In Brazil, there is no legal definition of blue- and white-collar workers. However, Brazilian law does recognise highly educated employees who receive a monthly salary greater than two times the maximum benefit granted by social security (currently, this means a salary higher than BRL11,678.90). For such employees, individual agreements prevail over the law and collective agreements (see 5.3 Collective Bargaining Agreement). However, the following matters are subject to Article 611-A of the Consolidated Labour Laws (CLT):
In addition to the distinctions above, the applicable legislation (Article 62, II, of CLT) provides that employees holding a “position of trust” are not subject to any kind of working hour control and, consequently, are not entitled to overtime pay. In order to be characterised as an employee holding a “trustworthy position”, the employee shall be assigned managerial responsibilities (eg co-ordinate, supervise and oversee personnel), and substitute for the employer especially with regard to assuming financial duties, setting work methods and having the autonomy to make decisions on business matters.
Also, the employee shall have a salary at least 40% higher than his or her previous salary – in cases where he or she has been promoted to the position or where he or she was hired to hold a trustworthy position at a rate 40% higher than employees in the immediate lower hierarchical level.
Employment relationships are usually for an indefinite term, but which can be terminated at any time. It is not mandatory to have a written agreement, but it is recommended practice.
Employment agreements for a definite term must be in writing and are applicable only if the services and/or the businesses themselves are of a temporary nature that justifies such a limited term. These may be concluded for a maximum of two years. If the employment relationship continues after the expiry of this two-year period, the contract automatically becomes indefinite term.
In addition, the parties may set a “Probation Period” in the employment agreement for a maximum of 90 days. As this is an employment agreement for definite term, it must be reduced to writing.
The main difference between indefinite and fixed-term employment agreements is severance payments (see 6.2 Notice Periods Severance below).
There is also an employment agreement related to “intermittent work”, which denotes a non-continuous provision of services. In other words, there is an alternation of periods of service and periods of inactivity. Such types of agreement must be executed in writing and contain the employee’s hourly rate, which cannot be lower than the minimum hourly wage or lower than the lowest amount paid to other employees performing the same activities under regular or intermittent employment agreements.
Workers under such regime will be eligible for the same rights granted to regular employees.
In order to start a period of intermittent work, the employer must inform the worker at least three days in advance of the working schedule to be observed. Once the employee receives the communication, he or she has one business day to inform the employer of his or her availability. In the event of silence, the employer will presume that the employee has declined.
Upon confirmation by the employee of availability for the work, a party who reneges on the provision of services will have to pay a fine equivalent to 50% of the remuneration that would be due had the services been rendered. Such a fine may be offset by provision of services within the following 30 days.
During the period of inactivity the intermittent worker may work for other employers.
At the end of each period of service provision, the intermittent worker will be entitled to:
The employer will also have to pay applicable social security contributions and Severance Indemnity Fund (FGTS) contributions over and above the worker’s remuneration. Payment periodicity cannot exceed one month.
After the completion of 12-months' employment, intermittent workers are entitled to 30 vacation days to be taken during the following 12 months. As the respective remuneration is paid proportionally at the end of every period of service provision, in theory there will be no payment during the vacation period.
The maximum regular working hours in Brazil are 44 hours per week or eight hours per day (item XIII, Article 7 of the Brazilian Federal Constitution) unless provided otherwise in a collective bargaining agreement. In the event of rotating shifts, the maximum working hours is six hours per day unless otherwise provided in a collective bargaining agreement (item XIV, Article 7 of the Brazilian Federal Constitution). The “12x36” work system (12 hours of work followed by 36 hours of rest) is legally allowed provided that the weekly constitutional limit is observed.
Any employee working fewer than 30 weekly hours is considered a part-time employee who shall be remunerated proportionally to the hours worked.
If the part-time employees’ weekly commuting time amounts to a total of up to 26 weekly hours, the employee may work up to six overtime hours per week. If the commuting time is between 26 and 30 hours, overtime work is not allowed, otherwise the agreement will convert into a full-time agreement.
According to the CLT, the legal eight-hour working day may be extended by two hours per day as overtime. For work performed during business days (Monday through Saturday), the overtime is to be paid at a rate equivalent to 50% of the regular hourly rate. A higher overtime rate can be paid, whether as a result of the applicable collective bargaining agreement, an employment agreement or the company’s working practices.
For work performed on Sundays and holidays, the additional premium rate is equivalent to 100% of the regular hourly rate. This percentage may be increased, whether as a result of the applicable collective bargaining agreement, an employment agreement or the company’s practices.
Brazilian Law also sets forth that the offsetting of overtime work with time off (“Bank of Hours”) is permitted, provided that it has been agreed by way of an individual agreement entered into with each employee (for offsetting occurring within a six-month period), or through the execution of a CBA (for offsetting occurring within a period of more than six months and limited to two years).
Setting flexible working journey system - through which the employee must work the total number of hours of his or her daily journey, but the time he or she starts and finishes the work may vary at his or her discretion - is also possible provided that it is set forth in a CBA.
Employees holding managerial positions, performing external activities which are incompatible with fixed working hours, or under a telecommuting/home office regime, are exempt from working hours control and payment of overtime hours, as provided for in Article 62 of the CLT.
Employees holding trustworthy positions have already described in 1.1 Status of Employee.
Regarding the “home office” system, the law defines it as “a provision of services that are predominantly performed outside of employer’s premises, with the use of information and communication technologies that, by their very nature, do not constitute external work.”
It is a legal requirement that the work performed under the home office system - as well as other provisions about the activities to be performed, equipment and infrastructure necessary to provide the services under this regime, as well as if there will be any reimbursement of the expenses - is provided for in a written agreement or by amendment thereof with the employee. The employer is obliged to instruct employees in home office regimes about the care that must be taken to prevent occupational diseases and accidents and to execute a statement of responsibility by the employee about the instructions received.
The minimum wage is usually adjusted on an annual basis by the Brazilian government. The national minimum wage in Brazil is currently BRL998 per month (for 2019).
On a regional level, some states may set a higher minimum wage. Most collective bargaining agreements (CBAs) set higher specific minimum wages for their professional categories (see 5.3 Collective Bargaining Agreements for further details on CBAs). However, no rule can be put in place to set a lower minimum wage than that established by the Federal government.
Mandatory salary increases are set annually by way of a collective agreement executed between employer and the relevant labour unions. The negotiation between employers and unions usually considers the inflation rate accrued over the last 12 months, whereas increases claimed by unions seek an addition to the inflation rate. In general, mandatory salary adjustments cannot be offset against merit increases.
Companies may establish that part of an employees’ remuneration package will be variable and include commissions or bonuses, but the employee cannot receive total compensation lower than the minimum wage.
Although the company is not legally required to grant a variable payment, such as a bonus, to its employees. Despite the fact that such a benefit is only paid if some conditions are met by the employee, from the moment it is implemented it becomes a vested right which cannot be taken away or have its conditions changed to the employee's detriment. Bonuses will be considered as salary for all purposes. Such amounts shall be considered for the calculation of taxes, social security contributions and their impact on other labour rights, such as 13th salary (see below), vacations and Severance Indemnity Fund deposits (see 1.5 Other Terms of Employment below).
In addition, the implementation of a plan for the participation of employees in the "profits” or "results" of the company is a fundamental right granted to all urban and rural workers, as provided by the Brazilian Federal Constitution and ruled by Law No 10,101 of December 2000, and is considered enforceable against all employers, with the exception of non-profit companies.
In this regard, Law No 10,101/00 (Article 2, 1st paragraph) sets forth that the profit-sharing/results participation rules must be subject to free negotiations between the company and its employees – with the mandatory assistance of the labour union - where the resulting instruments must have clear and objective rules for the establishment of profit-sharing/results participation rights, which may take into account some specific criteria better explained below.
Law 10,101/00 does not carry an obligation for the granting, fixing or guaranteeing the payment under a profit-sharing/results participation plan; it provides only for obligations in the negotiating of the same, permitting the parties to agree the conditions and criteria for implementing the rules for the employees' participation in the company's profits or results.
Furthermore, it is important to note that the payment of profit-sharing/results participation will depend on the achievement of specific goals and conditions established by the plan. In other words, the employers are obliged to negotiate a plan, but the participation's payment is only due if the pre-established goals and conditions are met.
Brazilian law also provides for the possibility of payments under the title of “premium”, which are not considered to be salary as provided for in Article 457, paragraph 2, of CLT. This means that such amounts will not be considered as a basis for calculation of social security contributions, nor do they impact upon other labour rights.
A premium is a gratuity granted by the employer in goods, services or cash to an employee or group of employees due to an extraordinary performance in the execution of their activities. It cannot be previously negotiated with the employees nor paid to all employees, otherwise it will no longer be vested with the requisites that guarantee that it is not a basis for calculating labour rights.
Finally, employees are also entitled to a 13th salary per year, calculated on the basis of one twelfth of their December earnings. Part of it may be paid at some point in the year when vacations are normally or in November, and the balance will always be paid in December.
The 13th salary amount will take into consideration the employees’ fixed salary as well as the average of the variable part of his or her salary paid during the respective calendar year (such as bonuses, commissions, premiums etc).
If the employee only works part of the calendar year, he or she is entitled to receive a pro-rated 13th salary of one twelfth of his or her salary in December for each month worked during the calendar year. Fractions equal or superior to 15 days are considered to be a complete month.
The Brazilian labour law guarantees the following basic rights to employees:
In addition to the above, upon the employee’s request vacation periods can be split, in up to three periods, in which one must constitute at least 14 days and the others cannot be shorter than five days each.
Confidentiality and non-disparagement obligations are considered natural consequences that flow from the principle of contractual good faith and are applicable to both the employee and the employer, regardless of specific provisions in the employment agreement (although it is recommended that such clauses be included).
Non-compete clauses referring to the period during which the employment agreement is in force are valid under Brazilian law. In fact, this kind of obligation is actually presumed to be inherent in an employment agreement, so violation of this represents justification for termination for cause of the employment agreement (see 6.3 Dismissal for (Serious) Cause (Summary Dismissal) below).
As a rule, any agreement or clause prohibiting individuals from working, even for competitors, for the period after termination is considered to be a limitation on the employee’s freedom to work as protected by the Federal Constitution, and therefore will be considered to be a null and void condition.
Despite the above, the Brazilian labour courts have been ruling in favour of non-compete clauses, provided that it has reasonable limitations, eg:
Although not provided for by law, non-solicitation clauses are considered valid by the Brazilian courts as a consequence of the principle of contractual good faith, provided that there is a time limit for the obligation, as well as a reasonable time reference that defines which clients and employees cannot be solicited (for instance, employees dismissed in the last 12 months).
The Brazilian General Data Protection Law (No 13.709/18 - LGPD) was published on 15 August 2018 and will become effective as of August 2020 regarding the obligations about data treatment. The LGPD regulates the processing of all personal data by physical and digital means and by individual or legal entities governed by public or private law. Its main purpose is to provide for and protect the essential rights of freedom, privacy and the free development of individual personality.
In summary, the LGPD allows the treatment of personal data collected without consent (provided that acknowledgement is given) in the following cases:
An exception is made only with respect to under-age employees (less than 18 years old) in which case the person legally responsible for the minor must give consent to the employer for processing the minor’s data.
Further, the LGPD expressly excludes from its protection (Article 4) data originating from outside Brazilian territory which is not subject to communication, shared use with Brazilian processing agents or subject to international transfer of data with a country other than the country of origin provided the country of origin provides a degree of personal data protection consistent with provisions of Brazilian law.
Therefore, whenever personal data is collected in a different country that does not have protective regulations in force and the information is shared with a processing agent in Brazil, it shall be subject to the Brazilian LGPD.
In addition, personal data collected in Brazil will be subject to the LGPD even if transferred abroad, and may be shared provided that the requirements for processing such data are met. In this case, employers must inform the employees of the transfer of their data abroad.
A company may monitor employees’ activities through the company’s IT network, such as access requested by the employees, links and pages visited and information that went public in social media accounts, but it cannot require employees to give access to their personal accounts even if the IT network was able to save log-in information.
It is also necessary to disclose to the individual what data has been processed by the company, whenever an individual makes a formal request to the company.
To work in Brazil, foreign workers must obtain a residence permit and a temporary work visa, as established by Law No 13.445/17 (Brazilian Migration Law), the Decree 9.199/2017 and extensive regulatory norms issued by the National Immigration Council, referred to as Normative Resolutions.
Work visas are documents that allow foreigners to enter Brazilian territory for the purpose of work, which are issued by the Ministry of Foreign Affairs. Residence permits authorise foreigners to live and perform their work in Brazilian territory, accordingly to the applicable Normative Resolution issued by the National Immigration Council.
Therefore, if the individual is abroad and intends to work in Brazil, he or she must apply for a residence permit first and, once a “provisional” Residence Permit has been approved, the applicable visa will be issued.
The documentation and the requirements of each type of Residence Permit for work purposes vary, depending on the activities to be carried out by the foreign worker, as specified in the corresponding Normative Resolution.
Different types of residence permits allow foreigners to work in Brazil, which must be held:
In addition, it is important to mention that as a result of an agreement held between the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) as well as Chile, Peru, Ecuador, Colombia and Bolivia, the citizens of these countries may obtain a permit to live in any of them, and consequently they will have the same rights as nationals of those countries, including the right to work.
The main requirement to obtain permission to reside in Brazil is based upon proof of nationality and fulfilment of the requirements set forth in the aforementioned agreements.
Finally, citizens of border countries that are not part of the Mercosur agreement – Suriname, Guyana, French Guiana and Venezuela – may also obtain a residence permit of up to two years through direct application at the Brazilian Federal Police Department and by providing proof of fulfilment of the requirements (essentially, the absence of prior criminal convictions).
The procedures to register a foreign worker in Brazil vary depending on the services to be rendered and the hiring conditions.
Once the foreigner is in Brazil, the foreign worker must register with the Brazilian Federal Police within 30 days from the date of entry into the country in order to provide civil identification and biographical and biometric data.
On this occasion, the foreigner will be provided with his or her National Migratory Registry (Registro Nacional Migratório – RNM) and shall request the issuance of the “CRNM” (Carteira de Registro Nacional Migratório), which will be the foreigner civil ID in Brazil to be used for all purposes.
After the aforementioned registration, if the foreigner intends to work under an employment relationship, it is also necessary to issue the Work and Social Security Booklet (“Carteira de Trabalho e Previdência Social" – CTPS) at an agency of the Labour Secretary of the Ministry of Economy in order to enable the employee to start work. This document is only mandatory for those foreigners that will render services under an employment agreement with a Brazilian company.
Unions are recognised by law and both the employees and the employers are automatically represented by unions – the workers' unions and the employers' union – based on the company’s business activity and location.
Such representation occurs regardless of the effective association of the company or employee with the union. Effective association may grant additional benefits in addition to enabling the company’s representatives or employees to run for elections as union director.
For a union to be recognised as such, it is necessary to file a request before the Ministry of Justice and Public Security. The Ministry will analyse the request, verify whether there is already a union representing that category in such a location and, if all requirements are met, the union will be allowed to carry out activities.
Only one union may represent a certain category in the same location.
Some professional categories, either because the workers perform differentiated duties as a result of a special professional regulation or as a result of unusual living conditions (Article 511, paragraph 3, of the CLT) are exceptions to the rules on union classification based on the employer's predominant activity. The differentiated professional category has the option to execute specific collective bargaining agreements, different from those that correspond to the main activity of the employer’s establishment.
The union system in Brazil comprises three levels: unions; federations (association of Unions); and confederations (association of federations).
The unions alone represent the first level of the union system.
The federations are the second level of the union system and are usually composed of the association of at least five unions representing the same or similar economic activities or professional categories.
In turn, Confederations are the third level of the union system and are composed of at least three union federations, usually acting at a national level.
Beyond this, Brazilian law acknowledges what are called “Union Centrals” (Centrais Sindicais) which are national entities that group workers’ unions, federations and confederations based on ideological criteria, regardless of the activities they represent. The Union Centrals cannot directly represent employees and cannot participated in collective bargaining agreements, but they may support their members during negotiations.
Besides the unions mentioned in 5.1 Status/Role of Unions above, employees in companies with more than 200 employees may elect a commission to represent them in order to resolve conflicts (“employees' commission”).
The employees’ commissions may have between three to seven members, depending on the total number of employees, as follows:
The commission members are elected by the employees for a one-year mandate. Once elected, the commission will carrying out its duties on the following day. The constituents will have job tenure up to one year after the end of the the mandate.
The elections shall be conducted by an electoral commission of five employees who cannot run for the employees’ commission.
The role and functions of the Internal Commission are the following:
The employees' commission is not permitted to negotiate collective bargaining agreements (see 5.3 Collective Bargaining Agreements below).
There are two kinds of collective agreements: (i) the Collective Bargaining Agreements (“CBA” – Convenção Coletiva de Trabalho), negotiated and executed between the workers' union and the employers' union, applicable for all employees of a certain category in a certain location and (ii) Special Collective Bargaining Agreements (SCBA – Acordo Coletivo de Trabalho), negotiated and executed between a company and the workers union, applicable to all or part of the employees of that company.
A CBA or a SCBA may be executed for up to two years, the clauses thereto cannot remain in effect after that period (Article 614, paragraph 3 of the CLT).
For the valid approval of a CBA or a SCBA, the negotiation shall be duly approved by the affected employees (or companies) in a general meeting summoned for that specific purpose, provided that a minimum quorum is met. Approval for a CBA or SCBA proposal is reached by a simple majority of those present at the meeting.
Collective agreements prevail over the law – with the exception of cases of suppression or reduction of fundamental rights provided for in Article 611-B of the CLT – and are required for the adoption of special work conditions, such as working journeys which involve offsetting between weeks, “bank of hours” with offsetting occurring in more than six months, and authorisation to work on Sundays and holidays among others.
Usually, collective agreements establish rights and benefits better than those provided by law, eg, meal vouchers, minimum category wages and mandatory salary adjustments.
CBAs and SCBAs may provide for economic or social clauses.
Economic clauses are the clauses that result in direct costs to the employers, such as salary adjustments, minimum category wages, overtime allowances and gratuities, among others.
Social clauses are clauses that do not create a direct cost to the employer, but have as their goal the improvement of employment conditions for the employees or to settle guarantees with the union, such as job tenure, justified absences, and minimum health and safety conditions, among others.
An employment agreement may be terminated by an employee (resignation) or by mutual agreement. An employer may dismiss an employee with or without cause. Dismissals for cause are those resulting from an employee’s misconduct (see 6.3 Dismissal for Serious Cause (Summary Dismissal) below).
A dismissal without cause at the company’s initiative does not require a specific motivation, unless required subject to an applicable CBA or SCBA.
In order to terminate an employment agreement with or without cause, the following procedures must be followed:
a) deliver to the employee the Labour Termination Form (TRCT), which is a mandatory standard document following a template provided by the government, giving a breakdown of the severance pay together with documentation that proves that the relevant government agencies were notified (an FGTS termination deposit voucher and unemployment insurance slips/forms, if applicable);
b) submit the employee to a medical examination upon his or her dismissal in order to verify that he or she is able to perform his or her function in another company; and
c) pay mandatory severance pay(see 6.2 Notice Periods/Severance below).
If this term is not observed, the employer will be required to pay a fine equivalent to one month's salary to the employee.
• the employment agreement termination must be recorded in the employees' work booklet (CTPS) and in the employees' registration files kept by the company (Ficha de Registro). The CTPS must be fully updated with all salary raises and all vacation periods enjoyed by the employee.
Additional steps (such as ratification of the termination before the labour union) may be provided for in the applicable CBA or SCBA.
Regarding “collective redundancies”, decisions handed down by the courts have established that whenever a company implements a mass termination, the company shall negotiate a termination package for the redundant employees with the workers’ unions,
in addition to mandatory severance, under penalty of having the terminations annulled by the court and the company being compelled to negotiate with the workers' union.
Notwithstanding the above, in 2017 a change in Brazilian labour law (Law No 13,467/2017) established that mass terminations shall be treated the same way as individual terminations. Thus, from 2017, neither previous negotiation with the workers union nor consultations are legally required.
The communication of the employee’s termination must take into account the statutory prior notice period of 30 days. In addition, if the employee has worked for more than one year at the company, this notice period will be increased by three additional days for each completed year of work at the company, up to 90 days in total (including the statutory period of 30 days).
During the prior notice period, the employee may:
If the employee remains working, he or she will be entitled to a reduction of two hours from his or her regular daily working hours during the notice period or receive a credit of seven calendar days' work.
The severance payments due, including notice periods, vary depending on the kind of termination (with or without cause, resignation or termination by mutual agreement) and if the agreement was undetermined or for a fixed term, ie:
(a) termination without cause at the employer’s initiative:
(i) a prior notice period of between 30 and 90 days;
(ii) the salary balance due for the termination month;
(iii) unused earned vacations (if any) plus a one-third additional payment or a pro-rated vacation plus a one-third additional payment;
(iv) a 13th salary (full or pro-rated, depending on the termination date);
(v) FGTS Fund: a deposit in the employee’s blocked account equivalent to 8% of the employee’s monthly salary in the termination month;
(vi) a 50% FGTS fine based on the amount deposited in the employee’s FGTS blocked account (40% to the employee, 10% to the government);
(vii) any other labour rights related to the termination provided under a collective bargaining agreement contractually agreed with the employee or provided for by the company’s internal policies.
(i) the salary balance due in the termination month;
(ii) unused earned vacations (if any) plus a one-third additional payment or a prorated vacation plus a one-third additional payment;
(iii) a 13th salary (full or pro-rated, depending on the resignation date);
(iv) FGTS Fund: a deposit in the employee’s blocked account equivalent to 8% of the employee’s monthly salary in the termination month, as well as upon prior notice and 13th salary;
(v) any other labour right related to the termination provided under a collective bargaining agreement contractually agreed with the employee or provided for in the company’s internal policies.
(c) mutual agreement:
(i) half of the prior notice due in the case of termination without cause;
(ii) the salary balance in the termination month;
(iii) unused earned vacations (if any) and one third plus a one-third additional payment or a pro-rated vacation plus a one-third additional payment;
(iv) a 13th salary (full or pro-rated, depending on the termination date);
(v) FGTS Fund: a deposit in the employee’s blocked account equivalent to 8% of the employee’s monthly salary in the termination month, as well as upon prior notice and 13th salary;
(vi) a 20% FGTS fine based on the amount deposited in the employee’s FGTS blocked account;
(vii) any other labour right related to the termination provided under a collective bargaining agreement contractually agreed with the employee or provided for in the company’s internal policies.
(a) upon expiry:
(i) the salary balance of the termination month;
(ii) unused earned vacations (if any) and one third plus a one-third additional payment or a pro-rated vacation plus a one-third additional payment.
(iii) a 13th salary (full or pro-rated, depending on the termination date);
(iv) FGTS Fund: a deposit in employee’s blocked account equivalent to 8% of the employee’s monthly salary in the termination month;
(v) any other labour right related to the termination provided under a collective bargaining agreement contractually agreed with the employee or provided for in the company’s internal policies.
(b) early termination at the employer's initiative:
(i) a prior notice period (only for contracts with a clause providing for early termination by prior notice);
(ii) an indemnification equivalent to half of the amount the employee would receive from the termination date to the date established for the end of the agreement (only for contracts without a clause assuring early termination by prior notice);
(iii) the salary balance for the termination month;
(iv) unused earned vacations (if any) plus a one-third additional payment (thus, employees who may have unused vacations do not have to take them prior to them being terminated);
(v) a pro-rated vacation plus a one-third additional payment;
(vi) a 13th salary (full or pro-rated, depending on the termination date);
(vii) FGTS Fund: a deposit in the employee’s blocked account equivalent to 8% of the employee’s monthly salary in the termination month.
(viii) a 50% FGTS fine based on the amount deposited in the employee’s FGTS blocked account (40% to the employee, 10% to the government);
(ix) any other labour right related to the termination provided under a collective bargaining agreement contractually agreed with the employee or provided for in the company’s internal policies.
(c) early termination at the employee's initiative:
(i) the salary balance for the termination month;
(ii) unused earned vacations (if any) plus a one-third additional payment (employees who have unused vacations do not have to take them before their termination date);
(iii) pro-rated vacation plus a one-third additional payment;
(iv) a 13th salary (full or pro-rated, depending on the termination date);
(v) FGTS Fund: a deposit in the employee’s blocked account (equivalent to 8% of the employee’s monthly salary in the termination month;
(vi) any other labour right related to the termination provided for under a collective bargaining agreement contractually agreed with the employee.
Termination for cause is provided for in Article 482 of the Brazilian Labour Code and may only be applied if one or more of the following actions is present:
It is not necessary to have a formal procedure to terminate an agreement for cause, except for union leaders and directors of co-operatives, which require a judicial process prior to termination.
However, for termination for cause to be valid, in addition to being one of the acts listed above), the violation must have been serious or recurrent and the employer must have material evidence to prove that the violation occurred and that the employee was responsible for that violation; and termination shall occur immediately or shortly after the employer becomes aware of the violation.
The main difference between a termination for cause and a termination without cause lies in the severance payments to be made. In a termination for cause, the following severance applies:
The employee is also entitled to terminate the employment agreement for cause. This procedure is called “indirect termination” (rescisão indireta), and applies if the employer is implicated in one of the situations provided for in Article 483 of the CLT:
For this purpose, the employee shall file a labour claim before the courts, seeking confirmation of his or her indirect termination. If he or she is successful, the employer will be compelled to pay the severance applicable in cases of termination without cause.
Employment agreements may be terminated by mutual consent, which will entail the severance payments described in 6.2 Notice Periods/Severance above.
It is possible to execute agreements to address specific issues at termination, but full releases granted by employees will only be considered valid and enforceable if the agreement is submitted for judicial ratification by a labour court, observing certain procedures established in Article 855-B et seq of the Brazilian Labour Code.
As it is considered a judicial procedure, the employee and the employer must be represented by attorneys.
Brazilian laws grant temporary job tenure to the following categories of employees:
Further job tenure situations may be stated in the applicable collective bargaining agreements or by the company’s practices.
As Brazilian law allows companies to terminate employment agreements without cause, claims of wrongful dismissals fall into two categories: (i) seeking the change of a termination for cause into a termination without cause and/or (ii) seeking nullity of the termination due to job tenure.
If a termination for cause is questioned in court, it is usually based on the lack of a severe fault or some formal irregularity, such as the application of a prior penalty for the same fact, or tacit forgiveness should the employer take a long time to apply the penalty. The consequences of a successful claim will include the payment of differences in severance and compensation for pain and suffering.
If the judicial claim seeks the nullity of a termination based on a job tenure situation that was not observed, the employer may be obliged to reinstate the employment agreement until the end of the tenure or pay the relevant compensation if the period has already expired by the time the decision was issue, as well as salary and labour rights for the period between the termination and the reinstatement. Compensation for pain and suffering may also be due in the event it is proven that the termination was discriminatory (see 7.2 Anti-discrimination Issues. below).
The primary source of anti-discrimination legislature in Brazil is Article 7, item XXX of the Brazilian Federal Constitution, which provides that any salary difference and/or unequal treatment in relation to recruitment and employment based on sex, age, colour or marital status is prohibited.
Further, federal laws also forbid any discriminatory practice that limits hiring, the maintenance of the job or salary differences based on sex, origin, race, colour, marital status, family situation, disability, professional rehabilitation and age, among others, with exception to the rules that protect children and teenagers.
Labour courts understand that stigmatising diseases can provide grounds for discriminatory acts.
In the case of a claim questioning a discriminatory act that did not involve termination, eg an admission process, the claimant may be awarded compensation for pain and suffering of up to 50 times his or her last monthly salary.
On the other hand, if the discriminatory act involved termination, besides the compensation for pain and suffering, the employee may opt for one of the following alternatives: (i) reinstatement to the job, plus payment of the full compensation between termination and reinstatement, with monetary updates and interest or (ii) payment of double the full compensation between termination and reinstatement, with monetary updates and interest.
In theory, the burden of proof falls upon the claimant; however, judges may invert the burden of proof depending on the situation.
Besides the labour claims, in a case where a company commits a discriminatory act, the labour inspection may issue an infraction notice and apply a penalty of ten times the highest salary paid by the employer, increased by 50% in the case of recurrence. Further, the company may be prevented from obtaining loans or financing from official financial institutions.
Labour matters are analysed by the labour courts, which are a specialised and autonomous branch of the Brazilian justice system, formed by local labour courts, regional labour courts and the Superior Labour Court.
The local labour courts are the basis of the labour dispute resolution system, having the original jurisdiction to rule over individual labour claims. There are hundreds of local labour courts in Brazil, usually covering one or more cities. The decisions are taken by a single judge, who seeks conciliation between the parties.
The regional labour courts hear appeals against decisions made by the local labour courts, but also have original jurisdiction for some specific matters (such as collective disputes and a writ of mandamus against lower courts’ decisions). There are 24 regional labour courts in Brazil, whose decisions are collective (three judges per panel).
Finally, the Superior Labour Court is formed by 27 ministers and is the highest labour court in Brazil. It has the duty to standardise labour case law and is also the appeals court for cases in which a regional labour court had original jurisdiction.
The concept of “class action” is not entirely applicable in Brazil. However, labour unions and the Labour Prosecution Office (Ministério Público do Trabalho) may file collective claims and public interest actions that represent all employees of a certain company or category of persons.
Due to changes in the Brazilian labour law (as of November 2017), arbitration clauses may be included in employment agreements for employees whose annual remuneration is higher than two times the maximum limit set for benefits from the Social Security General Regime, currently BRL11,678.90 per annum. However, considering the principles that guide Brazilian labour law, such clauses may be challenged in court, by reason that such agreements impact upon employees’ constitutional right of access to the judicial system. Further, arbitration cannot be used if the controversy involves inalienable rights and labour rights are considered inalienable rights under the law.
Employees or employers that are unsuccessful in judicial labour disputes – whether as a claimant or defendant – can be ordered to pay attorney fees from 5% to 15% of the amount claimed, which is called “defeated fees” (honorários sucumbenciais). These fees are paid directly to the attorneys.