The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The Labor Code is the main regulation which covers the employment relationship, but there are several other relevant federal laws and regulations. For example, the Regulatory Standards – which are issued by the Ministry of Labour and concern workplace health and safety – are particularly relevant. Labour Courts at the appellate and superior levels issue case law in the form of consolidated precedents. These are not equivalent to statutes but indicate how courts will adjudicate specific matters when the law needs interpretation or if there are any legal loopholes.

Who do these cover, including categories of worker?

These regulations cover all foreign and Brazilian workers who hold work permits. However, some provisions are specific to certain professions or categories of worker.

Misclassification

Are there specific rules regarding employee/contractor classification?

Yes. Contractors are not covered by labour laws; however, the parties cannot opt for a contractor agreement if the work routine is typical of an employment relationship. Litigation for misclassified employment frequently occurs. In this situation the contracting company bears the burden of proving the contractor’s actual independence.

Contracts

Must an employment contract be in writing?

No, but having an employment contract in writing is recommended to guarantee the enforcement of internal rules.

Are any terms implied into employment contracts?

The law provides for fundamental employment terms, which apply irrespective of confirmation.

Are mandatory arbitration/dispute resolution agreements enforceable?

Until November 2017 the Superior Labour Court held the position that alternative dispute resolution was illegal. However, there is now a new legal provision which permits the arbitration of conditions that are intrinsically negotiable, although it is doubtful that this provision will be effective. First, it might not be a complete solution because fundamental rights cannot be negotiated through arbitration and second, because the courts can overrule any arbitration agreement if it violates any constitutional principles.

How can employers make changes to existing employment agreements?

Changes to employment agreements can be made unilaterally if they are merely organisational or operational and by mutual consent in all other situations. In any case, the change must not adversely affect the employee (eg, cut salary or benefits) or it will not be valid.

Foreign workers

Is a distinction drawn between local and foreign workers?

A distinction is made between local and foreign workers only in terms of total headcount – Brazilian companies must have at least two or three different nationals (by headcount and payroll).

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