Global Compliance Desk – Brazil

Brazil Labor Reform Changes

The Brazil Labor Code (CLT) was first enacted in 1943. Although there have been several amendments to the labor law over the years, this reform has been the biggest change to happen in 70 years of labor law. Before the announcement was made in 2017, the labor code was considered inflexible and incompatible with present-day employment relations. So, Senate and House of Representatives approved Law No. 13,467 (2017) to amend the Brazilian labor law as well as the law regulating Temporary Work (Law No. 6,019). The purpose of the labor reform is to update the old labor laws. The labor reform legislation came into effect on 11th November 2017. 

Holiday Leave (Yearly)

Old Rule 

The 30-days’ holiday leave entitlement allowed employees to split their holiday leave time into two periods. One period to be at least 10 days. One-third of the holiday leave entitlement was allowed to be “sold” back to the employer. Instead of taking the days, the employee received pay for the holiday leave days on top of his/her normal salary. 

New Rule 

The 30-days’ holiday leave entitlement can now be split into three periods provided it is negotiated with the employer first. One period must be at least 14 calendar days with the remaining two periods no less than 5 calendar days each. 

Working Hour

Old Rule 

The working hours were limited to 8 hours per day, with a total of 44 hours per week and 220 hours per month. Two overtime hours were allowed per day. The Superior Labor Courts also allowed 12 x 36 shifts (12 daily hours with a 36-hour rest period) provided this condition was established by law or upon union agreement. 

New Rule 

The daily working hours are now 12 hours with a 36- hour rest period. The weekly limit is 44 hours per week (or 48 hours with overtime) and 220 hours per month provided there is an individual written agreement or union agreement. 

Intermittent Work

Old Rule 

There was no rule regarding intermittent work in the old legislation. 

New Rule 

The worker now receives pay for the worked period (per hour or days worked). He/she is entitled to holiday leave, FGTS (federal severance fund savings), social security and 13th salary, all proportional. The employment contract must state the rate per hour worked, and it cannot be less than the minimum wage nor the remuneration of the other workers performing the same function. 

Home Office/Remote Work

Old Rule 

There was no rule regarding home office/remote working in the old legislation. 

New Rule 

The employment contract must include compensation for the tools needed to perform the job from home such as equipment, internet, and energy expenses as well as health and safety prevention measures. There is no control of hours for home office workers.

Part-Time Work

Old Rule 

The weekly working hours limit was a maximum of 25 hours per week, without the option of overtime. The worker was entitled to a maximum of 18 days holiday leave and was not allowed to sell their holiday leave entitlement. 

New Rule 

The weekly working hours limit is now a maximum of 30 hours per week, without the option of overtime; or 26 hours per week, with a maximum of 6 extra hours per week payable with an addition of 50%. Holiday leave is now increased to 30 days, and one-third of holiday leave entitlement can be sold. 

Collective Agreement

Old Rule 

Collective agreements could establish work conditions different from the ones provided in the legislation, only if they granted a superior level of protection compared to the labor legislation. 

New Rule 

Collective Agreements may prevail, in certain circumstances, over the labor legislation. Labor unions and companies can negotiate different working conditions than those provided in the labor legislation. If companies or labor unions wish to reduce the salary or working hours, the agreement must state that the employee cannot be dismissed during the union agreement. Highly educated employees who receive a salary more than twice the maximum amount paid by the Social Security Agency (currently BRL 11.290,00) can now negotiate employment agreements with employers without union involvement.

Union Contribution

Old Rule 

The contribution was mandatory. Payment was made once a year by deducting the amount from the employee’s salary. 

New Rule 

Union contribution is now optional. 

Banking of Hours

Old Rule 

Overtime hours could be compensated on another day, if it did not exceed, on a total one-year period, the sum of the weekly working hours predicted. There was also a daily 10 working hours limit. 

New Rule 

The bank of hours can now be negotiated directly upon a written individual agreement provided the compensation happens within 6 months.

Old Contracts, New Contracts 

One of the biggest questions for all employers in Brazil was whether to apply the changes imposed by the labor reform on ongoing contracts or only on new contracts. In May 2018, it was announced that all contracts, even those signed prior to the approval of the new law, should be included in the changes imposed by the reform. All valid employment contracts in Brazil as of 11th November 2017 will be governed by the Reform Law No. 13;467.

 

 

Edited by: Shreya Bhattacharya

Sajid Mir
ABOUT THE AUTHOR
Sajid Mir
A labor and employment lawyer at Replicon who specializes in global compliance. Replicon provides award-winning products that make it easy to manage your workforce. Replicon is an industry leader in global compliance and has a dedicated team which pro-actively monitors international labor regulations for ensuring proper adherence with specific country rule requirements.
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