An overhaul of Brazilian labour law came into force in November 2017. One of the key changes was made to the procedural system, which has increased the accountability of employees who file labour lawsuits, of which there is a high number in Brazil.
By Eduardo Boccuzzi, Boccuzzi Advogados Associados
Amongst the changes are the following:
Up until the implementation of the new law, only employers had been ordered to pay the winning party’s legal fees in any labour litigation, and even then, only in exceptional situations. Under no circumstances were employees ordered to pay the costs of the employer. Under the new law, the defeated party, whether employer or employee, will be ordered to pay 5 to 15% of the other party’s attorney’s fees, as well as any compensation award.
“Free justice” benefit
The “free justice” benefit exempts the suing party from paying court costs and other procedural charges. Whilst this was previously granted in an indiscriminate way, this new benefit is now only granted to those whose salary is R$ 2,200.00 (around £480) or less, or those who are proven to be unable to pay such costs.
In the event that the employee is defeated on the lawsuit, and cannot prove that they are entitled to “free justice”, they will be ordered to pay court costs of 2% of the value of the claim.
Expert fees and absence on the initial hearing
If the employee’s claim is defeated on an expert’s investigation or they unjustifiably fail to attend the initial hearing, they will be automatically ordered to pay the expert’s fees and/or the court costs, even if the employee in question is entitled to free justice.
It is expected that such changes may reduce the volume of labour claims, since they increase the level of accountability imposed on the employee filing the labour claim. At the very least, more caution will be required in the formulation of, as well as in the assignment of value to, the claims.
On the one hand, there is now a higher risk that the employer will be liable to pay a successful employee’s legal fees, which practically did not exist until now. On the other, it discourages employees from indiscriminately filing random and opportunistic lawsuits, since any employee who acts in such way will now face the risk of costs awards against them.