Introduction

The need to modernise the procedural rules applicable to the labour procedure has long been a concern in Brazil. As such, it was well known that labour relations were being modernised and that the law did not satisfactorily account for this progress.

In light of this, the newly enacted Law 13,467/2017 – which will come into force on November 11 2017 – will introduce, among several changes not seen in prior legislative amendments, equal treatment of litigating parties and greater legal certainty for both litigating parties and Brazilian society as a whole.

Labour reform

The labour reform will ensures that parties are treated equally by establishing that all parties can be held liable for procedural damages. The party causing the damage may be ordered to pay a fine (higher than 1% and lower than 10% of the adjusted value attributed to the law) for litigating in bad faith and ordered to indemnify the harmed party for attorney fees and procedural expenses (eg, fees for court-appointed experts and costs).

In addition, from November 11 2017, litigation may have a greater cost for both the plaintiff and the defendant, since both parties may be ordered to pay fees for losing the suit.(1)

Another important legal change introduced by the labour reform relates to orders for the plaintiff to pay court costs where it fails to attend the first hearing and intends to file a second labour claim. Before the labour reform, the plaintiff had no onus when filing a second labour claim and, in turn, the defendant would have already paid the fees to defend itself in the first labour claim.

These changes aim to discourage exaggerated requests, mainly by plaintiffs, which in turn should help to reduce the number of disputes before the labour courts.

Further, by introducing a foreseeable cost and thus providing greater certainty to litigating parties, the labour reform is innovative, as it determines that the procedural costs will amount to a maximum of four times the highest benefit of the general security system, which stands at Rs22,125.24 (approximately $7,000).

Comment

The changes brought by the labour reform are expected to contribute not only to the strengthening of labour relations, but also to Brazil's economic growth, attracting more foreign investment into the country.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information of this topic please contact Aline Marques Fidelis at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados by telephone (+55 11 3147 7600) or email (afidelis@mattosfilho.com.br). The Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados website can be accessed at www.mattosfilho.com.br.

Endnotes

(1) A minimum of 5% and a maximum of 15% on the amount resulting from the liquidation of the award, of the economic benefit achieved or, in the case it is not possible to measure it, on the value attributed to the lawsuit.