Introduction

The labour reform was approved on July 13 2017, amending several articles of the Labour Code and Laws 6,019/1974 (temporary employment), 8,036/90 (severance fund) and 8,212/1991 (social contributions).

The legislation still protects the constitutional rights of workers. However, it seeks to modernise labour relations by creating rules and defining concepts (which did not exist in the legislation until now) which allow workers, companies and unions to have more freedom to negotiate their rights. Another purpose of the labour reform is to seek legal assurance by limiting the labour courts' interference in labour relations, especially those regulated by collective bargaining agreements.

Changes

The most important changes included in the reform are set out below.

Freedom of contract

The reform grants greater autonomy to the parties to negotiate:

  • the termination of the employment agreement, which may be performed by mutual agreement;
  • the means to settle individual conflicts, which may be performed by arbitration; and
  • the type or method of agreement – for example, whether:
    • the worker will be contracted as a self-employed worker;
    • the worker will be contracted to perform intermittent work; and
    • the work is onsite or remote (home office).

Shifts and rest

There are several developments brought by the reform, including:

  • the possibility to negotiate compensatory time by means of individual agreements;
  • commuting time from the worker's place of residence to work, and vice versa, will no longer be considered part of the shift; and
  • rest and meal breaks can be reduced to 30 minutes by means of collective bargaining.

Salaries and benefits

The reform expressly establishes that bonuses granted by mere readiness of the employer, when related to performance, will not be incorporated in the employees' compensation. In addition, certain benefits, such as meal allowances, daily travel allowances and health and dental care, will not be included in compensation.

Outsourcing

The reform expressly allows the possibility of outsourcing the company's core business.

Collective bargaining

According to the reform, companies and unions will have considerable freedom to negotiate topics such as:

  • shifts and rest and meal breaks;
  • compensation;
  • employee representation;
  • job position and salary plans; and
  • incentive bonuses, which can be granted as goods or services, among others, provided that negotiation will prevail over legislation.

Labour matters governed by the Constitution (eg, minimum wage, additional allowance for night work, holiday, parental leave, retirement, occupational health, hygiene and safety rules, and strikes) cannot be changed.

Labour liability for former partners

According to the reform, the liability of former partners for the company's labour debts is limited to claims filed in a two-year period following registration of the amended articles of association.

Indemnity for non-pecuniary damages

There is an important innovation brought by the reform in establishing limits to non-pecuniary damages, whose maximum indemnity amount cannot exceed 50 times the last salary paid to the worker.

Comment

The changes brought by the labour reform will become effective on November 11 2017. During this period, there may be legal proceedings filed by bodies representing workers or even by the Labour Prosecution Office to discuss the legal validity of certain aspects of the reform. In addition, Congress may need to analyse the legal feasibility of the likely provisional measure promised by the federal government to adjust certain controversial aspects of the reform in order to serve the interests of the parties involved, particularly unions.

In any case, provided that the reform does not deprive workers of their rights and seeks to modernise labour laws, it is an undeniable advance to work relations and will undoubtedly contribute towards bringing greater competitive advantages for companies established in Brazil.

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 Cleber Venditti da Silva at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados by telephone (+55 11 3147 7600) or email (venditti@mattosfilho.com.br). The Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados website can be accessed at www.mattosfilho.com.br.