.
In any continuous work that lasts for more than 6 hours, an interval of at least one hour for refreshment and rest is obligatory. For a shorter period not exceeding 6 hours, an interval of 15 minutes is obligatory. An employer who fails to grant the interval for refreshment and rest must indemnify the employee in the exact proportion of the right not enjoyed, and no longer the entire period as was decided before the Reform, with an addition of 50%. Such payment will be of an indemnity nature.
Between one working day and the next, the employee is entitled to a minimum of 11 hours’ rest, which cannot be absorbed by the weekly rest.
Every employee is entitled to remunerated weekly rest (DSR) of 24 consecutive hours, that normally coincides with Sunday.
Failure to grant the interval between working days and the DSR gives rise to the obligation to pay overtime to the employee who did not receive them.
As a rule, work performed between 10 p.m. one day and 5 a.m. of the next is considered night-work. Other economic activities, such as cattle-breeding and agriculture, are subject to different night hours. One hour of night-work is computed as 52 minutes and 30 seconds, that is to say, 7 hours’ work at night is equivalent to 8 hours during the day. Remuneration for night-work is at least 20% more than for work done during the day.
According to the new CLT text, the time spent by the employee traveling between his home and his work-place, and vice-versa, will not be computed in his working day, since it does not constitute time at the disposal of the employer. Prior to the Reform, in situations where the employer provided transport for its employees, because the establishment where they work is situated in a place of difficult access or is not served by public transport, traveling time was considered as time worked. This rule is now valid for journeys on foot, within the company’s establishment or by any means of transport, including that provided by the employer.
None of the rights relating to working hours, referred to above, are due to three categories of employee:
i) those who exercise an external function, incompatible with fixed working hours;
ii) those who occupy a position of trust, who are not subject to control of their working hours, have powers of command and management, occupy a high-level position in the company’s organizational chart and receive differentiated salary and benefits in comparison with their subordinates;
iii) those employed under the telework system, subject to the requirements of article 75 of the CLT.
The new CLT text disregards various situations as time on standby or worked, prior to the start or after termination of the agreed working hours, when the worker remains on the company’s premises, whether by his own choice or to seek personal protection, such as religious practices, rest, leisure, study, meals, social activities, personal hygiene and change of clothing or uniform, when the latter is not obligatory, even in excess of the tolerance limits currently in force (5 minutes on arriving and leaving, subject to the limit of 10 minutes per day).
The payment of overtime to the employee, whether for excessive hours or non-compliance with the obligatory intervals and rest periods, does not prevent the company from receiving notices from the Ministry of Labor and Employment for violation of the law. The penalties charged in these cases, subject to rare exceptions, are not heavy.
12.4. REMUNERATION AND SALARY
Remuneration is the total of sums of money and benefits paid to employees in consideration for services provided for the benefit of the employer.
Salaries – the fixed amount guaranteed to the employee on being hired – cannot be reduced (art. 7, VI, of the CF) – except by collective negotiation, cannot be altered unilaterally by the employer to the employee’s detriment, cannot be levied upon (art. 649, IV, CPC), and are intangible (cannot normally suffer deductions – art. 462 of the CLT and Precedent 342 of the TST).
Salaries are subject to obligatory readjustment at least once a year, in accordance with the annual pay-rise date applicable to the category of worker. The great majority of trade unions determine payment of the salary readjustment to all the employees, regardless of their qualifications, position in the corporate hierarchy or salary, but there are Collective Agreements/Conventions that draw a distinction between employees based on the criteria referred to above.
The salary must be paid in national currency. Payment in foreign currency is prohibited.
The salary for work done in a given month must be paid not later than the 5th working day of the following month – art. 459 of the CLT – which period cannot be exceeded. Commission and gratuities may be paid over longer periods, depending on what is stipulated in the contract.
Foreigners who come to Brazil to work, with a visa granted by the Brazilian government, and who continue to receive remuneration abroad, must declare their situation to the authorities and pay, depending on the type of visa and/or the length of time they remain in national territory, income tax on the money received outside Brazil. The Brazilian company that applied for the visa must take into consideration the amounts paid abroad, invariably by a company forming part of its economic group, as a basis for calculating FGTS and the welfare contribution.
The salary may also be paid in utilities. The law provides that a minimum percentage of 30% must necessarily be paid to the employee in money.
12.4.1.a. Clothing, Equipment and other Accessories
Salary is only payable in kind when paid in consideration for services rendered by the employee and as an alternative to paying him the amount of money necessary for the purchase of the item in question.
Clothing, equipment and other items provided for execution of the work in no way constitute payment of salary in kind – paragraph 2, I, of art. 458 of the CLT.
It is necessary for the company to draw up appropriate documentation, stipulating clear rules for the use of these items, prohibiting their private use by the employee or charging for their use, precisely to avoid the configuration of any of these items as indirect remuneration or time on standby and payment of overtime.
Lots of discussions have been occurring lately with regard to the use of corporate e-mails and the violation of employee’s privacy.
However, the fact is that the employer grants an e-mail account to its employees so that they may use it as an additional work tool.
For this reason, the employers have the right to oblige their employees to abstain themselves from using computers to access sites which are not related to the professional activity and they also have the right to prohibit the use of corporate e-mails for private matters.
This is because it is evident that the monitoring of the employee’ activity represents an exercise of the employer’s property right over the computer, the server and the electronic mail itself.
Therefore, if the employer grants an e-mail account and provides access to internet to its employees, as long as those employees had been expressly communicated that there will be control in relation to its use, there is no violation to the employee’s dignity.
The prohibition of accessing sites which are not related to the professional activity, as well as the prohibition of the use of e-mails granted by the company for purposes not related to professional issues, do not offend the employee’s privacy; on the contrary, it represents the due and licit right of the employer.
12.4.1.b. Transport (Sonia Marques Döbler Advogados)
This is one of the most controversial issues. If transportation is extended in order to perform the work, it cannot be considered a utility salary. If it is extended to fill a need of the employee, namely transportation from home to work and return, then it is a utility salary. The transportation coupon introduced by Law 7418/85 and regulated by Decree 95.247/87 is not considered salary.
The Precedent No. 367 of the Supreme Labor Court excludes the vehicle as part of an employee salary, even if it is used by the employee for private personal purposes.
Meals granted to the employee by the employer, as part of the Worker’s Food Program (PAT), is not salary-related.
In order to be included in the PAT, the company must register in the system, comply with legal requirements and validate its classification periodically, further justifying its tax incentive.
The Labor Reform extended the exemption for all meal allowances, prohibiting, however, payment in cash.
In order for a housing allowance to constitute a salary in kind, it must be granted for the performance of the employment contract, as is the case of construction site workers in distant places and without structure, or the caretaker of residential condominiums.
If the housing allowance does not meet this need, it will be treated as indirect remuneration and, as such, will form part of the remuneration of the employee for all purposes, as is the case of expatriates.
12.4.1.e. Abonos (Bonuses for compensation of salary losses)
The unions have adopted the practice of including the payment of bonuses as a form of compensation for salary losses, in addition to the base-date increases.
In essence, they constituted salary advances and formed part of the remuneration.
The Labor Reform definitively eliminated the salary nature from this payment, removing it from the labor contract and from the basis for calculating any labor and social security charges.
12.4.1.f. Additional payments for adverse working conditions
Salary increases that aim to “compensate” for work carried out in adverse conditions. Compulsory extras: overtime, night-work, unhealthy/dangerous conditions, and transfer. They are cumulative, with the exception of additional payments for unhealthy/dangerous conditions.
Unhealthy activities are considered to be those that, due to their nature, condition or method of functioning, expose the worker to agents that are harmful to health (noise, heat, cold, vibrations, ionizing and non-ionizing radiation, gases and vapors, chemical and biological agents etc.), above the tolerance limits set by reason of the nature and intensity of the agent and the time of exposure to its effects. The unhealthy activity gives the employee the right to a salary increase, according to the degree of insalubrity, set according to norms of the Ministry of Labor, of 10%, 20% or 40% of the minimum salary.
Activities or dangerous operations are those that by their nature or method of functioning involve permanent contact with flammable substances, explosives, electric power, robbery or other types of physical violence in the professional activities of personal security or property protection, under conditions of serious risk, and workers on motorcycles. The dangerous activity gives the employee the right to additional payment for dangerous working conditions, the value of which is 30% of the base salary received by the employee.
On termination of the factors that give rise to these additional payments, the latter may be eliminated, except in the case of habitual overtime, when the company must pay an indemnity corresponding to the value of one month of the hours eliminated for each year or fraction of six months or more of services in excess of normal working hours.
12.4.1.g. Expense Allowance and Traveling Expenses
Both items are paid to reimburse expenses incurred by the employee to carry out his activity. Even though habitual, they will not be included in the work contract for any purpose, will not form part of the employee’s remuneration and do not constitute a basis for calculating any labor or social welfare charge.
In relation to the expense allowance, however, the tax and social welfare legislation exempts this item from the usual contributions, if it is paid once, by reason of the employee’s change of residence.
Commission constitutes a percentage of results achieved by the employee or by the company, normally paid to employees in the commercial and sales area.
Commission may be paid as an exclusive form of remuneration (solely as a commission agent), constituting an exception to the general rule of payment, the employee being guaranteed receipt of a minimum salary or wage floor of the category of worker to which he belongs in the event targets are not met.
The percentages paid to the employee, during the course of the employment relationship, cannot be reduced, under penalty of an illegal alteration of the work contract, expressly prohibited by law.
Payment made to the employee as an act of liberality of the employer, in recognition of some act performed by the former.
Pursuant to current legislation, legal gratifications acquire a salary nature, by reason of paragraph 1 of article 457 of the CLT.
Companies instituted the payment of gratifications in processes involving dismissal of their employees. If it is only one payment, as a result of the contractual termination, it will not have a salary nature for labor and social security purposes. It will be the basis for calculation of income tax. If it results, however, from an official voluntary termination program, it will not even be subject to income tax.
12.4.1.j. Premiums and Bonuses
The Labor Reform innovated in this area, starting to regulate premiums, defining them as liberalities granted by the employer in the form of goods, services or cash value to an employee or group of employees, due to performance higher than ordinarily expected in the exercise of their activities.
The premiums are not part of the employee’s remuneration, are not included in the employment contract and do not constitute a basis for the incidence of any labor and social security charges.
It is worth mentioning that it is only bonuses for the purpose of recognizing unusually high performance that fall within the legal classification referred to here.
Bonuses that are contractually stipulated are excluded from this rule.
12.4.1.k. Profit sharing
This is the payment made to the employee resulting from the distribution of profits achieved by the employer, obtained with the collaboration of the employee, who reached the intended goals.
It is implemented through negotiation between employer and employees, through a commission chosen by the latter, consisting also of a representative of the union. The purpose of the union’s participation is to implement the collective negotiation.
Legally profit sharing is of an indemnity and participatory nature, and is conditional upon the occurrence of profits or results. If this condition is not fulfilled, it is not paid. However, if there is a loss, the employee does not participate.
Profit sharing is distinct from remuneration, and represents neither a replacement nor a supplement thereof. It is therefore of an indemnity nature, is not subject to FGTS and social security contribution, and is not reflected in the other contractual items. It will be subject to the withholding of income tax, by means of taxation separate from habitual earnings and at special rates.
In the event of a deadlock, the parties must opt for mediation and arbitration, and not for the Labor Court, which can only be activated, if all previous attempts have been exhausted.
The labor law excludes from remuneration:
– education, in the company’s own teaching establishment or school belonging to third parties, including the cost of matriculation, monthly fee, annual fee, books and didactic material.
The labor legislation only excluded this benefit from the remuneration, without specifying conditions for this.
The social security legislation, however, excludes from the remuneration the professional training and qualification courses linked to the activities carried on by the company, which are not used in substitution of salary and are offered to all employees and managers.
The tax legislation excludes from the basis of calculation of income tax only the donation received to carry out studies or research, the results of which do not represent a financial advantage for the donor, or consideration for services, a situation in which the benefit usually granted to employees rarely fits.
– medical, hospital and dental care provided either directly or through health insurance
The Labor Reform has extended the exemption to include also the value of medical and dental care, including reimbursement of expenses with medicines, spectacles, orthopedic appliances, prosthetics, orthotics, medical and hospital expenses and the like, even when granted in different types of plans and cover. This does not form part of the employee’s salary for any purpose nor the contribution salary. The amendment was so significant as to impute new wording to the social security legislation to exclude such payments from the basis of calculation of the contribution of this nature.
12.4.1.m. Equal pay and substitution
The Labor Reform changed the concept of equal pay. Employees of the same company, working in the same establishment (and no longer in the same locality), perform the same function, with equal productivity (quantity) and technical perfection (quality), with a difference in time of service and function, respectively, not less than four and two years, must necessarily receive the same salary.
In cases of substitution, the substitute is also entitled to the salary of the person for whom he is substituting, while the substitution lasts. It is not a question of equal pay, but of ensuring equal pay for equal work.
12.4.1.n. 13th salary
This is a Christmas gratification, payable not later than December 20, regardless of the employee’s remuneration, and is equivalent to 1/12 of such remuneration per month worked or fraction of 15 days.
12.5. TRANSFER OF EMPLOYEE
Transfer is the relocation of an employee to a place other than that stipulated in the contract.
Under Article 469 of the CLT, which regulates the issue, the employer cannot transfer the employee without his consent. The removal is not considered a transfer when it does not entail a necessary change in the employee’s domicile, that is, if the transfer to another location does not cause the employee to move his residence.
Another aspect, also relevant, is that the transfer must result from a real work necessity, which is defined as the impossibility of the company to develop its economic activity without the transfer of the employee to a location other than the one for which he was hired.
Employees who hold positions of trust are not included in the protection of the law, and cannot oppose the decision of the employer (§1 of art. 469 of the CLT), but have all the rights guaranteed to the others.
The closing down of the establishment where the employee works is an accepted cause for his transfer, without the need for the above mentioned cause (real work necessity). That is, if the establishment for which the employee was hired to work ceases to exist, the company is authorized to transfer him in order to keep him working. The law states: “The transfer is lawful when the establishment where the employee works closes down.”
An aspect that is very difficult to determine is when a transfer is provisional. It is generally understood that a provisional transfer is one in which the employer transfers the employee temporarily to a place other than that stipulated in the contract, because of some important fact (to fill in for someone’s absence, to assemble certain equipment etc.) that requires such a transfer.
The employer does not intend to make the employee permanently remain in this position, but only provisionally. The temporary nature of the change means that the employee is not definitively established at the place to which he was transferred. The intention therefore is that he should return to the original location.
On a definitive transfer, the employer intends that the employee remain until the end of the employment contract at the new location. The employee relocates with the certainty that, at least as long as his work contract with that company lasts, he must organize his personal and professional life there.
Only a provisional transfer guarantees the employee the right to receive the additional transfer payment. A definitive transfer does not give the employee such right.
For each employee transferred provisionally, the employer must pay him the additional transfer compensation, equivalent to 25% of the salary received in the place where he was hired. The additional payment will only be due for as long as the transfer lasts. After his return to the place of origin the right to the additional payment ceases.
All expenses arising from the transfer (provisional or definitive) of the employee and his family (relocation, transportation, rent etc.) must be borne by the employer. The additional expenses arising from a transfer that does not entail a change in the employee’s domicile must also be borne by the employer.
12.6. VACATION (Sonia Marques Döbler Advogados)
Every employee has a right to a yearly vacation, without prejudice to salary and counting of period of employment for retirement purposes, and it is usually thirty calendar days. The employee has the option to convert 1/3 (one third) of the vacation period to which he/she is entitled into a cash payment, which amount shall correspond to the number of days that are being converted into cash., in the amount of the remuneration that would be due to him by the corresponding days.
With the Law 13.467/2017 (Labor Reform), currently, provided that the employee so consents, vacations can be enjoyed in up to three periods, one of which cannot be less than fourteen calendar days, and the other shall not be less than 5 calendar days, each.
The granting of vacation period after the period of 12 months following the acquisition of such right by the employee, the employer shall pay the respective amount in double as provided in Article 137 of CLT.
12.7. CONFIDENTIALITY CLAUSE (Sonia Marques Döbler Advogados)
Due to the high competitiveness in the market, the employers have been requesting more and more their employees and even service providers to sign a confidentiality agreement.
Such agreement can be unilateral or bilateral, this is, its clauses can be imposed by one of the parties or upon mutual consent.
Its contents brings everything that must be considered as confidential by the employee, since the simplest up to the most complex act, among which, it can be highlighted the confidentiality of any and all technical, industrial, commercial and administrative information, during the validity of the agreement and after its termination, under the penalty of the employee being liable both in the civil and in the criminal grounds, in addition to the possibility of the imposition of the penalties provided for in the labor rules, especially the just cause applicable to the subject, as set forth in subitem “g” of Article 482 of CLT (company’s secrecy violation).
The so-called “company’s secrets” are considered, among those assets and rights of the employer’s property, the employee’s material and/or intellectual activity and the technical improvement which have been acquired during the validity of the contract, whether by means of practice or by means of studies.
Therefore, the confidentiality clause, in principle, would only be valid while the agreement relationship is in force, whether related to labor or to rendering services, as the rescission terminates any previously existing relationship.
In this sense, if termination occurs, nothing prevents the employee from being hired by another employer in order to perform similar tasks to the previous one, what is very common.
However, it is said “in principle”, as the new contracting must respect confidentiality and the terms which have been agreed upon in the previous contract, exactly in order not to violate the other’s right.
As a consequence, one may conclude that the confidentiality clause does not restrict the job and the new contracting, but it must respect, with no doubts, the terms agreed in the previous job or in the previous contracting in order not to incur in violation of rights.
12.8. NON-COMPETE CLAUSE
The enforceability of a post-contract non-competition clause is accepted with reservations by the Brazilian labor courts, because they consider that such restriction violates article 6 of the Federal Constitution, which guarantees the right to work. Such a clause denies the employee this guarantee and, consequently, prevents him from surviving with dignity.
In cases where an indemnity is stipulated to compensate the employee for the prohibition against his working, which is sufficient for his survival during the period of time expressly stipulated and normally estimated at a certain number of salaries for the non-competition period, the Brazilian courts have accepted such a provision, although there are opinions to the contrary.
The execuition of such a clause, post-contract, is therefore dependent on these elements, without which the contractual stipulation cannot be enforced by the employer.
12.9. EMPLOYEES’ INSPECTIONS (Sonia Marques Döbler Advogados)
In some cases, due to the company’s activity, the employer usually establishes that, after the working hours, the employees should be submitted to personal inspection, before they leave the company.
Said measure aims to prevent the removal of materials, parts, drugs, among others, which are the target of illegal activities.
As per the current majority’s precedents understanding, close inspection offends the employee’s fundamental rights, which are guaranteed by the Federal Constitution, such as the person’s dignity, the prohibition of inhumane and humiliating treatment and the inviolability of intimacy and honor.
In addition, it must be highlighted that there is the understanding that the employer may inspect its employees as it is the employers’ right to care for its properties, but said conduct must be made with respect and discretion and the inspection shall be made by a person of the same gender and as long as it is not intimate (that one in which one demands the employee to show his/her body just wearing underwear or even being nude).
In this regard, section 373-A of CLT, added by Law nr. 9.799/99 rules that: “the employer or representative is prohibited to make intimate inspections in female workers or female employees.”
Therefore, the company that makes intimate inspections to its female employees may be subject to a possible inquiry at the Labor Court.
In view of the aforementioned, despite the inspection procedure which is performed by the employer to the employee can be justified in order to prevent the removal of materials, parts, drugs and other objects that may cause the illicit act to happen, it is certain that in the performance of said inspection the companies must respect some measures in order to avoid possible penalties.
However, in this case, the employer should make use of electronic equipment, which may detect or prevent said deviations, because, even though the intimate inspection is one of the most used forms by companies as a safety measure, it is considered by the Labor Courts as a practice that offends the employee’s integrity and intimacy.
12.10. RESCISSION OF WORK CONTRACT
A work contract can be terminated either by the employer or the employee, and also by decision of both parties.
The employment relationship will be terminated by the employer with the dismissal of the employee, which will be with or without just cause. In the former case the employee forfeits the right to labor indemnities (for having committed a serious fault), which are fully assured in the second case. The Labor Reform also added a new method of application of just cause to employees to the existing list: an employee who loses his professional qualification or fails to meet the legal requirements for the exercise of his occupation may be dismissed for just cause, in cases where such qualification is an essential requirement for him to exercise his activities and provided that he acted with willful intent.
The employment relationship will be terminated by an employee by handing in his notice or resignation, or by indirect termination of the work contract. In the first case, the employee is not paid labor indemnities; in the second case he is entitled to such indemnities, particularly as a punishment to the employer, who was guilty of some fault.
The employment relationship will be terminated by agreement of the parties, when both agree as to the conditions of the termination.
Prior notice is the manifestation of will of the party who intends to terminate the contract. It usually corresponds to one month of work. An employer who does not want the employee to remain on its premises during the notice period may indemnify him in respect of such period; this will have repercussions on the work contract for all purposes, that is, calculation of vacation, thirteenth salary, FGTS etc.
To the period stipulated in the previous item, 3 days for every year worked by the employee are added, subject to the limit of 90 days (in which the prior notice of 30 days is already included). This constitutes mere financial reparation, and does not count as time actually worked.
There are collective agreements that stipulate a differentiated period of notice, taking into consideration the length of time the employee has worked for the company, among other factors.
In contracts with expatriates, it is common to have longer notice periods. According to Brazilian law, if the employer decides to waive the employee’s compliance with the notice period, it must pay for the whole contractual period, as it is a more favorable rule. The employee, in the event he hands in his notice, is not obliged to work for the full period.
Innovation introduced by the Labor Reform is related to the Voluntary or Incentivized Dismissal Plans for individual, collective or collective dismissal, provided for in an agreement or collective labor agreements, which will result in a full and irrevocable discharge of the employment contract, preventing the employee from proposing labor action, unless expressly stated to the contrary.
The new CLT also abolished the compulsory assistance of the trade union on termination of the labor contract and its ratification. According to the text, the act of rescission by the employer, with annotation in the workbook, will be sufficient for release of the forms necessary for the employee to receive unemployment insurance and withdraw his FGTS. Unemployment insurance is the benefit paid, for a limited time, to a worker dismissed without just cause, equivalent to 3 or 5 installments calculated on the average of the last salaries received, variable according to the length of time worked, and paid by Social Security.
The CLT further included the possibility of an agreement between the employee and the employer to terminate the employment relationship. In this case, the employer can pay half the notice (if indemnified) and the fine. The worker may also withdraw 80% of the FGTS, but will not be entitled to unemployment insurance.
12.10.1. Guarantee of Employment
The guarantee of employment protects the employee against arbitrary or unjustified dismissal, for as long as the situation persists, and prevents the employer from terminating the work contract.
Among various factors that guarantee stability of employment, we would draw attention to the following: employee elected to the position of director of internal commissions for accident prevention, from the registration of his candidacy until one year after the end of his term; pregnant employee, from confirmation of the pregnancy until five months after giving birth; trade union official, from his candidacy until one year after the end of his term of office; injured employee, until one year after termination of the accident sickness benefit; member of the internal staff representation commission during the term of office and up to one year after its termination, re-election in the two subsequent periods being prohibited.
In addition to these, some conventions and collective bargaining agreements also provide instances of guaranteed employment, such as the minor at the age of military service, employee injured at work or suffering from an occupational disease, for a given period for the workers of a company etc.
12.10.2. Retirement and Termination of Labor Contract (Sonia Marques Döbler Advogados)
Discussions have occurred for so long as to whether the employee’s spontaneous retirement would imply or not in the rescission of the working agreement and, consequently, due to this, a new work contract would be initiated.
The importance of the issue was related to the penalty due to the employee when he is fired with no reason, since it was understood that, as retirement was the cause for the extinction of work contract, the employee would lose the right to such fund.
However, the referred to discussion was ended due to the Federal Supreme Court’s decision which, when judging ADin 1.721-3, declared that the 2nd paragraph of Article 453 of CLT was unconstitutional, thus resulting in the cancellation of the Jurisprudence Guidance nr. 177 of the Superior Labor Court, which understood the contractual rescission to be pertinent in this situation.
This way, whether or not the employee retires during the validity of the labor contract, by the time of the contract rescission for no due reason, the employee, as provided for in 1st paragraph of article 18 of Law No. 8.036/1990, will necessarily have the right to a 40% indemnity on the entire existing balance in the blocked account (understanding of the Superior Labor Court, consolidated in SDI-1 Precedent Guideline No. 361).
12.11. TRADE UNION ASPECTS
The Labor Reform seriously affected the trade union structure, which was and will remain for some time oversized. There are about 17,000 unions in Brazil representing employees and employers.
The new CLT establishes that the collective agreement and / or collective bargaining agreement will prevail over the law in 15 different points, such as participation in profits and results, remuneration for productivity, working hours, hour bank, minimum interval for meal and rest of half an hour, holiday exchange, telecommuting, notice and intermittent work, plan of positions and salaries and adhesion to unemployment insurance. The degree of unhealthiness and the extension of working hours in unhealthy environments may also be negotiated, without prior permission from the Ministry of Labor.
In negotiations regarding reduction of wages or working hours, there must be a clause providing for the protection of employees against dismissal during the term of the agreement. Such agreements need not provide for consideration for a specific negotiated item.
It is important to state that the CLT prevents the negotiation of 30 items of the employment relationship, prohibiting, for example, negotiation for the reduction or elimination of rights such as FGTS, 13th salary, minimum salary, remuneration for night work higher than for work during the day, weekly paid leave, maternity and paternity leave, prior notice, retirement, accident insurance, right to strike and take action, among others.
With the labor reform, the prevalence of the Collective Agreement (negotiation between company and union) over Collective Conventions will be guaranteed, granting significant importance to the unions when negotiating contractual conditions for the category they represent.
Although it intends to give prominence to trade unions in the negotiation of working conditions, the Labor Reform made the union contribution optional and conditioned its discount to the prior and express authorization of those who participate in a particular economic or professional category, or a liberal profession, which will lead in the near future to the re-sizing of the structures and, perhaps, a merger of unions.
12.12. LABOR PROCEEDINGS
In relation to procedural law, the Labor Reform inter alia: (i) established rules regarding fines for malicious litigation; (ii) set parameters for procedural costs, limiting such obligation to four times the ceiling for welfare benefits; (iii) established limits for damages, imposing on the employer payment according to the degree of the offense committed; (iv) provided for the payment of sucumbência fees by the unsuccessful party of up to 15% of the claim; (v) attributed the responsibility for payment of the expert’s fees to the losing party in the claim the subject-matter of the expert’s report, even if he benefited from free legal aid; (vi) authorized the incidence of intercurrent prescription within a period of two years; (vii) permitted the exemption of philanthropic entities from putting up security or assets for attachment in labor claims; viii) determined the counting of labor court deadlines on business days.
The constitutionality of many of these topics is being contested in the Federal Supreme Court, through Direct Actions of Unconstitutionality.
The Superior Labor Court issued Normative Instruction no. 41, which regulated the application of the procedural rules altered by the Labor Reform, ratifying it in its essence, but providing, as a parameter, for its immediate application, without, however, affecting past situations initiated or consolidated under the aegis of the law repealed. Thus, for cases filed since the law came into force, the rules apply, for example, to sucumbência and liability for expert fees.
12.12.1. MORAL DAMAGES (Sonia Marques Döbler Advogados)
This is a recurring discussion in the scope of the Labor Court and, according to Article 223-B of the CLT, “an action or omission that offends the moral or existential sphere of the individual or legal entity causes non-property damage, being the individual or legal entity the exclusive holders of the right to seek damages”.
It is characterized by the violation of one of the employee’s personality rights, such as intimacy, privacy, honor, image, freedom, self-esteem, sexuality, health, leisure and physical integrity (CLT Article 223-C ).
Moral damage may occur in the event of a punctual fact. However, for its configuration, one requires complete and convincing evidence of the employer’s action or omission, negligence or malice, causality connection between this one and the damage experienced by the employee.
The Labor Reform brought parameters for the judge to set the amount of compensation for moral damages, namely: (i) light nature offense, up to three times the last contractual salary of the victim; (ii) medium nature offense, up to five times the last contractual salary of the victim; (iii) serious nature offense, up to twenty times the last contractual salary of the victim, and (iv) offense of a very serious nature, up to fifty times the last contractual salary of the victim.
It must be emphasized that it is unquestionable that to quantify the amount that aims to compensate the person’s pain requires common sense from the judge. And the setting of this amount should be grounded on the reasonable logics so as to avoid extreme amounts (insignificant or big ones).
Thus, indemnity due to moral damage is grounded on the recovery of the attacked employee’s morale and in the employer’s punishment so that he will not commit this illicit act anymore.
12.12.2. MATERIAL DAMAGES (Sonia Marques Döbler Advogados)
Material damage, including loss of profits, results from the damage to physical integrity, the decrease of labor capacity, decrease of life capital – useful life – and reimbursement of expenses incurred from those.
It regards, therefore, to the obligation to indemnify the employee for damages caused to him due to an illicit act motivated by the employer and which brought damages of pecuniary nature to the employee.
In fact, for the granting of indemnification, in addition to convincing and complete evidence of the employer’s action or omission, negligence or malice, causuality connection between this one and the damage experienced by the employee, it must also be demonstrated by the employee which damages have been effectively experienced by him.
Therefore, once the material damage is proven, in other words, when the harm to physical integrity has been proven, the decrease of labor capacity or the decrease of life capital, the Labor Court will fix the amount to be paid by the employer to the employee as a material damage, which is simply the reimbursement of the amounts paid by the employee (even in future) due to the illicit act made by the employer.
Maria Lúcia Menezes Gadotti – Stüssi – Neves Advogados
Camila de Moraes Machado – Sonia Marques Döbler Advogados
Stüssi – Neves Advogados
Sonia Marques Döbler Advogados