Law No. 13,467/2017 ("Labor Reform ") came into effect on November 11, 2017. However, specialists are still uncertain whether the new provisions will apply immediately to employment relationships and labor claims initiated before this date.

The Labor Reform modified more than 100 rules of the Labor Code but, as highlighted by the President of the Superior Labor Court ("TST"), Ives Gandra Martins Filho, the main change relies on the possibility of overriding statutory requirements relating to labor rights in Collective Bargaining Agreements (also known as "negotiations prevailing over legislation").

In view of the President's pressure on Congress to expedite approval of the Labor Reform, some Senators had already indicated that the necessary modifications to the Law would need to be done by a provisional measure edited by the President.

After much speculation on the content of this provisional measure, on November 14, 2017 (i.e. 3 days after the Labor Reform became effective), Provisional Measure No. 808/17 was officially announced revising several critical points of the Reform. Below are the main changes:

  • Effectiveness and application to agreements currently in place: the Provisional Measure states that the Labor Reform fully applies to employment relationships currently in force. However, the question regarding the immediate applicability of the Law is still unclear, since it is expected that it will be analyzed by the Labor Courts on a case-by-case basis, considering the constitutional principles that prevent retroactive laws.
  • 12 hours on x 36 hours off work schedule: According to the Provisional Measure, only companies and entities in the healthcare sector may establish this work schedule directly with their employees (i.e. without involving the Union). As such, any other company will need a CBA negotiating 12-hour work shifts followed by 36 hours of rest.
  • Damages for Emotional Distress: The Provisional Measure specifies that damages awarded to employees shall be fixed in accordance with the multiples of the limit of the benefits from the National Social Security Institute. The original version of the Labor Reform awarded damages in accordance with the multiples of the last contractual salary of the employees.
  • Pregnant Employees under Unhealthy Conditions: The original version of the Labor Reform stated that employers would only be required to remove pregnant employees from work environments considered to be of minimum/medium harm to health if the employee presents a medical certificate recommending her removal. The Provisional Measure changes this requirement reaffirming that pregnant employees must be removed from all unhealthy work environments, regardless of the level of the harm to health, unless the employee volunteers and presents a medical certificate authorizing it. Furthermore, the Provisional Measure exempts the employer from paying the related unhealthy work conditions supplement during this pregnancy leave.
  • Self-Employed Workers: The Provisional Measure prohibits the hiring of a self-employed worker with an exclusivity clause. It also clarifies that a self employed worker who provides services to only one company does not constitute an exclusive employment relationship. Moreover, the Provisional Measure states that self-employed workers may provide services related to the main business of a company and, in any event, if it is confirmed that this worker is actually subordinated to the company, the employment relationship (and all related labor rights) will be recognized.
  • Intermittent Work: The Provisional Measure includes several new points regarding intermittent work contracts. Among them, these stand out: i) intermittent workers must be paid benefits such as the nightly supplement, vacation, severance pay, FGTS and social security contributions; ii) the place and term of payment must be specified in the contract and it cannot be more than 30 days; iii) the hourly wage paid to intermittent workers cannot be less than what is paid to the others who perform the same work; (iv) a dismissed employee hired for a fixed term contract cannot, until December 31, 2020, provide intermittent services to the same employer; and v) the exclusion of the penalty to the intermittent worker in case she/he accepts to work and then cancel her/his acceptance without a reason.
  • Remuneration: The Provisional Measure subtly altered the wording of article 457, of the Brazil Labor Code to exclude allowances from the list of payments not included as part of an employee's salary. In addition, allowances, which are non-salary in nature, should be limited to 50% of the employee's salary. Bonuses (in Portuguese called as "Prêmios") continue to be excluded from the concept of salary and were defined by the Provisional Measure as "donations granted by the employer, up to twice a year, in the form of goods, services or cash value, to the employee, group of employees or third parties related to his activity economic performance due to higher performance than ordinarily expected in the exercise of its activities."
  • Classifying unhealthy work conditions through collective bargaining: The Provisional Measure clarifies that collective bargaining agreements will have precedence over the law when they provide for the classification of the degree of unhealthy conditions and the extension of working hours in unhealthy conditions if the rules of the Ministry of Labor be respected. In practical terms, the Provisional Measure shows that the collective standards cannot deviate from occupational safety and health standards.