Another amendment to the Outsourcing Bill was approved yesterday increasing the liabilities of companies that retain outsourced services. Pursuant to the amendment, these companies will be jointly and severally liable for any employment and social security debts of service providing companies . Therefore, another important step was taken for the referral of the Bill for consideration by the Senate.

The original Bill was kept unchanged regarding the permission for private companies to outsource any type of activity, including activities related to their businesses (i.e., the company’s core activity). Currently, the Employment Tribunal prohibits the outsourcing of core activities pursuant to Statement 331; however the interpretation of the Courts has not been accurate in terms of determining what constitutes the ancillary activities and the core activities of a company, causing considerable legal uncertainty. This Bill would finally resolve the issue. 

In addition, the following items were also kept unchanged: INSS (Brazilian Social Security Institute) withholdings of 11% or 5.5% by the contracting company, the possibility of outsourcing manpower through cooperatives and a 12 (twelve) month lock-up period for directly retaining a former employee as an outsourced service provider in order to prevent the impoverishment of manpower, reflecting the opposition of the Trade Unions.