Lobo de Rizzo Advogados

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Labour Court has primary jurisdiction over claims involving work-related situations, including but not limited to claims from employees, officers, independent contractors, and independent consultants. Arbitration Courts prevail over Labour Court’s jurisdiction in case employees earning at least a BRL 12,867.14 monthly compensation (in 2021) expressly agree, in writing, upon solving a labour dispute in such Courts.


The Main Sources Of Employment Law

In Brazil, fundamental employment rights are provided for in the Federal Constitution, which establishes rights and minimum contractual conditions that must be complied with in employment relations.

The rights provided for in the Federal Constitution are codified by federal laws and, in their vast majority, are consolidated in the Brazilian Labour Code (“CLT”).

In addition to the CLT, a significant amount of regulation is introduced by federal labor and social security authorities, such as those relating to occupational health and safety.

There are also mandatory regulations outlined in collective bargaining conventions (“CBC”) executed between one or more Trade Unions representing the companies, and one or more Labour Unions representing employees. Please note that, in Brazil, companies may also be under collective bargaining agreements (“CBA”), which are executed between employers and Labour Unions.

Moreover, policies set forth by the employer are also deemed a source of Employment Law.

Finally, Laws 8,212/1991 and 8,213/1991 and Federal Decree 3,048/1999 cover the principal regulations regarding social security obligations relating to employment.


National Law And Employees Working For Foreign Companies

National law applies to work performed in Brazil, even if the employee works for a foreign company (with or without a branch in Brazil) or is a non-national employee (in such case, specific visa regulations apply). It is not possible to override this by specifying a different set of rules chosen by the parties and included in the employment agreement. Thus, the company must provide to the foreigner the same rights guaranteed by law to Brazilian workers, and it is advisable to include him or her in the local benefits policy.

When hiring non-nationals, employers are subject to specific visa regulations. Labour regulations also limit the total of non-nationals hired as employees in a company to 1/3 of the employees and/or 1/3 of the cost of the payroll.


National Law And Employees Of National Companies Working In Another Jurisdiction

Law 7.064/1982 establishes the rights applicable to employees of Brazilian companies working in another jurisdiction, whether hired in Brazil to perform services abroad or simply transferred to a foreign subsidiary of a Brazilian company. Such rights include the labour rights in the jurisdiction where the work is done as well as any rights under Brazilian law, whichever is the more beneficial to employees.


Data privacy

Employers shall keep employees’ personal data confidential, which may be disclosed only upon a judicial decision or a public authority request. The collection, treatment, and processing of their personnel data must be expressly authorized by one of the legal basis provided for by the Brazilian Data Protection Law (Law 13,709/2018).

With regard to employees under 18 (minors), the collection, treatment, and processing of their personal data shall be made upon the provision of notice (if collected offline) or upon express consent (if collected online). In any case, it is also required specific permission given by at least one of the parents or the legal representative.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

As a general rule, Brazilian law does not require the execution of a written employment agreement. Nonetheless, the parties usually execute written employment contracts detailing the work terms and conditions not established by law or by collective bargaining. Written employment contracts are mandatory for temporary, fixed-term, part-time, telework, and zero-hour contracts, but are highly advisable in case of managerial positions and employees handling confidential information and/or developing products or inventions.

It is essential to highlight that job offer letters are usually construed by the Brazilian Labour Courts as part of the employment agreement. Thus, they create duties and rights for employment, even if the job offer has been replaced by a formal employment agreement.

In any case, it is mandatory to provide the details of the agreement in the Employee’s Labor ID (“CTPS”), including information on the hiring date, compensation and special conditions to which the employment contract is subject to, and employment registration form – this procedure is also called “to register an employee”.


Mandatory Requirements

Under Brazilian labour law, an employee is entitled to certain rights, in addition to what may have been agreed to in a written employment agreement.

  • Trial Period

    • The maximum length of a probationary period is 90 days according to the law unless otherwise provided by collective bargaining. Should this period be shorter than 90 days, the employer may extend it once if both periods together do not exceed 90 days. If the employment contract continues after the probationary period, including due to job tenure, it is automatically converted into an indefinite-term contract.

  • Hours Of Work

    • In general terms, hours of work are limited to 8 per day or 44 per week. In certain situations, such as night shifts or by agreement, this maximum limit may be reduced.

    The working hour limits defined by law are mandatory. Some worker categories have a lower limit of working hours per day (e.g., bank workers, workers in hazardous activities). For offshore employees, the hours of work are limited to 12 hours per day, in a shift of 15 days of work per 15 days of rest.

    Specific rules regarding working hours may also be established by CBC or CBA.

  • Special Rules For Part-time Work

    • The work shift of part-time jobs is limited to 30 hours per week, in which no overtime is allowed, or 26 hours per week plus six hours of overtime (totalling 32 hours), and the relevant salary must be proportional to the full-time job salary.

    Part-time employees’ vacation has the same length and conditions of indefinite-term employees.

  • Earnings

    • Besides national minimum wage (currently BRL 1,100 per month) employees are entitled to (i) annual Christmas bonus (13th Salary), which is an additional monthly salary, paid in two instalments, the first during the period from February to November, and the second up to December 20; (ii) Unemployment Severance Fund (the so-called “FGTS”), which is an amount to be funded by the employer by depositing 8% of the employee’s monthly salary in a special bank account at the Federal Savings Bank (Caixa Econômica Federal); and (iii) 30 days of vacation per year of service paid with salary and a bonus equivalent to one-third of the salary.

    Please note that CBC or CBA may also set forth other earnings.

  • Holidays/Rest Periods

    • Employees are entitled to an annual 30-calendar day paid vacation, which must be paid together with an annual bonus equal to 1/3 of the employee’s monthly salary owed together with the vacation payment (up to two days before the start of the vacation).

    Employees are also entitled to a minimum 11-hour rest period between two work shifts and a break for rest and meal according to the following parameters: a 15-minute break if the working hours exceed four hours, but do not exceed six hours; or a break of at least one hour if the working hours exceed six hours. Such a break for rest and meal is not counted towards the calculation of the daily working hours.

    The weekly 24-hour rest is paid by the employer, being included in the employee’s monthly salary. Depending on the industry, every 3-7 weeks the weekly rest must be given on Sunday.

  • Minimum/Maximum Age

    • The minimum age for work as an employee is 16 years. Apprentices may be hired once they are 14 years old. There is no maximum age for non-governmental employees. Apprentices must not be older than 24. Retirement does not imply an automatic cause for termination.

  • Illness/Disability

    • The legislation ensures the right to sick leave to the employee under medical recommendation, in which case the employment contract is suspended and cannot be terminated. The employer pays the first 15 days of sick leave, and the National Institute of Social Security (“INSS”) pays the other days of leave as a social security benefit. There is no time limit for sick leave.

    Also, as mentioned above, Brazilian laws provide that companies are obliged to hire a certain number of apprentices and disabled workers.

  • Location Of Work/Mobility

    • The employment agreement must provide details of the employee’s place of work. If the employee may be required to travel for business or even to be transferred to another location of work, it is recommended that this be recorded in the employment agreement.

    In case of a temporary transfer to another location of work, the employer must pay a transfer allowance of at least 25% of employee’s salary during such a transfer, together with any costs of the transfer.

    In the event of a permanent transfer to another location of work, this must be recorded in a formal agreement, and the employer must pay the corresponding costs related to the employee’s relocation. Any transfer of the employee to work abroad will trigger the application of a Brazilian special law related to cross-border work.

    An employee may work from his/her home under a telework system, provided that such condition and the costs related to are expressly provided under the employment agreement.

  • Pension Plans

    • The employer is under no obligation to establish or contribute towards a private pension scheme, even though this is a common practice in Brazil. Employees are considered covered by the National Institute of Social Security pension plan (mandatory for employees), which is funded by employers and employees to the Government.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • In case of pregnancy or adoption, female employees are entitled to 120-day maternity leave starting on the day of the newborn’s or the mother’s hospital discharge, whichever the later, paid by the National Institute of Social Security which is, rather than an employment right, social security right. Besides, during pregnancy and until at least 150 days after birth, the employee is entitled to job security.

    Male employees are entitled to a 5-day paternity leave paid by the employer, both in case of birth and adoption.

  • Compulsory Terms

    • As a rule, the mandatory terms must be noted in the Employee’s Labor ID, i.e., the name of the parties, job title, salary, commencement date and probation period (if applicable), promotions, salary increases, and other rights and duties.

  • Non-Compulsory Terms

    • The employer and the employee are free to agree on any other terms in addition to the compulsory provisions, provided that these terms are not detrimental to the employee than the rights provided under the Federal Constitution, the Labour Code and the CBA or CBC, and in any applicable special laws.

    In any case, once set forth by the employer, rights, and benefits may not be changed except if favourable to the employee.


Types Of Agreement

Employment Agreements may but do not have to be in writing, provided that the essential elements are noted in the Employee Booklet. Employment agreements are usually established for an indefinite period, however, in a few circumstances may be established for a fixed period or part-time jobs.


Secrecy/Confidentiality

In general, the protection of trade secrets and other confidential business information are provided for in the Federal Constitution, which ensures the free initiative and exercise of economic activity, and Law 9,279/1996, which fights unfair competition, states that some conduct committed by an employee, partner or administrator of the company impaired is a crime.

Therefore, employees must keep confidential any secrets or confidential information belonging to the employer (including documents, memoranda, drawings, diagrams, lists, computer programs and other items that may contain business secrets), being possible that the employment agreement be terminated for cause in case of failure to comply with this obligation.

Specific and more detailed confidentiality clauses are commonly inserted in employment agreements. It is also possible to add a confidentiality clause after the employment has commenced by means of a written agreement.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In general terms, inventions or objects (subject to intellectual property rights) produced or created by the employee during his/her employment belong to the employer. Still, for certainty, it is advisable to have an express provision in the employment agreement. The compensation for the invention developed is limited to the employee’s salary, unless the parties agree on other indemnity or rights.


Pre-Employment Considerations

In general terms, an offer letter and any other work invitation, either in writing or orally, sent to an applicant before the execution of an employment agreement, is binding upon the Parties and deemed a part of the employment relationship from the date the offer/invitation is delivered.

Another key aspect involving pre-employment issues is related to the legal extent of background checks.

Although in Brazil there are no specific restrictions on applicants’ background checks, each person’s privacy, private life, honor, and image shall be respected. Therefore, courts have decided that a legal background check involves direct or indirect (through expertise vendors) access to public records kept by official agencies. Courts have also interpreted that getting the applicants' express authorization for background checks is the best practice and that the results should not necessarily be revealed to applicants.

According to the Brazilian Data Protection Law (effective as of May 3, 2021, or August 1, 2021 - pending confirmation by the National Congress), once data has been gathered, analysed, and deployed in the hiring decision-making process, it should be immediately erased and cannot be stored in any case considering its general purpose has been fulfilled; otherwise, a significant fine may be imposed.


Hiring Non-Nationals

When hiring non-nationals, employers are subject to specific visa regulations. For each foreign employee, the employer must employ two Brazilian employees. This is the ‘two-thirds rule’ established by the CLT, which is also required in relation to the company’s payroll.

Among the many types of work permits, the most applied-for permission is the temporary permit granted for foreign professionals who aim at working in the country with or without a job offer. If no job offers are issued, the work permit will be granted in the following cases: (i) technical assistance or technology transfer services; (ii) professional training provided by a foreign company´s subsidiary or by a Brazilian company; (iii) professional internship; or (iv) auditing or advising services for more than 90 days. The length of the visa in such cases ranges from one to two years, and their extension will be conditioned upon specific ordinances to be released by the Ministry of Economics.

The permanent visa applies, among others, in the following situations: (i) foreign investors wishing to reside in Brazil; and (ii) foreigners who want to hold roles as officers of Brazilian companies.

In cases where foreign professionals are sponsored by a Brazilian company by means of a job offer or an employment contract, the length of the visa is up to two years, extendable for the same period upon the employer’s justification. This visa is available for employees who are transferred from one corporate entity in another jurisdiction to a related entity in Brazil.

Officers and administrators that do not qualify as employees may apply for permanent visas, which are approved when the company evidences an investment, duly registered with the Central Bank of Brazil, of an amount of at least 600,000 reais for each professional, or an investment of at least 150,000 reais per professional provided that the Brazilian company undertakes to create at least 10 new jobs within two years following its incorporation in Brazil or the concession of the permanent visa to the foreign administrators or officers.

Another possibility is the granting of a permanent visa to foreign individuals investing in Brazilian companies. In such cases, each foreign investor must provide evidence that he or she has already made capital contributions, duly registered with the Central Bank of Brazil, to a new or an existing Brazilian company, of an amount not lower than 500,000 reais. Exceptionally, the Immigration Council can authorise, at its sole discretion, the granting of a permanent visa even if the capital contribution is lower than 500,000 reais but higher than 150,000 reais, provided that the investment is in innovation, primary and applied research or for scientific and technological purposes. Finally, visas issued before the Migration Law comes into force will remain in force until their expiration date.

The admission of foreign workers that do not fulfil the legal requirements subjects the company to fines imposed by the Brazilian immigration authorities, and the federal police may deport the illegal foreign worker.


Hiring Specified Categories Of Individuals

There are constitutional and legal restrictions relating to specific tasks, such as night work and hazardous work, which may not be performed by under-age employees.

Companies with 100 or more employees are obliged to hire from 2% to 5% of disabled workers or those submitted to professional rehabilitation after work-related accidents (depending on the number of employees in the company),

Different treatment also applies to the hiring of apprentices. The apprenticeship is a hiring regime that, in addition to the theory taught in courses, grants professional and technical training to people between 14 and 24 years old. Companies are also obliged to hire a specific number of apprentices, the quota varying from 5 to 15 per cent of the number of workers who perform roles that demand professional training.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Outsourcing is deemed licit and can be agreed upon activities related, or not, to the core business of the company provided that some conditions and requirements are met. Contractors are secondarily liable for the outsourced employees’ labour rights and obligations.

Temporary work shall be performed by individuals to urban companies (hiring parties) and is allowed in two situations: to meet the temporary need to replace regular and permanent employees in the company (for example, in the case of vacation and sick leave) or to deal with extraordinary increase of activities (for example, at certain times of the year, such as during the holiday season).

The temporary employment contract is necessarily written and can be executed for 180 days, consecutive or not, extendable for a further 90 days if the preliminary conditions that led to the temporary staffing hiring are still in force.

Although temporary employment agencies are responsible for paying and assisting the temporary workers hired by them with respect to their rights and obligations, hiring parties must provide temporary workers with the same health and safety work conditions already granted to regular employees, as well as the same medical and meal assistance, provided that the temporary work is performed within the hiring party’s offices or plant. The same provisions apply to outsourced workers.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The Labour Code Legislation provides that alterations to employment agreements are only allowed by mutual consent and provided that there is no harm to the employee or to his/her labour situation.


Change In Ownership Of The Business

In general, changes in ownership of a business do not have any impact on labour agreements. In that sense, the new owner must observe all the employee’s rights.


Social Security Contributions

Social security contributions are made by employers and also by the employees. The Federal Government also contributes to Social Security. The contribution paid by employees is calculated as a percentage of the salary (varying from 7.5% to 14%), limited to a maximum contribution, which is lower than the minimum wage. The contribution paid by employers is not subject to limitations and is calculated, according to the activity of the company, as a percentage of the payroll (this percentage may vary from around 26.3% to 31.8%) and/or a percentage of the revenues.


Accidents At Work

Employers have an obligation to guarantee a safe work environment. During sick leave (including leave caused by accident at work), the employee’s salary is paid by the INSS (employer pays the first 15 days, and the INSS pays the remaining days as a social security benefit). Employers are responsible for any damage suffered by their employees as a result of an accident at work. The same rules apply to accidents that take place on an employee’s way to work.

Employees are protected from dismissal without cause during 12 months after sick leave due to work-related accidents.


Discipline And Grievance

Brazilian labour regulation provides for specific situations in which employees may be dismissed with cause. Some cases allow an employer to terminate the employee’s agreement immediately, i.e., acts of dishonesty. Other situations, i.e., lack of effort at work, provide for prior disciplinary actions, such as warnings to the employee, and unpaid disciplinary leave. Employees are also entitled to terminate their agreements for cause, in specific situations established under Brazilian labour law.


Harassment/Discrimination/Equal pay

The Federal Constitution ensures human dignity and welfare for every citizen, regardless of nationality, race, gender, colour or age and prohibits any other kind of discrimination, establishing that federal laws shall regulate the enforcement of such constitutional guarantees and the relevant penalties in cases of violation.

According to the CLT, employees who perform the same work must receive the same pay and also be treated equally.

Women have special legal protection against discrimination, being a crime to ask any questions about contraception, as provided for by Law 9,029/1995.

Law 7,716/1989 states that it is a crime to deny or prevent employment in a private company due to race, colour, ethnicity, or religion. This law also defines as a crime the practice of certain conducts due to racial or colour discrimination or prejudice related to origin, nationality, or ethnicity.

Also, Law 10,741/2013 prohibits discrimination and age limitation of older adults on the admission to any job, defining as a crime denying employment or work; or taking ownership of or diverting assets, earnings, pension or any other income of the elderly.

Also, Law 12,984/2014 defines as a crime the following discriminatory conduct against HIV-positive people because of their condition.

Laws 7,853/1989 and 13,146/2015 guarantee to persons with disabilities the right to the work of their own free choice, and acceptance, in an accessible and inclusive environment, in equal opportunities with other persons, including equitable remuneration for the same type of work. Any restriction or discrimination on the grounds of disability, including during the recruitment, selection, admission, periodic medical examinations, permanence on the job, professional growth, and rehabilitation, as well as requirement of full capacity, is forbidden. These laws also define as a crime the practice, inducement or incitement of discrimination of persons because of their disability, and taking ownership of or diverting assets, earnings, pension or any other income of the persons with disability.

Harassment situations are covered by general civil law, which also applies to labour relations. Specifically regarding sexual harassment, the Criminal Code defines it as the circumstance in which someone who holds a hierarchically superior status harasses another person to gain advantage or sexual favours because of their work, position, or role.


Compulsory Training Obligations

Compulsory training in Brazil is mainly related to the health and safety of employees.


Offsetting Earnings

Deduction for earnings against employees’ debts are only allowed when (i) determined by the courts, (ii) when the liability has arisen as a result of damage caused deliberately by the employee or (iii) when authorized by the employee in specific situations provided by the Court’s understanding. It is only possible to make deductions for damage caused by negligence if there is a particular provision in the agreement.


Payments For Maternity And Disability Leave

Both the 120-day maternity leave and the disability leave are paid by the National Institute of Social Security.


Compulsory Insurance

There is no legal obligation to provide or pay for private insurance. Nevertheless, employers contribute to INSS, which acts as a general insurer for employees. However, INSS provides employees with pensions but does not pay any premium.


Absence For Military Or Public Service Duties

Employees are entitled to take paid leave for military or public service duties.


Works Councils or Trade Unions

Companies are represented by Trade Unions according to their business activity. Employees are represented by an appropriate Labor Union dependent upon the industry in which they operate. CBC must be observed by both employers and employees when negotiated between Trade Unions and the relevant Labor Unions.


Employees’ Right To Strike

The right to strike in Brazil is a Constitutional Right. There is specific regulation regarding the right to strike, which is subject to certain limits regarding the employer’s activities.

Employers must be notified at least 48 hours in advance (72 hours in case of essential services), and employees must obey certain limitations. If strike procedures are not followed, employees may lose payment for such days.


Employees On Strike

Employees may not be dismissed during a strike, and employers are not allowed to hire replacement personnel during a strike.


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for any damage caused by their employees in the performance of their contractual duties.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

When an employment agreement is terminated without cause, no reason is required to be given, and the employee will be entitled to payment in full in respect of all severance payments provided for in his employment agreement, under the relevant labour laws and pursuant to any applicable CBC/CBA.

Brazilian labour regulation requires employment agreements to include a minimum notice period for termination of 30 calendar days, with an addition of three days of each full year of employment, up to 90 calendar days.

Listed below are severance payments required in the event an employee is terminated without cause:

  • Payment in lieu of notice;
  • Vacation, based on one month’s salary per year of employment, calculated on a pro rata basis, with an addition equal to one-third of the pro rata vacation;
  • Christmas bonus (also called “13th salary”) equivalent to 1/12 of the employee’s monthly salary per month of employment (or a fraction thereof at least equal to 15 days), counted from the relevant January 1st to the day of termination, calculated on a pro rata basis;
  • Forty percent (40%) of all amounts existing in the employee’s FGTS bank account on the date of termination.

When an employment agreement is terminated with cause, a reason is required to be given. The dismissal of an employee with cause may only occur where the termination results from one or more of the following acts of the employee (as defined under Brazilian labour laws):

  • Dishonesty;
  • Improper conduct or lack of self-restraint;
  • Regularly doing business on his/her own account or for the account of a third party without the employer’s permission, or when the activity is in competition with the employer’s business or adversely affects the quality of the employee’s work;
  • Criminal conviction of the employee, in a final court decision, provided that execution of the penalty has not been suspended;
  • Laziness in the performance of his/her duties;
  • Drunkenness during working hours;
  • Violation of trade secrets;
  • Any act of indiscipline or insubordination;
  • Abandonment of employment;
  • During working hours, any act of violence or any act injurious to the honour or reputation of any person, except in legitimate cases of self-defence, or defence of the interests of a third party;
  • During working hours, any act of violence or any act injurious to the honour or reputation of the employer or the employee’s superiors, except in legitimate cases of self-defence, or defence of the interests of a third party;
  • Constant gambling;
  • Loss of license or legal requirements for the exercise of the profession, as a result of intentional conduct by the employee.

If the employee is dismissed with cause, he/she will be entitled only to unpaid salary and vacation.

The cause for termination must be fully evidenced; otherwise, the employee may argue in Court that his/her dismissal was, in fact, without cause and, therefore, the right to receive all due severance pay applies. Furthermore, the employee may seek payment of damages if the termination for cause is turned into termination without cause.


Instant Dismissal

An employee may be dismissed immediately and without payment of notice of termination in any of the above-mentioned circumstances amounting to dismissal for cause.


Employee's Resignation

Employment agreements may, generally, be terminated if the employee resigns, subject to a minimum notice period of 30 calendar days, as provided for in the CLT.


Termination On Notice

For a fixed-term agreement, it will be deemed to terminate automatically at the expiry of the fixed term. However, if there is an extension of work even for one day, such an Employment Agreement will be considered as an unlimited Employment Agreement.


Termination By Reason Of The Employee's Age

Under the Brazilian labour law, there is no maximum age for non-governmental employees. Furthermore, a termination due to the employee’s age could be construed as an act of discrimination.


Automatic Termination In Cases Of Force Majeure

There is no specific provision for automatic termination in the event of Force Majeure. Therefore, the employment will continue, and in the event, the employer terminates the employment, the mandatory severance will apply.


Collective Dismissals

As of the validity of Law 13,467/2017, employers are expressly exempted from negotiating the terms of a mass termination or collective dismissal with the relevant unions. However, class or collective actions in defence of workers are allowed by the legislation, in which case employees are generally represented by labour unions or by the Labour Prosecution Office.


Termination By Parties’ Agreement

In case of termination by Parties’ Agreement, employee will be entitled to:

  • half of the notice period, which will be mandatorily paid and calculated based on the average of the amounts paid to employee;
  • an indemnification corresponding to 20 per cent of the balance of deposits made by the employer on the employee’s FGTS account; and
  • all other labor charges related to indefinite-term contracts.

Directors Or Other Senior Officers

Since they are not working under subordination, officers and statutory directors are not considered employees. However, if an employment agreement Is executed, employees holding college degrees and with monthly salaries of at least, BRL 12,867.14 can negotiate their employment conditions directly with the employers (the so-called “all-sufficient employees”).

The termination of the statutory office does not automatically bring to an end the employment agreement being necessary to terminate such agreement according to the Labour Law.


Special Rules For Categories Of Employee

Specific categories of employees benefit from more generous rules that protect them from dismissal without cause.

In general terms, employees are protected from dismissal without cause during the following periods:

  • 12 months after sick leave due to work-related accidents;
  • Pregnancy up to five months after the delivery;
  • From the candidature up to one year after the mandate is expired for members of internal committees for accident prevention (“CIPA”), union officers and members of conciliation commissions representing employees; and
  • Other cases established by CBC/CBA, which usually prevent dismissals in case of employees who are about to retire or have just returned from vacation.

Whistleblower Laws

As of 2019, Brazil issued Law 13,964 in a context of an anti-crime general legislative revision, which has been providing legal protection and certain incentives to whistleblowers in order to report general corrupt practices, criminal activities and/or general misconducts they are aware of.

The new legislation applies to whistleblowers reporting general public corruption and fraud related to government procurement and agreements, government-owned companies, government-funded programs and also to criminal activities and administrative misconduct related to a broadly concept of public interest.

From a general standpoint, the Law ensures whistleblowers with certain incentives, such as monetary rewards (up to 5% of the amounts recovered by the Government), confidentiality, immunity from civil and criminal liabilities, protect against retaliation and entitlement to the Brazilian Victim and Witness Protection Law


Specific Rules For Companies in Financial Difficulties

Despite the absence of a particular legal provision regarding the termination of employees by companies in financial difficulties, it is possible to negotiate with Labour Unions certain special conditions concerning labour relations.


Special Rules For Garden Leave

The only two possibilities of terminations in Brazil are the following:

  • Termination with work during the 30-notice period, when the employee receives the notification and continue working up to the end of such period (the employer cannot ask the employee not to come to work); or
  • Payment in lieu of notice, when the employee receives the notification and is immediately released.

A typical “garden leave”, meaning that the employee would receive the notification for termination but would continue at the disposal of the employer during the notice period, but without work, is not valid in Brazil.


Restricting Future Activities

Generally, clauses that attempt to limit the future activities of an employee are contrary to the Brazilian Federal Constitution and therefore unenforceable, but Courts will uphold restrictions if they are drafted sufficiently narrowly and upon the payment of a reasonable indemnity per month of restriction.

Essentially such restrictions must be designed to protect a “legitimate business interest” and they should be no wider than is necessary to protect those interests. Further, such covenants must be clear and reasonable in time and area limitations. Typical clauses include those designed to restrict an employee from joining a competitor (or setting up in competition), from soliciting business from or dealing with specific customers or from enticing other employees to leave.


Severance Payments

Brazilian Labour Regulation lays down statutory payments, which are calculated by reference to the employee’s length of service and salary. In case of dismissal without cause, the severance payment includes an indemnification corresponding to 40 per cent of the balance of deposits made by the employer on the employee’s FGTS account.

Termination payments must be made within ten days after the termination in any case, and a medical examination may be required.


Special Tax Provisions And Severance Payments

Income tax and social contribution may be deducted from employees’ compensation under applicable tax legislation.


Allowances Payable To Employees After Termination

Employers are not required to contribute to any allowances payable to employees after termination unless there is a specific contractual provision.


Time Limits For Claims Following Termination

The statute of limitations for labour claims is two years from the termination of the employment relationship, provided that the labour claims comprise rights related to the past five years counted from the filing date.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

After the Brazilian federal government acknowledged state of calamity due to the Covid-19 pandemic, the year 2021 brought uncertainty for employers and employees, since all specific legal provisions governing furloughs, salary downsize and public emergency benefit ceased to be in effect on December 31, 2020.

Considering the severe second wave of Covid-19 at the turn of the year, the federal government has just extended the special emergency benefit, to be paid as of April to those who cannot support themselves. However, the benefit amount is lower than what was paid in 2020. Some state governors, on the other hand, have anticipated some 2021 and 2022 official holidays to encourage people to stay at home. Majors have also imposed lockdowns in most affected areas to address the collapse of the healthcare system.

On April 27, 2021, the federal government issued Provisional Measures 1045 and 1046 to reedit labor measures aiming at assisting employers and employees with certain financial benefits and labor flexibility. Such measures are valid for a first 120-day period and can be extended for more 120 days. The main ones are the following:

    1. Furlough (unpaid leave) and pro rata downsize of wages and working hours
    2. Special conditions for telework, holidays and overtime offset
    3. Suspension of certain health & safety requirements at work
    4. Deferment of certain labor repercussions payments.


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Need more information?
Contact a Contributing Author:
Fabio Medeiros
Lobo de Rizzo Advogados
Brazil


André Blotta Laza
Lobo de Rizzo Advogados
Brazil


Disclaimer:

© 2021, Lobo & de Rizzo Advogados. All rights reserved by Lobo & De Rizzo Advogados as author and the owner of the copyright in this chapter. Lobo & de Rizzo Advogados has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021