Labor Reform (Main Aspects)

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Observing the changes brought by the new Law No. 13,467 of July 13,2017, which modifies several articles contained in the CLT (Consolidação das Leis Trabalhistas — Consolidation of Labor Laws), we understand that they will bring more legal safety to companies, as well as the reduction of labor lawsuits existing in Brazil, which amount to approximately 4,000,000 lawsuits per year, contributing yet to the reduction of the unemployment rate that our Country faces at this moment.

The Labor Reform — Law No. 13,467, was sanctioned by the President of the Republic and published in the Diário Oficial da União (Federal Official Gazette of Brazil) in July 14, 2017, being conditioned to the vacancy period for its entry into force, so the companies will have 120 days to adequate to the new labor practices and routines. This way, in November, 2017, the Law will come into force, and the new provisions shall be applied and observed by the whole Brazilian society.

The main changes follow below:

Joint and Several Economic Group

Whenever one or more companies, each of them albeit having its own legal personality, is or are under direction, control or management of another, or yet when, even maintaning their individual autonomy, they are members of an economic group, they shall be jointly and severally responsible for the obligations resulting from the employment relationship.

Characterization of Economic Group or Not

The mere identity of partners does not characterize an economic group. Demonstration of integrated concern, effective communion of interests and joint operation of the companies are required for characterization.

Dissenting Partner

The dissenting partner shall be subsidiarily liable for the labor obligations of the company related to the period in which he figured as partner only in lawsuits filed up to two years after the entry of the change to the contract, observing the following order of preference:

I — the debtor company;

II — the present partners; and

III — the dissenting partners.

Precedents and Enunciations

The precedents and enunciations of caselaw published by the Tribunal Superior do Trabalho (Superior Labor Court) and by the Tribunais Regionais do Trabalho (Regional Apellate Labor Courts) cannot restrict legally provided rights nor create obligation that are not provided by the law.

Collective Bargaining Agreement or Convention — “Force of Law”

With the new rules, collective bargaining agreements and conventions may prevail over the legislation. Therefore, labor unions and companies may negotiate working conditions differing from the ones provided by law, but not necessarily in a better level for the workers. The validity of effectiveness of a collective bargaining agreement or convention is of up to 2 years.

Situations Not Deemed as Time at the Employer’s Disposal

The time exceeding the regular working hours, not being deemed as time at the employer’s disposal, will not be reckoned as extraordinary period, even if it surpasses the 5-minute limit provided by the §1st of Article 58, when the employee, of his or her own choice, seeks personal protection, in case of unsafety in the public roads or bad weather conditions, as well as enters or remains in the company’s premises to carry out private activities, such as: religious practices, rest, leisure, study, eating, social relationship activities, personal hygiene, changing clothes or uniform.

Term for Entry in the Labor Court

Article 11 of CLT provides that the right to claim credits resulting from labor relations is barred in 5 years for urban and rural workers, up to the limit of 2 years after termination of the employment contract.

Lack of Registration of Employees

In case the employer keeps an employee without registration, he or she will be subject to fine at the amount of R$ 3,000.00 (three thousand reais) per unregistered employee, plus equal amount in each recidivism.

For small or very small companies, the fine amount for violation due to lack of registration will be of R$ 800.00 (eight hundred reais) per unregistered employee.

In the respective violation the “criterion of double visit” does not apply.

Commuting Hours (In Itinere)

The time spent by the employee from his or her home to the effective occupation of his or her work position and back, walking or by any means of transportation, including one supplied by the employer, will not be reckoned in the working hours, not being deemed as time at the employer’s disposal.

“Hour Bank” — Individual Agreement

Addition to the salary may be dismissed if, due to collective labor agreement or convention, the excess of hours in one day is compensated by the corresponding diminution of hours in another day, in a manner that does not exceed, in the maximum period of one year, the sum of the foreseen weekly working hours, nor surpasses the maximum limit of 10 daily hours.

The hour bank may be covenanted by individual written agreement, provided that the setoff occurs within the maximum period of 6 months.

In case the company wishes to make use of an hour bank longer than 6 months, it shall agree with the category’s labor union. The working hours offsetting regime established by tacit or written individual agreement for setoff in the same month is lawful.

12-Hour Shift Work Schedule (36-Hour Rest)

It is permitted for the parties, through individual written agreement, collective labor agreement or convention, to establish a work schedule of 12 straight hours followed by 36 uninterrupted hours of rest, observing or indemnifying the meal and rest breaks.

Meal and Rest Breaks

The Labor Reform provides the possibility of reduction of the 1-hour meal and rest break, respecting the minimum limit of 30 minutes, however, such procedure shall be established by collective bargaining agreement or convention, the supressed period coming to be setoff at another time (entering or leaving) or indemnified.

Remote Work (Home Office)

Remote work is providing services predominantly performed outside the employer’s premises, with use of information and communication technologies. The worker hired within this modality will not be subject to the working hours.

The modality of providing services in the condition of remote work shall be expressly mentioned in the individual employment contract specifying the activities to be performed by the employee.

The provisions relating to the responsibility for acquisition, maintainance or supply of the technological equipment and required infrastructure to perform the remote work, as well as relating to reimbursement of expenses born by the employee, shall be mentioned in writing in the contract. The abovementioned utensils do not integrate the employee’s compensation.

The employer is obliged to instruct the employees, expressly and ostensibly, as to the precautions to be taken in order to avoid diseases and work accidents. The employee shall sign a term of responsibility committing to follow the instructions provided by the employer.

Split Vacation

Vacation, provided that the employee agrees, may be enjoyed in up to 3 periods, so that one of them may not be inferior to 14 calendar days and the others may not be inferior to 5 calendar days each. It is prohibited to place the beginning of the vacation in the period of 2 days prior to a holiday or weekly paid rest.

Pregnant and Lactating Women

The employee’s compensation, including hazard pay when away from her activities, will suffer no loss. She shall be taken away from the hazardous activities when they are deemed to be at maximum degree of risk, for the duration of her pregnancy, and when deemed to be at average or minimum degree of risk, upon presenting a medical certificate issued by a doctor trusted by the woman recommending her disengagement during pregnancy.

In activities regarded as hazardous in any degree, she shall be taken away upon presenting a medical certificate issued by a doctor trusted by the woman recommending her disengagement during the lactation period.

In order to breasfeed her child, until he or she is 6 months old, the woman shall be entitled, during the working hours, to 2 special rest breaks of half an hour each. The break times shall be defined by individual agreement between the woman and the employer.

Intermittent Work

A new modality of service provision, called intermittent work or non-continuous working, was introduced. This way it is possible to provide services discontinually, by day or by hour, for example, so that the employer shall pay for the effectively worked hours, and the pay cannot be inferior to the amount of minimum wage or salary per hour.

Through any efficient mean of communication, the employer shall summon for providing services and will inform how long the working hours will be at least 3 calendar days in advance.

Once the summoning is received, the employee will have one working day to respond to the call, silence presuming refusal.

The refusal of the offer does not invalidate subordination for purposes of intermittent work agreement.

At the end of each period of service provision, the employee will receive immediate pay of the following portions: compensation, proportional vacation added of one third, proportional 13th salary, weekly paid rest and legal premiums.

Every 12 months, the employee acquires the right to enjoy, in the subsequent 12 months, 1 month of vacation, period in which he or she may not be summoned to provide services by the same employer.

Part-Time Regime

It is deemed as work in part-time regime that which duration does not exceed 30 weekly hours, without possibility of supplementary weekly hours, or, yet, that which duration does not exceed 26 weekly hours, with possibility of addition of up to 6 supplementary weekly hours.

In the previous legislation the maximum duration of the working hours for part-time regime was 25 hours and supplementary hours were prohibited.

The previous rule entitled the worker with part-time hours to 18 days of vacation and prohibited the conversion of vacation into pecuniary allowance. However, with the change in the law, the period of vacation for workers with part-time hours increases to 30 days, one third of which may be converted into pecuniary allowance.

Compensation

The employee’s compensation comprises, for all legal intents and purposes, in addition to the due wage paid directly by the employer, as consideration for the service, the tips he or she receives. The amounts paid for subsistence allowance, meal allowance, which payment in cash is prohibited, travel allowances, premiums and bonuses do not make part of the employee’s compensation. Even if customary, they are not incorporated to the employment contract and do not constitute tax base of any labor and social security burden.

Grants conceded by the employer in the form of goods, services or amount in cash to the employee or group of employees, due to performance superior to the ordinarily expected in the exercise of his or her activities, are considered premiums.

Equal Pay (Paradigm Employees)

The role being identical, for every work of equal value, provided to the same employer, in the same company premises, will correspond to equal wage, without distinction of gender, ethnic group, nationality or age.

Work of equal value will be that performed with equal productivity and with the same technical perfection, among people which difference of length of service for the same employer is not superior to 4 years and the difference of time in the role is not superior to 2 years.

Equal pay will only be possible among employees contemporary in the position or role, being prohibited the appointment of remote paradigm employees, even if the contemporary paradigm employee has obtained the advantage in his or her own lawsuit.

Termination of Contract — Ratification

At the termination of the employment contract, the employer shall proceed to annotation in the Carteira de Trabalho e Previdência Social (Labor and Social Security Book), communicate the dismissal to the competent authorities, make severance payments and provide and deliver to the employee the documents that prove the contractual termination in up to 10 days from the contract termination.

The obligatoriness of ratification of severance payments before the category’s labor union, the Ministry of Labor and other ratifying agencies is revoked.

Dismissal for Fair Cause

To the reasons for contract termination by fair cause provided by the CLT (Consolidation of Labor Laws), “the loss of qualification or the requirements established by law for the exercise of the profession, as a result of the employee’s fraudulent conduct” was added.

New Modality of Termination (Agreement Between Employee and Employer)

The employment contract may be terminated by agreement between employee and employer, in which case the following labor allowances shall be due: 50% of notice, if indemnified; fine of 20% on the FGTS balance; as well as the full amount of the other severance payments.

The contract termination provided in this modality allows access to the worker’s bank account bound to the Fundo de Garantia do Tempo de Serviço (Guarantee Fund for Length of Service), limited to 80% of the amount of the deposits.

The provided contract termination by agreement does not allow the employee to enter the Programa de Seguro-Desemprego (Unemployment Insurance Program).

Individual, Multiple or Collective Dismissals Without Reason (Mass Dismissals)

The individual, multiple or collective dismissals without reason are made equal for all purposes, there being no need for prior authorization from a labor union entity or execution of collective bargaining agreement or convention for its enforcement.

Plano de Demissão Voluntária (Voluntary Resignation Plan) — PDV

Encouraged or Voluntary Resignation Plan, for individual, multiple or collective dismissal, provided in collective bargaining agreement or convention, allows full and irrevocable release of the rights resulting from the employment relationship, unless otherwise specified between the parties.

Representation of Employees

In companies with more than 200 employees, the election of a commission to represent them is assured, with the purpose of promoting a direct agreement with the employers. The commission will be composed:

I — in companies with more than 200 and up to 3,000 employees, by 3 members;

II — in companies with more than 3,000 and up to 5,000 employees, by 5 members;

III — in companies with more than 5,000 employees, by 7 members.

The mandate of the employees’ representatives (commission members) will be 1 year.

From the registration of candidature until 1 year after the end of the mandate, the employees’ representative (commission member) may not suffer arbitrary dismissal, by that being understood the dismissal unfounded in disciplinary, technical, economical or financial reason.

Employment Contract vs. Arbitration (Free Stipulation of Employment Contract)

In individual employment contracts which compensation is superior to twice the limit of R$ 11,062.62 (eleven thousand, sixty-two reais and sixty-two cents), established for the benefits of the Regime Geral de Previdência Social (General Social Security Regime) and in which the employee has higher education, an arbitration clause may be agreed upon, either by his or her own initiative or by means of his or her express agreement, in the terms provided by Law No. 9,307 of September 23, 1996.

Employees’ Labor Union Contribution

It will be optional. The employee will have to formalize in writing his option for deduction.

Employer’s Labor Union Contribution

It will be optional. It is the contribution collected every year in the month of January, based in the company owners’ capital.

Non-Pecuniary Damages — Moral Damages

The limits to the amount to be pleaded by the worker were determined:

– Light offenses — 3 salaries

– Average offenses — 5 salaries

– Serious offenses — 20 salaries

– Very serious offenses — 50 salaries

Lawsuits in the Labor Court

The worker will be obliged to attend to the Labor Court sessions and in case he or she loses the lawsuit, he or she shall bear with the lawsuits’ expenses. In case he or she does not attend to the session, the lawsuit is shelved.

Term of Annual Discharge from Labor Obligations

It is permitted to employees and employers, within or without the duration of the employment contract, to sign the term of annual discharge from labor obligations before the employee category’s labor union.

The term will discriminate the monthly satisfied obligations of giving and doing and the annual discharge given by the employee will be provided in it, with effective discharge from the items specified in it.

Added to the Outsourcing Law

In addition to what has been approved before, the novelties are conditions equal to employees in:

• Meals

• Transportation

• Healthcare

• Training

• Work safety

• In case of dismissing an employee, the employer cannot contract him or her as an outsourced for 18 months

• Subsidiary responsibility

Contracting Legal Entity with Employee Characteristics Remains Illegal

If there is employment relationship, it must be registered according to the CLT. The employment relationship is characterized by:

• Subordination

• Habitualness

• Personal service

• Compensation

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