Brazil: Employment & Labour Law

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This country-specific Q&A provides an overview to employment and labour law in Brazil.

It will cover termination of employment, procedures, protection for workers, compensation as well as ííinsight and opinion on the most common difficulties employers face and any upcoming legal changes planned..

This Q&A is part of the global guide to Employment & Labour. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/employment-labour-law/

  1. Does an employer need a reason in order to lawfully terminate an employment relationship? If so, describe what reasons are lawful?

    No. Except for employees with stability on the job (e.g., pregnant employee, labor union representative, victim of a work-related accident), the employer can lawfully terminate an employment relationship without cause. If the employee commits serious misconduct, the employer can also terminate the employment relationship for cause. The law provides a comprehensive list for the termination of the employee for cause:

    A. Dishonest conduct

    B. Improper conduct or lack of self-restrain

    C. Helping competitors or business competing (without the employer's consent)

    D. Criminal conviction of the employee, in a final court decision, provided the punishment has not been suspended

    E. General negligence

    F. Drunkenness during working hours

    G. Trade secret violation

    H. Indiscipline or insubordination

    I. Non-attendance to work by the employee for more than 30 days

    J. Act of violence or injury to the honor or reputation of any person during working hours, except in self-defense or legitimate defense of a third party

    K. Act of violence of injury to the honor or reputation of the employer or a superior, except in self-defense or legitimate defense of a third party

    L. Constant gambling

    M. Acts of violation to national security dully proved in a governmental investigation

    The recent labor and employment reform enacted on November 11, 2017 (“Labor Reform”) included another factor for termination with cause:

    N. Loss of qualification or requirement for the job position because of employee's malicious action (e.g., if the bar suspends or decertifies a lawyer)

  2. What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?

    Until the Labor Reform, the employment law did not establish a rule for layoffs/collective dismissals. However, the case law determined that employers had to bargain with the union of employees before proceeding with the collective dismissals.

    After the Labor Reform, the law provides that employers may terminate the employees without consulting or negotiating with the union of employees, whether this termination is individual or collective.

    Considering that this new disposition is against the current case law on this matter, it is advisable to request legal advice before conducting any collective dismissal.

  3. What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?

    The employment law does not require the payment of additional consideration to the employee in the event of termination because of business sale. However, the applicable collective bargaining agreement, or the internal policy of the company subject to the sale, may provide for the payment of additional consideration in such cases. Also, depending on the business sale deal, the termination of the workers’ employment may not be required, i.e., the transfer of employees may be possible.

  4. What, if any, is the minimum notice period to terminate employment?

    If the employer terminates the employment contract without cause, the law provides the employee with 30 days of notice plus 3 days of notice per employment anniversary up to the limit of 90 days. The employment contract, or the collective bargaining agreement, or even the internal policy of the company may provide for additional notice.

    The law does not require the employer to provide the employee with notice in the event of termination with cause.

    The employee must provide the employer with 30 days of notice if he/she resigns.

  5. Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?

    Yes. The employer may ask the employee not to attend the notice period; in return, the employer has to compensate the employee for the days of the notice period.

  6. Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to say at home and not participate in any work?

    No. There is no garden leave in Brazil. It is not legal for the employer to request the employee to stay at home during the notice. The employer may require the employee to continue working during the notice period or not, but if the employer does not require the employee to continue working during the notice period, the employee is allowed to work elsewhere.

  7. Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, describe the requirements of that procedure or procedures.

    Yes. The employment law requires the employer to give a notice of termination to the employee and pay the severances in 10 days after the termination; in addition, the employee must be submitted to medical examination, to confirm that he/she is able to work. The employer also has to record the termination in the employee's booklet and in the company’s book of employees (a proper book to register all employments' data).

  8. If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?

    It depends on the type of breach, but the termination may be considered null; further, the relevant collective bargaining agreement may provide for additional penalties.

  9. How, if at all, are collective agreements relevant to the termination of employment?

    The collective bargaining agreement may provide for additional rights and rules for termination to which the employer is bound. For instance, the collective bargaining agreement may provide for stability on the job for seniors who are less than 24 months to complete the minimum time required for retirement or additional notice period for employees with more than 5 years of service.

  10. Does the employer have to obtain the permission of or inform a third party (eg local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?

    No. However, in case of layoffs/collective dismissals case law before the Labor Reform was demanding previous negotiation with the employees’ union (please refer to answer to query # 2 above).

  11. What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?

    The Brazilian laws forbid any discriminatory and restrictive practice for the purpose of accessing or maintaining the employment relationship on the basis of sex, origin, national origin, race, marital status, family status, disability, professional rehabilitation, age, among others (except for the hypotheses of children and teenagers protection).

    In addition, the Constitution and employment law provides for the protection of (i) equal pay for equal work (regardless of the race, sex, national origin, disability, etc.); and (ii) women work (promotion of equal terms and conditions in job offers, promotions, and seniority plans; pregnancy protection; protection against searches, and other related matters). The case law also protects (iii) the employee with a serious disease (e.g., cancer, HIV).

  12. What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?

    The termination of the employment relationship by a discriminatory act subjects the employer to the payment of damages compensation (pain and suffering); further, the law permits the employee to claim:

    A. Reinstatement and backpay for the applicable entire period; or

    B. Backpay in double for the entire period.

    In the context of employment termination, if the employer harasses the employee, the remedies provided by law are damages compensation (pain and suffering), and constructive dismissal claim.

    Depending on the latitude and context of the discrimination or harassment practice, the labor and employment authorities may investigate the employer and impose additional penalties. The Labor Prosecution Office can also file a public civil action claiming (i) the compliance with the law, (ii) additional obligations to cure the damage done, and (iii) the payment of punitive damages. Depending on the case, such discrimination may constitute a criminal offense and affect the employer's reputation.

  13. Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?

    Yes. These employees have job protection (tenure) under the following conditions:

    A. If the employee had a work-related accident or suffers from a work-related disease: the employee has tenure from the moment of leave up to 12 months after the date of reinstatement

    B. If the employee is member of the company's internal commission for accident prevention: the law requires the employer to have this internal commission depending on the size of the company's facilities, and the number of employees in each of these facilities; representatives of the employer and employees form this internal commission; if such case, the employees have tenure from the moment they apply to the position up to one year after their mandate ends

    C. If the employee gets pregnant: the employee has tenure from the moment of pregnancy confirmation up to five months after the date of birth

    D. If the employee is a union representative: the employee has tenure from the moment of application to the position up to one year after the mandate ends

    E. If the employee is a representative of the company's employees: the law requires companies with more than 200 employees to elect representatives of employees; the number of representatives follows a progressive scale that is dependent on the total headcount of the company; these representatives have job tenure from the moment they apply to the position up to one year after the mandate ends.

  14. Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?

    No. There is no whistle blowing legal framework in Brazil.

  15. What financial compensation is required under law or custom to terminate the employment relationship? How do employers usually decide how much compensation is to be paid?

    If the employer terminates the employee with cause, the law entitles the employee with the following severances:

    A. Accrued monthly salary (owed until the day of termination)

    B. Accrued vacation (one month per year) and vacation bonus (1/3 of the monthly salary), if applicable

    C. Prorated Christmas bonus (1/12 of the employee's monthly salary per month)

    D. Severance fund (Fundo de Garantia por Tempo de Serviço – “FGTS”, 8% over the severance due)

    E. Other payments may be required depending on the employment contract, collective bargaining agreement, or internal policy (e.g., profit and sharing results, discretionary bonus, contractual bonus, stock options, etc.)

    If the employer terminates the employee without cause, the law entitles the employee with the following severances:

    A. Accrued salary

    B. Accrued and prorated vacations, if applicable

    C. Vacation bonus, if applicable

    D. Accrued and prorated Christmas bonus

    E. FGTS payment (8% over the severances due)

    F. FGTS fine (50% over the balance of the FGTS fund, of which 40% belong to the employee, and 10% serve as tax)

    G. Other payments may be required depending on the employment contract, collective bargaining agreement, or internal policy (e.g., profit and sharing results, discretionary bonus, contractual bonus, stock options, etc.)

    These severances also applies to the employee that claims constructive dismissal.

    If the employee resigns, the law provides the employee with the following severances:

    A. Accrued salary

    B. Accrued and prorated vacations, if applicable

    C. Vacation bonus, if applicable

    D. Accrued and prorated Christmas bonus

    E. FGTS payment (8% over the severances due)

    F. Other payments may be required depending on the employment contract, collective bargaining agreement, or internal policy (e.g., profit and sharing results, discretionary bonus, contractual bonus, stock options, etc.)

    The Labor Reform introduced a new form of employment termination—the employer and employee may terminate the relationship by agreement. In such cases, the severances verified in the termination without cause also apply for this scenario, but the notice and the FGTS fine are reduced by half. To the extent this is a recent provision of the law, this possibility should be analyzed on a case-by-case basis.

  16. Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply.

    Yes. Until the Labor Reform, the execution of releases did not prevent the employee from bringing a claim against the employer. After the Labor Reform, the new law introduced the possibility to ratify out-of-court settlements with the local labor court. In the event of termination, the employer and employee may settle a release upon the payment of the statutory severances and any other discretionary compensation. Then the parties may agree to ratify such release with the court, provided a lawyer or the applicable union of employees assists the employee in this proceeding. If the court ratifies the agreement, the employee cannot claim against the employer anymore.

    The Labor Reform also validates employees’ full release in case of voluntary redundancy plans for termination which must be negotiated with the relevant employees’ union.

  17. Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.

    Yes. Although the employment law does not provide for such rules, the case law permits the employer and employee to sign no-compete agreements under the following conditions:

    A. The obligation is for a temporary period (usually from six months to two years)

    B. The obligation is effective for a limited territory (usually restricted to the locations where the employee may have influence on the employer’s business)

    C. The employer pays the employee a compensation for the non-compete period (this compensation must be reasonable considering the level or experience of the employee)

    D. The obligation is enforced against limited businesses or competitors to which the employee cannot be engaged

    E. There is a penalty for the parties in the event of breach (it should not be higher than the maximum compensation paid for the non-compete)

  18. Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?

    No, unless required by the applicable collective bargaining agreement.

  19. Are employers obliged to provide references to new employers if these are requested?

    No, unless required by the applicable collective bargaining agreement.

  20. What, in your opinion, are the most common difficulties faced by employers when terminating employment and how do you consider employers can mitigate these?

    There are 2 main concerns that employers should know when terminating the employment relationship: (i) checking potential stability on the job (such as employees on leave or returning from work-related accident or illness, union representatives, members of the Internal Committee for the Prevention of Accidents); and (ii) termination of several employees at the same time (collective dismissal), which can be challenged by the applicable union of employees.

  21. Are any legal changes planned that are likely to impact on the way employers approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?

    The recent Labor Reform brought more than 100 changes to the labor and employment laws. The Labor Reform aimed to purport collective negotiations, and give more flexibility to employers and employees when bargaining about the working conditions, while preserving the minimum labor and employment standards provided for by the Constitution. It also innovated in some aspects, such as introducing the arbitration for resolution of some employment disputes. As these changes and new features are mostly business oriented, some of them may be challenged by employees’ union before labor courts.