Brazilian employment laws do not differentiate blue-collar and white-collar employees for purposes of labour rights. However, since the 2017 Labour Reform, employees with a college degree who receive monthly salaries greater than or equal to twice the limit of benefits from the National Social Security Institute (INSS) are, in principle, able to directly negotiate with their employer agreements that may override statutory requirements relating to labour rights such as: vacation usage, work shift, flextime arrangements, reduced meal breaks and remote work, among other points. Some labour protections, such as Severance Fund (FGTS) deposits, minimum wage, 13th salary and vacation pay cannot be subject to negotiation.

Employment agreements in Brazil are generally for an indefinite term.

The Labour Code sets forth very specific situations when the parties can execute an employment contract for a definite term, namely: (i) services whose nature or time frame justifies setting forth a term, (ii) transitory business activities and (iii) trial labour contracts.

Trial labour contracts cannot exceed 90 days and other fixed-term agreements may not exceed two years. Also, fixed-term employment contracts may only be renewed once.

Employers have the burden of proof of the circumstances that authorise the execution of the employment contract for a definite term. Otherwise, the employment relationship will be governed by indefinite term employment contract rules, which are generally more favourable to the employee upon termination.

It is also possible to execute employment agreements for intermittent work, in which case the employee can be required to provide services on specific dates upon prior notification.

An intermittent employment agreement must be executed in writing and registered in the employee’s Labour Booklet, and must contain the following provisions: (i) identification, signature and domicile of the parties; (ii) hourly or daily wage (not less than the respective minimum wage), ensuring that night work is compensated at a higher rate than daytime work; (iii) the place and timeframe for payment of the remuneration; and (iv) the employee’s schedule (which should be provided at least three calendar days in advance). Once the request to work is received, the employee has 24 hours to respond. If no response is provided, it will be understood that the employee has refused to provide the requested services.

Regular working hours are limited to eight hours per day and 44 hours per week. This means that if the employees work six full days in the week, the daily working hours should be limited to seven hours and 20 minutes per day. On the other hand, if the employees work only five days in the week, the daily working hours could be extended to eight hours and 48 minutes (this schedule would not violate the eight hours per day statutory limit if the employer and employee agree to such schedule in writing – such an agreement is considered an offset). The parties may agree to shorter working hours.

Pursuant to the Brazilian Labour Code, the employee should receive a meal break ranging from one to two hours per day. It is possible to establish other arrangements, but it is necessary to implement a CBA or obtain authorisation from the Ministry of Labour and Employment in this regard.

Overtime hours in excess of the above during business days require a minimum payment of 50% of the regular rate. Work on Sundays and holidays requires a permit from the Ministry of Labour and usually a minimum payment of twice the regular rate. CBAs may increase these rates. It is not possible to include overtime wages in the employee’s regular compensation.

According to the Labour Code, the employees’ regular work schedule may be increased by overtime hours. Overtime hours cannot, however, exceed the legal limit of two hours per day, constituting the limit of ten hours per day as the maximum work schedule allowed. The employer may negotiate in a Collective Bargaining Agreement to permit more than ten hours of work in a day.

Part-time work is permissible up to a maximum of 30 hours per week and with no possibility of overtime, or 26 hours per week, in which case overtime is limited to six hours per week. The compensation of the part-time employee must be proportional to that of employees working full time (ie, 44 hours per week) in the same function.

Overtime Exemptions

As a general rule, employees are overtime eligible. The only three categories of overtime exemption are as follows:

• Employees who discharge function outside of the company premises whose activities are not compatible with fixed working hours, such as sales employees. The amounts of time usually spent inside and outside the company’s premises is the key element determining whether the employee works externally or not. In addition, if the employees discharging functions outside the office are required to be present at the company at the beginning or ending of each business day or required to report all their daily activities in detail, then this exception will not apply and the employee shall be subject to working time limitations and entitled to overtime pay.
• Employees who discharge management functions, such as officers or managers. These employees are classified as being “in a position of trust”. The employee must actually occupy a position of trust within the company’s organisation and be empowered with true managerial authority.
• Remote workers, which are employees who render services primarily outside of the employer’s facilities, through IT and electronic communication tools, in telecommuting or working from home regime, provided that their engagement is “by product” or “by task”.

Statutory Requirements

The Local Laws Code provides for a series of minimum benefits that must be granted by the employer to its employees throughout the employment relationship. These include the following.

Christmas bonus (13th salary)

The Constitution provides that all employers must pay a Christmas Bonus, which corresponds to one extra salary per year. This payment shall be made in two instalments: the first instalment shall be paid between February and November of each year, and the second instalment shall be paid on or before December 20. The Christmas Bonus shall be paid based on the employee’s entire remuneration, not on the base salary; hence, it shall include the usual overtime and commissions/bonuses.

Severance fund (FGTS)

All employees are entitled to a severance fund. The employer deposits 8% of the employee’s monthly compensation into a special bank account for the employee at the Federal Savings Bank – the so-called Severance Fund (FGTS). This fund may be withdrawn by the employee in certain cases, such as upon retirement, house purchase, termination without cause, mutual termination.

Profit sharing

Profit sharing is not mandatory, but it is mandatory that companies in Brazil initiate negotiations with unions for profit-sharing programmes when the applicable Collective Bargaining Agreement provides for this obligation.

When a company has a profit-sharing plan, all company employees shall be entitled to participate in it, and the company shall renegotiate the content of the plan every year with the labour union, should the Collective Bargaining Agreement still contain this requirement. It is possible to provide for different targets for employees in different departments, provided that the company has an objective reason for this differentiation.

Profit sharing does not replace or complement the employees’ compensation, nor is it a basis for any labour or social security charges. It is subject, however, to income tax withholding from the payment made to employees.

Other benefits

Employers may voluntarily supplement the minimum benefits required by law or provide additional benefits at their discretion. In Brazil, employers usually provide health care plans and life insurance policies to their employees. Meal tickets are also a commonly provided benefit.

Pursuant to Law No 10,243 of 19 June 2001, the financial result of all the fringe benefits granted to the employees should be included in their compensation for the purpose of calculating labour rights. This law excludes, however, most usual fringe benefits granted to employees (ie, health insurance, pension fund, life insurance, education, etc) from their remuneration.

Mandatory insurance is generally provided by the state (and funded by social insurance contributions). Employers are not required to take out private group insurance for their employees unless required by CBA.

Salary increases

Yearly mandatory salary increases are generally provided in the collective bargaining agreement executed by and between the labour unions.

Vacation Requirements

Vacation

In Brazil, after one year of continuous employment, every employee is entitled to an annual 30 calendar days’ vacation, in addition to the public holidays occurring during the year. The vacation must be taken in the course of the 12 months following the anniversary date of employment. If the employee does not take vacation in due time, the company must pay twice the respective compensation.

Employees are entitled to sell up to ten days of their right to vacation to the employer, and the employer must buy back the same. The use of the right of vacation (either 30 days or the balance of 20 days if the employee sells ten days) cannot be divided into more than three separate periods, in which case one period must be of at least 14 days and the other periods must be of at least five days. If the use of vacation is split, this should be formalised in writing, to mitigate the risk of future employee claims (eg, employee should submit a request for a vacation split in writing and explain the reasons for the request).

Vacation pay

The Federal Constitution also provides that employers must pay an additional 1/3 of the monthly salary as a vacation bonus. This payment must be made before the vacation is taken.

Mandatory Leave

Brazilian employees are entitled to the following leave of absence, which shall be paid by the employer:

• sick leave (up to the 15th calendar day of absence);
• sick leave due to work accident/injury (up to the 15th calendar day of absence);
• paid vacation of 30 days after each 12 months of work, with a vacation bonus in the amount of 1/3 of the monthly pay;
• paid maternity leave of 120 days (this leave is initially paid by the employer and later reimbursed by the Social Security);
• paternity leave of five days;
• bereavement leave of two days, provided the deceased is a close relative (parents, grandparents, brothers and sisters, sons or daughters) or is economically dependent on the employee;
• marriage leave of three days, when the employee gets married;
• college exams leave, for as long as the employee is taking tests to enrol at the university;
• one day of leave per each 12 months of employment to donate blood;
• two days' leave for voter registration;
• leave to comply with certain military requirements; and
• leave when the employee is called to appear in court.

Please note that the costs of the maternity leave of 120 days and of the sick leave and sick leave due to work accident/injury after the 16th day are borne by the social security, and not by the company.

Other Employment Terms

Confidentiality and non-disparagement

It is both legal (allowed) and customary for an employer to include in an employment contract a provision stating that the employee may not disclose any information acquired during their work for the employer, both during the term of the contract or after its termination.

Non-Disparagement clauses are common in employment agreements of high-level employees, and do not demand consideration in exchange – this obligation is also seen as inherent to the employment relationship itself (especially good faith).

Post-termination Non-compete Obligation

No specific legal provision regulates non-competition and non-solicitation obligations in Brazil. Under the Federal Constitution, a person cannot, in principle, be prevented from performing their profession, in favour of any employer, especially if such a profession is the main source of funds to support the employee and their family.

Brazilian courts have taken two different positions regarding non-competition provisions. While a few courts have recognised the validity of such provisions, provided they are limited to a certain territory (or clients) and to a certain period, and provided they establish payment of compensation to the former employee for the non-competition term, other courts absolutely deny the validity of these provisions due to the constitutional principle of full right to work.

In view of the above, to increase enforceability chances, it is important to provide specific consideration to employees for the non-competition obligation. The amount of compensation due to an employee varies according to the policy adopted by each employer. A monthly remuneration from 75% to 100% of the employee’s monthly salary during the period of restriction is reasonable. Generally, it is also reasonable to establish the maximum duration of the restriction to one year.

Regarding non-solicitation obligations, a very important aspect in Brazil is to differentiate the non-solicitation of employees from the non-solicitation of clients. While a non-solicitation of employees can be more easily accepted and enforced, as it does not impair the employee’s right or ability to work and earn a living, the non-solicitation of clients is many times deemed as a type of non-compete restriction – subject to the restrictions discussed above.

Although there are no specific labour laws in Brazil about non-solicitation of employees of a former employer, the Brazilian Civil Code does contain an Article (Article 608) which provides for an indemnity obligation for those who solicit individuals with a binding contract with another party. This principle can be used in the labour courts to rule the matter, but there are actually very limited court precedents on non-solicitation obligations.

In August 2018, Brazil passed Law No 13,709/18, the first data protection law in the country. This law stipulates rights, obligations and good practices related to the processing of personal data (ie, information related to an identified or identifiable individual), and creates a national data protection authority, among other topics.

The law will apply to individuals and the private and public sectors provided that the processing occurs in Brazil or the personal data is obtained from data subjects located in Brazil, despite the location of the controller’s headquarters or where the data is stored. If data is processed in a foreign jurisdiction, the law will apply when the processing activities relate to the offering of goods and services to data subjects in Brazil.

The law provides for specific obligations to data controllers (ie, entities responsible for decisions regarding the processing of personal data) and data processors (ie, entities that process personal data on behalf of the controller.

The law also provides for the legal basis for processing personal data. To this effect, among other legal bases established in the law, processing shall be lawful (i) if it is required for compliance with the data controller’s legal or regulatory obligations, (ii) if it arises from legitimate interest, or (iii) when the data subject has given consent to the processing of their personal data for specific purposes.

One of the key aspects of the law is that it creates the National Data Protection Authority (NDPA), which is linked to the Ministry of Justice. The NDPA’s authority includes issuing data protection regulations and proceedings, and imposing administrative sanctions in the event of non-compliance. Sanctions for non-compliance include warnings, one-time fines (of up to 2% of the group’s gross revenues in Brazil in the last fiscal year excluding taxes, with a cap of BRL50 million), and daily fines (subject to the same cap aforesaid). Sanctions also include blocking or eliminating personal data, partial or full suspension of the data base, and suspension or prohibition to process personal data.

Processing of personal data inside the employment context relies on the same general legal bases provided in the law. The most commonly used are compliance with a legal obligation, performance of a contract and legitimate interest.

Foreign Employees

Aside from the required visa, the engagement of Brazilian and non-Brazilian employees must comply with the same labour regulations. In other words, both Brazilian and foreign workers are entitled to the same labour rights once they are hired as employees by the local entity.

If a non-national is hired by a Brazilian company under a local employment contract, the Brazilian company must apply for the work permit before their arrival in Brazil, producing evidence 2/3 of its employees are Brazilian nationals and 2/3 of the payroll is paid to Brazilians. This “2/3 rule” applies to those who apply for visas under an employment agreement (ie, not for non-employee statutory officers).

In addition, the non-national employee is required to evidence the educational background and professional experience in the same area they will work In Brazil.

Foreign Officers/Executives

If the intention is to pursue an officer visa for a non-national professional, the main migratory requirements refer to the need of indicating them to the position at the company’s by-laws and evidence the corporate foreign investment at the Brazilian company corresponding to BRL600,000 or BRL150,000, and a business plan to create ten job positions within two years.

Work Visas for Foreign Employees

Foreign nationals entering Brazil to provide technical assistance or professional services pursuant to a co-operation agreement or employment agreement may qualify for temporary residence once their work permit is approved by the Secretariat of Labour.

Upon the work permit approval, the foreigner is required to complete the registration procedure at the Federal Police with jurisdiction over their home address to obtain an ID number for foreigners (RNM).

Aside from such procedure, foreigners are also required to bear the Individual Taxpayer Registry (CPF) and the Employment Book (CTPS), if hired as employees.

Workers Under Employment Agreements

Most expatriations are intra-company transfers. It is common to pursue temporary visas through employment agreement. The visa is valid for two years and can be extended.

For this work visa, the professional must be on the local payroll and entitled to the same benefits as a local employee. These can include: regular employment benefits, benefits provided by the collective bargaining agreement and labour rights (eg, vacation, Christmas bonus, prior notice and severance payments).

The foreign national must also fulfill specific educational requirements and professional experience that may vary on a case-by-case basis.

Remote Work

Brazil has specific regulations on remote work, which apply to all employees who work primarily outside of the employer’s facilities (eg, from home), using IT and communication tools, regardless of the frequency of activities developed outside the company’s office (occasional or predominant). These requirements include:

• formalisation of telework/remote work through an employment contract or amendment thereto;
• a written agreement (not necessarily an amendment) if the employee or the employer will purchase, maintain or support the instrumental equipment and infrastructure for the remote work, and any reimbursement of expenses connected with this work regime; and
• instructing employees on health and safety conditions while working remotely.

In addition to the above legal requirements, it is also advisable to make sure data privacy and confidentiality aspects are also properly addressed.

Sabbaticals are not legally regulated in Brazil, but are becoming more common. Provided that a clear policy is put in place, employers have flexibility to determine the applicable terms and conditions (paid or unpaid, length, benefits, etc).

Digital Nomads

Since the COVID-19 pandemic, Brazil has seen the number of digital nomads increase. According to a September 2021 regulation on the relevant immigration implications, digital nomads are immigrants who, remotely and using IT tools, are able to carry out their work activities for a foreign employer from Brazil.

When classified as a digital nomad entering Brazilian territory, the individual must apply for a temporary (visitor) visa or a residence permit, which will be valid for a period of one year (with possible renewal for one additional year).

Although – in principle – such workers are not subject to local labour laws, companies should be attentive to possible permanent establishment risks.

Union Environment and Collective Bargaining Agreements

In Brazil, the employees’ union and the employer’s association enter into annual collective bargaining agreements dealing with general employment conditions, the most important of which are salary raises. If no such agreement is entered into, either party can file a collective bargaining claim to commence collective negotiations.

The creation of a union for both employers and employees is dealt with in the Federal Constitution. In Brazil, there are unions representing employees and unions representing employers. Their respective unions represent employers and employees in matters involving collective employment relations. The employees, regardless of their affiliation to the union, are entitled to the labour benefits that are granted in the collective bargaining agreement negotiated between the employers and the employees’ union for that specific economic category.

Accordingly, all employment relationships are subject to collective bargaining agreements.

Unions are organised by certain business activities, such as technology, commercial transactions, metallurgy, and chemical production. The union representing a given company must be of the main activity of the company.

Work Councils

Since the enactment of the Labour Reform in November 2017, a works council, or “commission”, must be implemented if the company employs more than 200 employees. The number of representatives depends upon the number of employees. From 200 to 3,000 employees, the commission must be composed of three members. The term of office of the members of the commission will be one year. Members cannot be candidates for the following two years (eg, an employee elected in year one cannot be a member again in years two and three. Instead, the employee can only be a member again in year four).

The duties of the commission include the following:

• represent employees before the administration of the company;
• improve the relationship between the company and its employees based on the principles of good faith and mutual respect;
• promote dialogue and understanding within the work environment in order to prevent conflicts;
• seek solutions to the conflicts arising from the employment relationship, in a fast and efficient way, aiming at the effective application of legal and contractual rules;
• ensure fair and impartial treatment of employees, preventing any form of discrimination based on sex, age, religion, political opinion or labour union activity;
• review specific claims of employees; and
• monitor the compliance with labour, employment and social security laws and the applicable collective bargaining agreement.

Please see 6.1 Unions.

Grounds for Termination

As a general rule, it is possible to terminate an employee without cause at any time (subject to a few exceptions where employees have job security) and for any reason, provided that: (i) the termination is preceded by a written notice of at least 30 days, which (as mentioned in 7.2 Notice Periods) may vary depending on how long the employee has rendered service to the company; and (ii) the employee receives the mandatory severance payment.

In Brazil, poor performance is not considered a legal basis for termination. Thus, terminations for performance reasons are processed and treated as terminations without cause (ie, upon payment of the applicable severance).

Statutory Severance – Terminations Without Cause

For indefinite term agreements, severance payments due for a termination without cause are as follows:

• pro rata Christmas bonus;
• pro rata vacation with extra payment of 1/3;
• prior notice;
• 40% of all amounts existing in the employee’s severance fund bank account (the FGTS) on the day of termination; and
• supplemental FGTS payment equal to 8.0% of pro rata Christmas bonus, pro rata vacation with extra payment of 1/3, and prior notice.

Severance payments are due to the employee within ten calendar days after the date of termination (failure to do so will result in a penalty of one month’s salary to the employee).

In Brazil, the termination of either a white- or blue-collar employee, without cause, should be preceded by written notice of at least 30 days and, employees with more than one year of work in the same company, are entitled to additional prior notice of three days for each year worked (up to a maximum of 90 days). Payment in lieu of notice is permissible.

For purposes of calculating severance payments, the employment relationship is only deemed terminated after the end of the notice period. Consequently, all the severance payments due to the employee shall include the notice period as a length of service.

Employee Termination – With Cause

Termination for cause by the employer does not trigger any notice or severance entitlements. Article 482 of the Labour Code specifies each and every action on the part of the employee that may be deemed as a cause for termination, and Brazilian companies cannot create additional causes for termination, apart from those already provided in Article 482 of the Labour Code. These are as follows:

• performance of any dishonest act;
• lack of self-restraint and improper conduct;
• regularly doing business without permission of the employer, when the same is in competition with the enterprise of the employer and is prejudicial for the employee’s activities;
• criminal sentence of the employee, in final judgment, provided that the execution of the penalty has not been suspended;
• sloth by the employee in the execution of their duties;
• usual drunkenness or drunkenness during working hours;
• violation of the company’s secrets;
• act of insubordination;
• abandonment of employment;
• act injurious to the honour or reputation of any person, practiced during the working hours, as well as any physical violence practiced under the same conditions, except in case of legitimate defence;
• act injurious to the honour or reputation of the employer or the employee’s superiors, as well as any physical violence towards them, except in case of legitimate defence;
• constant gambling;
• practice of acts against the national security duly evidenced by administrative investigation; and
• loss of a legally established qualification needed to exercise the employee’s profession, such as a driver’s licence, due to the employee’s intentional misconduct.

Terminations for cause must be carefully assessed by employers in Brazil – they often trigger litigation. Strong evidence and timely reaction are minimum requirements for this type of termination.

Terminations should be communicated individually and must be formalised in writing with the impacted employees. From a legal perspective, the document that formalised the termination communication is the termination notice/termination letter.

In general, termination agreements are used when the company intends to offer additional benefits (on top of mandatory severance) in exchange for a release of claims which, however, has limited enforceability in Brazil.

The safest approach to have a valid release of claims in Brazil is by submitting the private termination agreement to a labour court for ratification. In this case, the company and the employee are required to be represented by different attorneys.

The main protected categories of employees are the following:

• pregnant employees (from the date of confirmation of pregnancy up to no less than five months following the birth);
• employees who have labour-related illnesses or suffered labour accidents;
• employees with roles at Labour Unions;
• employees who are elected as representatives of the Labour Accident Prevention Committee (from their registration, during the term and for one year after the end of the term).

There may be additional job protections provided in the relevant Collective Bargaining Agreement.

Brazil’s labour laws do not exhaustively list the causes that may be used by employees as grounds for a wrongful dismissal. As a general rule, a termination may be considered unlawful (thus invalid) when an employee is terminated in a discriminatory matter (please see 8.2 Anti-discrimination), including a termination where the employee belongs to a protected category.

In case of a successful claim on the matter, the court could issue a job reinstatement order, and the employee could also be awarded moral damages (similar to emotional distress). In case the reinstatement does not apply (eg, the employee was protected from termination, but the wrongful termination was recognised for other reasons), the employee is granted the payment of full severance (applicable to a regular termination without cause, in case the termination was implemented for cause).

As mentioned above, employees treated in a discriminatory matter (upon termination or throughout employment) may bring claims on the matter, seeking the payment of indemnification for moral damages and, in case of constructive termination claims, also the payment of full severance.

Brazil laws (mainly the Federal Constitution) generally prohibit discrimination on the basis of sex, age, colour, family situation, pregnancy or ethnicity. Brazilian anti-discrimination rules cover all aspects of the employment relationship, including recruitment, the provision of terms and conditions of employment, promotion, training and dismissal. They also apply after the end of the employment relationship, for example, when references are provided.

Labour courts in Brazil treat the termination of an employee with a serious disease (such as AIDS, cancer) as presumptively discriminatory. If the employer does not prove that the termination was not discriminatory, the employee has the right to be reinstated.

In addition, last July the Brazilian President sanctioned Law No 14.611/2023, aiming to ensure equal payment for women and men who perform the same activities. Among other new provisions, the new law amends Article 461 of the Labor Code to expressly provide for mandatory equal payment and remuneration criteria for women and men who perform the same work or work of equal value. In case of discrimination on the basis of gender, race, ethnicity, origin or age, in addition to salary differences the employer will be subject to a fine of ten times the highest monthly salary paid by the employer (doubled if recurrence), plus a possible indemnification for moral damages. This fine represents a substantial increase over the previous one provided for in the Labor Code, which was limited to 50% of the maximum social security annual pension.

Digitalisation of Labour Lawsuits

In Brazil, almost 100% of the ongoing labour lawsuits are in electronic format. All documents and motions are filed electronically to the labour court’s system. Court hearing may also be conducted via video, but the judge has discretion to determine whether an in-person proceeding is more appropriate, taking into consideration the parties’ arguments (eg, discovery hearings where there is a substantial and/or sensitive amount of evidence to be produced).

Employment Litigation

Brazilian Labour Law, as it pertains to the federal sphere, is governed by specialised courts of first instance (“Labour Courts of the First Stage of Jurisdiction”), as well as Regional Courts and the Labour Superior Court, located in Brasília.

The judgment of cases involving individual or collective rights are first heard by the Labour Courts of the First Stage of Jurisdiction, and appeals may be filed to Labour Regional Courts, the Superior Labour Courts in Brasília and, in special cases, to the Federal Supreme Court itself.

The Constitution imposes a duty on the Labour Courts to conciliate and adjudicate individual and collective disputes involving employees and employers, as well as any disputes resulting from employment relations or litigation involving the enforcement of Labour Courts findings, including those relating to collective action.

It should be noted that the complexity of the Brazilian Labour Law gives rise to a large amount of judicial actions, as filed by employees against their employers. The Labour Code includes a set of substantive and procedural rules that specifically govern Brazilian Labour Law, and is supplemented by complementary legislation that also impacts upon the administration of the law.

Class actions

In Brazil, the Public Prosecutor’s Office, or the relevant labour union, are granted capacity to file civil class actions against companies who are in breach of labour rights which have not complied with labour legislation.

The union may act as agent for all employees under its jurisdiction, and enter lawsuits (sort of class or group actions) concerning collective rights or commonly-held rights of those employees. For example, they can sue an employer for health and safety issues affecting all workers in a workplace. The union cannot, however, commence a lawsuit in respect of individual contract rights, such as overtime payments, or salary equalisation.

Employment Arbitration

In Brazil, individual employment disputes are still typically handled by the Labour Courts (which are a part of the Brazilian judicial system) and their jurisdiction will depend primarily on the place where the work was actually performed by the employee.

Until 2017, employment arbitration provisions were often deemed unenforceable since an employee in Brazil cannot waive the right to bring a claim before the Labour Court. But after the 2017 employment law reform, arbitration became valid for employment matters in Brazil provided that:

• the employee’s compensation is higher than twice the maximum social security benefit (ie, more than roughly BRL15,014.98 – as of July 2023); and
• the arbitration is either requested by the employee or expressly agreed between the parties.

In view of the second bullet point above, the arbitration clauses should be in caps lock and in bold letters, to make sure they were clearly reviewed and agreed between the parties.

Litigation Costs and Attorney’s Fees

In respect of typical litigation expenses, both the employer and the employee can be held responsible for the payment of court costs.

If the employee is granted the benefit of free legal aid, they are not required to pay a preliminary deposit to file appeals, which employer companies/defendants are required to.

Employee exemption from court costs and appeal fees depends on certain conditions being met, such as the claimant having a certificate of poverty prepared with assistance from a lawyer of the labour union that represents the employee’s category. In addition, the claimant’s salary should be lower than 40% of the highest social security benefit (ie, less than BRL3,003.00 – as of July 2023). This is only applicable in cases where the claimant has the benefit of legal aid.

A prevailing employee will typically be awarded attorney’s fees. As for prevailing employers, there have been different understandings by different Brazil labour judges, but as a general rule the employee can be required to pay attorney’s fees if no free legal aid was provided.