employment law overview brazil 2021-2022

| 1 employment law overview

2021-2022 / brazilwww.leglobal.org

employment law overview brazil 2021-2022TozziniFreire Advogados / Proud Member of L&E GLOBAL

http://www.leglobal.org


2021-2022 / brazil

table of contents.

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i. General overview 03ii. HirinG praCtiCeS 05iii. employment ContraCtS 07iv. workinG ConditionS 09V. Anti-DiscriminAtion LAws 11vi. pay eQUity lawS 13vii. SoCial media and data privaCy 14 viii. termination of employment ContraCtS 15iX. reStriCtive CovenantS 19X. tranSfer of UndertakinGS 21Xi. trade UnionS and employerS aSSoCiationS 22Xii. employee BenefitS 24


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i. general overview

2. Key Points•Themost commonpractice ishiringworkers asemployees.

•Employment agreements in Brazil are usuallyfor indefinite term; fixed term employmentagreementsareonlyallowedinspecificsituations.

•All companies and employees are mandatorilyrepresentedbyUnions.

•Employmentsareatwill,meaningthatanypartymay terminate the employment agreementwithoutcauseuponmandatorypriornoticeandpaymentoftheseverance.

•Work permits must be requested whenever aforeignerwantstoworkinBrazil.

3. legal frameworKIn Brazil, labour relations are amatter of Federallaw, so the States and Municipalities have nopowertolegislateoverlabourmatters.Therefore,labour rights are nationally standardised and thesame labour costs and consequences will applyregardless of an employer’s place of business orplaceofincorporation.

The basic principles concerning labour relationsinBrazilarecontainedintheLabourCode,theso-called “Consolidação das Leis do Trabalho - CLT”,enacted on 1May 1943. On 11November 2017,

1. introductionInBrazil,LabourLawisprotectiveofemployees.SomebasicprinciplesimplicitlyorexpresslyprovidedbyLawwillgovernanyemploymentrelationshipinBrazil.Themostrelevantprinciplesare:(a)prevalenceoffacts:in thedeterminationof labourconsequences, therelevant factssurroundinganemploymentrelationshipwillprevailoverformaldocuments;(b)prohibitionofdetrimentalchanges:employersarepreventedfrommakingchangestoemploymenttermsandconditionsthataredetrimentaltoemployees,whetherornottheemployeehaspreviouslyconsentedwiththechange;and(c)jointliability(groupofcompanies):companiesbelongingtoagroupoflegalentitiesunderthesamecontrol,directionormanagementarejointlyliablefortheobligationsofanycompanybelongingtosuchgroupwithrespecttoemploymentrelationships.


the Labour Reform became effective. It changedmore than 100 articles of the Brazilian LabourCode. The changes intended to: (i) update theBrazilianLabourCode,(ii)improvelabourrelations,(iii)valuecollectivenegotiationsbetweenworkersandemployers, (iv) reduce thenumberof labourclaims filed every year, (v) reduce the workforceinformality,and(v)simplifylabourprocedures.

4. new develoPments The Labour Reform changed significantly thelabourrelations inBrazilandgavemoreflexibilityfor employers and employees to negotiatelabour conditions. Such Reform also reinforcedthe validity of collective negotiations with theUnions,establishing that thecollectivebargainingagreementsshouldprevailoverlaw.

Themain aspects changedby the LabourReformare:

•negotiation with the Union prevailing over theLaw, except when regarding health and safetymattersandtherightsestablishedbytheFederalConstitutionandtaxes;

•negotiation with employees with universitydegrees and monthly salary higher than twotimesthecapamountofthebenefitsgrantedbythe social security agency (currently amonthlyremuneration that corresponds to approx. BRL


2021-2022 / brazilan alliance of employers’ counsel worldwide

12,200)willprevailoverthecollectivebargainingagreement(“hypersufficientemployee’’);

•outsourcingofcorebusinessisallowed;•remotework,includingtheobligationtoprovideemployeeswithguidelinesrelatedtohealthandsafetymatterswhenworkingfromhome;

•alternatives for resolutionofconflicts, includingarbitration, validation of private releaseagreements by courts, negotiation and annualreleaseoflabourobligations;

•Intermittentworker;•premiums,evenifpaidonahabitualbasis,willnotbepartoftheemployee’ssalary,thusnotsubjectto labourandsocial securitycharges, ifgrantedonadiscretionarybasisandforemployeeswithoutstandingperformances;

•classification of moral damage indemnificationin light,medium, severe and extremely severe,inwhich indemnificationmayvaryfrom1to50timesthelastmonthlysalaryoftheemployee;

•unioncontributionsarenolongermandatory;•termination bymutual agreement,which has alower severance package in comparison to theterminationwithoutcause.


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1. requirement for foreign emPloyees to worK WheneveraforeigneristransferredtoBraziland/or retained by a Brazilian company to renderservicesinBrazil,anappropriateworkvisa/permitmustberequestedinadvance.Iftheforeignerwillbringhis/herdependents, it isnecessarytoapplyfor a residency permit based on family reunion.The proper visa depends on the activities thatwill be performed in Brazil. After the applicablevisa is selected, the Brazilian entity will have tocomply with the applicable rules concerning therelationshiptobemaintainedwiththeforeigners.

2. does a foreign emPloyer need to establish or worK through a local entity to hire an emPloyee?A foreign employer needs to establish or workthroughalocalentitytohireanemployeeinBrazil,becauseonly local companies are able to complywithalllabourrightsandobligations,whichincludepaymentof labourandsocial securitycharges,aswellasdeductionoftheapplicableincometax.

3. limitations on bacKground checKsThere is no specific provision in Brazilian LabourLaws either prohibiting or authorising theemployer to perform background checks on itsprospective employees. However, protection ofpersonal information pertaining to any Braziliancitizen isgranted inabroadscopebytheFederalConstitution, which grants protection and

inviolabilityofanycitizen’s intimacyandpersonallife. The Federal Constitution also prohibits anykind of discrimination. In addition, Law 9.029/95prohibitsanydiscriminatoryorrestrictivemeasurefortheadmissionofanemployeeormaintenanceof employment based on sex, origin, race, color,marital status, family situation or age. There areonlyafewexceptionstothegeneralrulethatjustifysome types of background checks (i.e. criminalcheck forbankemployees). Inviewof theabove,currently,asageneralrule,BrazilianLabourCourtsunderstand that certain kinds of search queriesthatacompanyperformsregardingitsprospectiveemployees’informationpersonifiesdiscrimination,thusbeingillegal,andentitlingtheindividualstoanindemnification formoral damages. Therefore, inordertoevaluatethecandidate’sbackground,andin order tomake a hiring decision, the companyshould only use public information about theindividual.

4. restrictions on aPPlication/interview questionsWith regards to the employment application andinterview questions, as mentioned above, Law9.029/1995 prohibits any kind of discriminatorypractice which may limit the access or themaintenance of employment due to sex, origin,race,color,maritalstatus,familysituation,disability,professional rehabilitation, age, among others.Therefore,theemployermustavoidquestionslike“Areyoumarried?”,“Doyouhaveanychildren?’’,‘’Whatisyournationality/religion/maritalstatus?’’,among others that may be discriminatory on anemployment application or during an interview.Under Law 9.029/1995, with respect to women,the requirement of statements, examinations orsimilarmeasuresrelatedtosterilisationorstateofpregnancyareconsidereddiscriminatory.This lawalsoprohibitsinducingorinstigatingbirthcontrol.


ii. hiring Practices



In addition, theBrazilianGeneralDataProtectionLaw, so-called “LGPD”, was enacted in August2018 (Law 13.709/2018) and has been in forcesince September 2020. Per the LGPD, personaland sensitive data can only be processed on anunderlying lawful basis. Thus, companies willhavetobecarefulnotonlywiththepersonalandsensitive data of employees that is processed,but also the data of candidates (e.g. résumé,backgroundchecks,amongothers).


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iii. emPloyment contracts1. minimum requirementsIn Brazil, workers may be hired in several ways,but themost commonpractice is tohireworkersas employees. An employment relation ischaracterised by the simultaneous presence offourrequisites:(a)servicesrenderedonapersonalbasis; (b)onapermanent/habitualbasis; (c)withsubordination,i.e.,theservicesarerenderedunderthe employer’s direction; and (d) on an onerousbasis,i.e.,theindividualmustreceiveremunerationinconsiderationfortheservicesrendered.

Whenever the requisites of employment relationarenotpresentinalabourrelation,thepartiesarefree to structure it in a differentway other thanemployment, such as: independent contractors/consultants,serviceproviders/outsourcedworkers,temporaryworkers,intern,non-employedofficers,among others, provided that the specific rulesand regulations regarding such other forms arecompliedwith.TheLabourCodeisapplicablesolelyforemployees,whiletheotherworkstructuresaregovernedbydifferentstatutes.

2. Fixed-term /Open-ended contractsEmploymentagreementsinBrazilareusuallyforanindefiniteterm.AspertheLabourCode,fixed-termemploymentagreementsareonlyallowed:(a)foruptotwoyearswhen:(1)thetemporarynatureoftheservice justifiesapre-established term,or (2)the business activities have a temporary nature;(b)duringaninitial90-dayprobationemploymentperiod,afterwhichtheemploymentagreementwillbecomeforanindefiniteterm.Ifthepartiesintendto execute a fixed term employment agreementit is necessary to have a written employment

agreement expressly stating the term and thereason. Additionally, Law 9.601/98 establishesthat collective bargaining agreements may alsoauthorisesomeadditionalsituationsinwhichfixed-termemploymentagreementswillbeallowed.

Thefixed-termagreementwillbecomeanindefinitetermemploymentagreement,iftheagreement:(a)isforafixedterm,butthereasontojustifyitisnotone of the reasons allowed by law; (b) does nothave a clausementioning the term and the legaljustification for such term; (c) is extended morethanonce;(d)themaximumtermisnotobserved;(e) the renewal is not agreed by the parties inwriting;or(f)ifsuccessivefixed-termemploymentagreements are used without observing the6-monthbreak.

In addition, the LabourReform introducedanewtypeofhiring–“intermittentwork”–whereintheemployee renders services with subordination,alternating between periods of provision ofservicesandinactivity,butnotonahabitualbasis.The employee can work for any other employerduringtheinactivityperiods.

3. trial PeriodsThetrialperiod,alsocalled“probationperiod”,maybeestablishedforaperiodupto90daysandmayberenewedonceifthelimitof90daysisobserved,e.g., 45 days renewable for 45 days, or 30 daysrenewablefor60days.

4. notice PeriodThe notice period, also called “prior notice”, isonly applicable in the event of termination ofemployment agreements for an indefinite term.In the event of termination of the employmentagreement for an indefinite term, without cause



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andupon theemployer´s initiative, theemployermust provide the employee with a prior noticeproportionaltothelengthofservice;minimumof30daysiftheemployeehasworkedupto1yearand3 additional days for each year of service limitedto 60 additional days (maximumof 90days priornotice).Inthecaseofaterminationofemploymentagreements foran indefinite term,without causeand upon the employee’s initiative (resignation),the employeemust provide a prior notice to theemployerof30daysorrequesttobereleasedfromworkingduringthepriornoticeperiod.Intheeventofterminationbymutualconsent,thepriornoticeperiodwillbereducedbyhalf.



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iv. worKing conditions 1. minimum worKing conditionsEmployeesareentitledtotherightsestablishedbyFederal Constitution, Brazilian labour legislation,includingallregulationsandsupplementaryrightsset forth by the respective collective bargainingagreement. Individual employment agreementsand internalpoliciesmayalsoestablishadditionalrights,whichmustalwaysbegreaterthantherightsestablishedbylaw.

As per the Labour Reform, collective bargainingagreements should prevail over law, even whenthe conditions agreed are worse than the onesestablished by law, except as they relate to: (i)healthandsafetyrights, (ii) thirdpartyrights (i.e.socialsecuritycontributions)and(iii)labourrightssetforthintheFederalConstitution,amongotherconditionsestablishedbylaw.

2. salaryThe LabourCodeestablishes that the employee’ssalary must be paid in Brazilian currency.Compensationcomprisesnotonlytheemployee’sfixed salary, but also any commissions, bonuses(Christmas or otherwise), fringe benefits, such aspersonal or family benefits and living expenses.The Federal Constitution prohibits reduction ofcompensation, except by means of a collectivebargainingagreement.

Compensation,withsomeexceptions,mustbepaidatleastmonthly.EmployeesareentitledtoreceiveaChristmasbonuscorresponding toonemonthlysalaryperyear.Halfof theChristmasbonusmustbe paid by the 30th ofNovember, and the otherhalfonorbeforethe20thofDecember.

The nationalminimumwage (established by law)is currently BRL 1,100.00. Collective bargainingagreementsmayestablishaso-called“professionalsalary”,which istheminimumwageforaspecificcategory and must be higher than the nationalminimum wage.

3. maximum worKing weeKTheregularworkingperiodcannotexceed8hoursper day and 44 hours perweek. One-hour breakforrestandmealismandatoryforemployeesthatworkmorethan6hoursperday.EmployeesarealsoentitledtoapaidweeklyrestperiodpreferablyonSundays.Somespecificcategorieshaveadifferentwork shift. For instance, regular bank employeesandtelemarketingoperatorscanonlywork6hoursperday,journalistsandmusicians5hoursperday,amongothers.

4. overtimeCompensationforovertimeworkmustbeatleast50% greater than the compensation for regularwork. The following employees are not entitledtoovertimepaymentsandarenot subject to thelimitsonworkinghoursundertheLabourCode:(a)employees who perform activities outside of thecompany’s facilities and wherein those activitiesassuch,arenotcompatiblewithdefinedworkinghours; (b) employees (such as managers) whooccupytrustpositions(“cargosdeconfiança”);and(c)employeeswhoworkinaremoteworksystem.




5. health and safety in the worKPlace

a. employer’S oBliGation to provide a HealtHy and Safe workplaCe

Employersareobligedtoprovideahealthyandsafeworkplace to employees and to comply with allmandatoryregulationsregardinghealthyandsafetymatters. There are several regulations providingfor strict rules concerning mandatory periodicalmedical examinations, medical examinationsuponadmissionandtermination,medicalrecords,environmental risks prevention, creation andmaintenanceofanInternalCommissionforAccidentPrevention (CIPA), health-hazard and dangerousactivities and the corresponding allowances andergonomics,amongothers.

B. Complaint proCedUreS

In Brazil there is no legal provision regardingcomplaint procedures. Generally, all employeesareentitledtofile labourclaimstorequest rightsrelatedtotheemploymentrelationship.Employeesmayfilelabourclaimswhileworking,orwithintwoyearsasfromtheterminationdate,toclaimrightsrelated to the past five years, counted as of thefilingdateof the claim.Companiesmayestablishtheir own internal policy related to complaintprocedures,butitwillnotpreventtheemployeesfrom filing claims directly without observing theinternalpolicy.

C. proteCtion from retaliation

Thereisnospecificlegislationregardingretaliationin Brazil. Nevertheless, the Federal Constitutionprohibitsanykindofdiscrimination,andretaliationmay be understood as a type of discrimination.Employeeswhosufferedretaliationandareabletoevidenceitincourtareentitledtoindemnificationdue to moral damages or even reinstatement towork,dependingonthereasonfortheretaliation.


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V. Anti-diSCriminAtiOn laws 1. brief descriPtion of Anti-diSCriminAtiOn lawsThe Federal Constitution prohibits any kind ofdiscrimination, including distinction of salaries,duties and admission criteria due to gender, age,skin colorormarital status. TheConstitutionalsoprohibits any discriminatory acts with regardsto distinction of salary and admission criteria ofdisabledemployees.

Furthermore,asmentionedabove,Law9.029/1995prohibits any kind of discriminatory practicewhich may limit the access or the maintenanceof employment due to sex, origin, race, skincolor, marital status, family situation, disability,professionalrehabilitationandage,amongothers.

2. extent of Protection Employers are prohibited from discriminatingagainst any candidate/employee during thehiring process and the employment relationshipfor any reason, including, but not limited to sex,origin, race, color,marital status, family situation,disability,professionalrehabilitationandage.

An employer can adopt a non-discriminatorypolicyapplicable toallemployeeswithguidelinesabout conduct that should not be performed byemployees.Inaddition,theemployermayprovidetrainingtoitsmanagersandhierarchicalsuperiorstoavoidanydiscriminatoryactorotherwisetransmitananti-discriminatorycultureatthecompany.

3. Protections against harassmentProtection of personal intimacy of any Braziliancitizen is granted, in a broad scope, by theFederal Constitution, which (a) prohibits anykind of discrimination; (b) grants the protectionand inviolability of any citizen’s image, honor,intimacyandpersonal life; and (c) sets forth thatthenoncompliancewith such legal guaranteesorthe violation of their limits may be challenged,withthepaymentofindemnificationduetomoralharassment.

Notwithstanding, as far as Brazilian law isconcerned, there are no express and specificprovisions of law definingwhat is orwhat is notconsidered harassment in the workplace, butratherhasbeendefinedbytheapplicablecaselaw.Moralharassmentcanbedefinedastherepeatedexposure of employees to humiliating andembarrassingsituationsduring theworkinghoursandwhileemployeesperformtheirduties.Ontheotherhand, sexualharassment canbedefinedasthe repeated exposure of employees to conductfromtheirsuperiorswithlibidinousandmaliciousconnotations.Companiesmayestablishtheirownpoliciesrelatedtomoralandsexualharassment.




4. emPloyer’s obligation to Provide reasonable accommodations Withregardstodisabledpersons,pleasenotethatLaw8.213/91sets forth thateverycompanywith100ormoreemployeesisobligatedtohire2%to5%ofemployeeswhoaredisabledorintheprocessof being rehabilitated according to the followingproportionality:(a)upto200employees-2%;(b)from201to500employees-3%;(c) from501to1000employees-4%and(d)over1001employees-5%.

Thelawalsoestablishesthattheterminationofanemployeewhoisdisabledorintheprocessofbeingrehabilitatediscontingentonthehiringofanotheremployee bearing similar conditions, in order tocomplywiththequotamentionedabove.

Law 10.098/2000 established general rules andbasic criteria to promote accessibility of disabledpersonsinpublicandprivatebuildings.Therefore,companies are required to adapt theirworkplacestructure to enable disabled employees to workandhaveaplaceforthematthecompany.

Withregardstoanemployee’sreligiouspractices,the Federal Constitution protects the freedomof religious belief. However, there is no specificprovisionunderthelawobligatingtheemployertoaccommodatetheemployee’sreligiouspractices.

5. remediesBrazilian Labour Courts are ruling thatdiscriminatory termination of employees mayresultinreinstatementandindemnificationduetomoraldamages.Forinstance,Precedent443oftheSuperiorLabourCourtholdsthattheterminationofanemployeewithHIVoranyotherseriousdiseaseispresumedtobediscriminatoryand invalid,andtheemployeeisentitledtoreinstatement.

6. other requirements InBrazil,companiesmustobservetwoquotas: (i)employees with disabilities and (ii) apprentices.There is no other specific legislation regardingdiversity in the workplace. However, severalcompanies are adopting internal policies andaffirmativeactionsthataimatincreasingdiversityintheworkplace.



vi. Pay equity laws 1. extent of Protection The Federal Constitution prohibits salarydifferences based on sex, age, color or maritalstatus.Asmentionedabove,suchprohibitionalsoapplies to disabled employees. In addition, theLabour Code ensures that employees performingthe same activity, with equal value, to the sameemployer, at the same facility, areentitled to thesame remuneration, except if the difference intheirlengthofservice:(a)withthesameemployeris longer than 4 years and (b) at such position islongerthan2years.Inaccordancewithlaw,“equalvaluework”istheworkperformedwiththesameproductivityandsametechnicalperfection.

2. remedies If a company does not comply with the equalpay rules mentioned above, the company maybe subject to (a) inspection from the Ministryof Economy, which may subject the companyto the payment of administrative penalties, (b)investigationbytheMinistryofLabourProsecutionand/or (c) individual labour claims filed byemployees or former employees, claiming moraldamagesduetothediscriminatorytreatmentandpaymentofsalarydifferences.

3. enforcement/litigation Equalpayforequalworkisacommonlabourclaimin Brazil.


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1. restrictions in the worKPlaceBrazilianLabourCourtsrecognisethattheemployercan restrict the personal use of the Internet andsocialmediabytheemployeesduringtheworkinghours,duetotheemployer’spowerofcommand.

a. Can tHe employer monitor, aCCeSS, review tHe employee’S eleCtroniC CommUniCationS?

ThereisnospecificprovisioninBrazilregardingthismatter.However, it is advisable to include suchaprovision in an internal policyof the employer. IftheemployerrestrictstheuseoftheInternetandsocialmediatoprofessionaluseonly,theemployerisallowedtoinspectsuchuse,andiftheemployeeis using the Internet/social media improperly, itcouldleadtodisciplinarymeasures(inaccordancewithrulingsbyBrazilianLabourCourts).

2. emPloyee’s use of social media to disParage the emPloyer or divulge confidential informationThere is also no specific provision in Brazilregarding this matter. However, Brazilian LabourCourtsunderstandthattheuseofsocialmediatodisparage theemployeror todivulgeconfidentialinformation, may lead to disciplinary measures.Priordecisionsby these courtson this issueheldthatthistypeofconductcouldleadtoterminationwith cause by the employer, and payment of anindemnification due to moral damages, by theemployeetotheemployer.


vii. social media and data Privacy


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1. grounds for termination InBrazil,employmentsareatwill,meaningthatanypartymay terminate the employment agreementwithout cause upon the mandatory prior noticeandpaymentoftheseverance.Itisnotnecessarytomention any reason for termination, except ifit is a termination with cause. Termination withcauseisthemostseveresanctionforanemployeeand results in the reduction of the employee’sseveranceentitlements.Also,theterminationwithcause isalwaysanexemplaryactionbeforeotheremployees.

The employer should only terminate anemployment with cause when the misconduct isforeseenbylawandseriousenoughtojustifysucha severe sanction.TheBrazilian LabourCode liststhefollowingasmisconduct:

•improbity(e.g.fraud);•impropriety;•business dealings by the employee for his/her own or someone else’s benefit withoutpermissionoftheemployer;

•competitionwiththeemployer;•criminalconviction(finaldecision);•negligenceintheperformanceofhis/herduties;•drunkenness,eitherhabitualoratwork;•breachofconfidentialitybytheemployee;•act of disobedience or insubordination by theemployee;

•abandonmentofemploymentbytheemployee;•libel, slander and any other defamation acts,exercised at worksite by the employee, againstany person, or physical acts of offence underthe sameconditions, except in the caseof self-defenseordefenseofthirdparties;

•libel, slander, any other defamation acts orphysicalactsofoffenceexercisedbytheemployee

againsttheemployerandhierarchicalsuperiors,exceptinthecaseofself-defenseordefensethirdparties;

•gamblingorsimilarconductbytheemployee;and•loss of qualification or of the requirementsestablished in law for the exercise of theprofession,asaresultofwillfulmisconductoftheemployee.

Fixed-term employment relationships mayterminateexactlyon the lastdayof such termormayendbeforeit. If itterminatesonthelastdayof such a term, the employeewill be entitled totheseverancepaymentssetforthbylaw.However,if the termination occurs before the fixed-term,therearetwoalternativesregardingtheseverancethat vary in accordance with the wording of theemploymentagreement:(a)theterminatingpartymustpaytheequivalentof50%oftheamountthatwould be due until the end of the agreement or(b) ifthere isaspecificclause intheemploymentagreementmentioningthat,uponearlyterminationof the fixed-term employment agreement, theterminationwillbetreatedasaterminationofanindefinite term employment agreement and theregular severance for termination of indefinitetermemploymentagreementswillbedue.

2. collective dismissalsLabourlegislationinBrazilissilentontheconceptof mass termination (collective dismissal). It ispossible to infer that the employer may legallyterminateallemploymentswithoutcause,provideditpaysallmandatoryseverance.Inaccordancewiththe Labour Reform, collective dismissal does notrequirepriornegotiationwiththeunion.However,massterminationisstillaverycontroversialmatterin Brazilian Labour Courts and depending on theindustry and number of employees involved,a prior negotiation with the union may still berecommendable.


viii. termination of emPloyment contracts



3. individual dismissalsSince employment agreements are at will, anemployercanterminateanemploymentagreementat any time, provided that the notice period isgranted. Some employees cannot be terminatedwithoutcauseduetotemporaryjobstability.ThatisthecaseofUnionrepresentatives,membersoftheInternalCommitteeforAccidentsPrevention(CIPA),pregnant employees, employees that have work-relatedaccidents,amongothersituationsthatmaybesetforthintheapplicablecollectivebargainingagreement.Terminationwithcauseandresignationare allowed even if an employee has temporaryjob stability.A terminationwithorwithout causeor resignation should be communicated to theotherpartyinwriting.Nopriorcommunicationorrequestsofauthorisationtotheemployees’unionorMinistryofLabourarerequiredtoperformanytypeoftermination.

The Labour Reform introduced a new type oftermination called ”termination by mutualagreement’’ in which both parties decide to endtheemploymentagreement.

Theemployermusttakethefollowingproceduresupontermination:•Schedule a mandatory medical examinationwith an employment doctor, to check anypossiblework-relateddiseasethatcouldpreventa termination without cause (job stability, asmentionedabove);

•Paytheseveranceamountwithin10daysasofthelastworkedday.Non-compliancewithsuchtermresultsinapenaltytobepaidbytheemployertothe employee in the amount equivalent to onemonthlysalary;and

•ValidatetheterminationbeforetheunionortheMinistryofLabourisnolongernecessary,exceptif it is established in the applicable collectivebargainingagreement.

a. iS SeveranCe pay reQUired?

In Brazil, severance pay is mandatory, but theamountdiffersbasedon the typeof termination,i.e. in case of resignation, termination bymutualagreement, without cause, and with cause inan indefinite term agreement and fixed-termagreement,asfollows:

mandatoryseverance comments

mutualagreement

without cause

Fixed-termresignation with cause

tyPe of termination

PriorNotice

ChristmasBonus

VestedandProportionalVacationNot

Taken

FGTSPenalty Notdue

Notdue

Notdue

Notdue Notdue

Notdue

Onlyvestedvacation

30to90daystothe

employee

30daysbytheemployee

Halfoftheregularnoticeperiod:

15to45days

Due

DueDue

Due

Due

Due

Due

Due

Due

Itcorrespondsto40%oftheFGTSaccount’sbalancepayabletothe

employee.

Aftereachperiodof12monthsofwork,theemployeeis

entitledto30dayspaidvacation,plus1/3

bonus.

1/12ofcompensationpermonthofworkduringthecalendaryear,includingthepriornoticeperiod.

Proportionaltothelengthofservice.

Minimumof30daysandmaximum90

days.Employeesshallprovide30days´prior

notice.

HalfoftheregularFGTS

penalty(20%)thatisduetotheemployee.



If the termination without cause occurs 30 daysbeforetheannualsalaryincreasedateestablishedinthecollectivebargainingagreement,theemployeeisalsoentitledtoanindemnificationequivalentto1monthlysalary.Collectivebargainingagreements,internal policies and individual contracts/offerletters must also be checked since they mayestablishadditionalrights.Intheeventfixed-termagreements are terminated without cause, theterminatingpartymustpaydamagesintheamountof 50% of the compensation established for theremainingtermoftheagreement.

4. seParation agreements

a. iS a Separation aGreement reQUired or ConSidered BeSt praCtiCe?

BrazilianLabourLawdoesnotrequireaseparationagreement. However, it may be considered goodpracticeintheeventofterminationofahigh-levelemployee/worker, who would be entitled to aspecial severance package beyond the severancepaymentsdeterminedbyBrazilianLabourLaw,orbythecontractexecutedbetweentheparties.

However,theseparationagreementisnotbinding,i.e. even though the employee/worker signs theagreement, he/she may claim additional rightsbefore the Brazilian Labour Courts. Despite itsunenforceability, any amounts paid in connectionwith the separation agreement, if properlyidentified, may be offset against future amountssentenced in a judicial claim, if necessary.Additionally,theseparationagreementhasamoraleffect upon the employee/worker and is veryusefultoavoidclaims.Iftheemployee/workerfeelssatisfiedwiththenegotiationhe/shewilllikelynotfileaclaimaftersigningtheseparationagreement.

B. wHat are tHe Standard proviSionS of a Separation aGreement?

Thestandardprovisionsare:(a)provisionbywhichtheemployee/workergrantsgeneralreleasefromanyandallpossiblerightsand/orpaymentsrelated

toorwhichmighthavearisenfromtherelationshipwiththecompany;and(b)provisionstatingthattheemployee/workergrantstothecompanytherightofoffsettingwiththevaluespaidintheseparationagreement, any and all values that the companymay be compelled to pay to the employee/worker,foranyreason,asaresultofanyjudicialoradministrativedetermination.

C. doeS tHe aGe of tHe employee make a differenCe?

No.

d. are tHere additional proviSionS to ConSider?

It isadvisable toproperly list,whenpossible, thenature of the amounts paid to the employee/workerintheseparationagreementinordertobeabletooffsetsuchamounts inthefuture,againstamountssentencedinajudicialclaim.

5. remedies for emPloyee seeKing to challenge wrongful terminationThere is no specific provision about wrongfultermination inBrazil.However,sincetheBrazilianFederal Constitution prohibits any type ofdiscrimination,ifanemployeeevidencesthathis/herterminationhasresultedfromadiscriminatoryact,he/shemayfilealawsuitagainstthecompanyclaiming reinstatement and moral damageindemnification.

6. whistleblower laws While there is no specific law regulatingwhistleblowing systems, the Brazilian CleanCompanyActprovidescredits for companies thathave implemented a compliance program. In thiscontext,awhistleblowingchannelisanimportantelementofacomplianceprogram. Internalpolicyshould regulate it, establishing provisions aboutconfidentiality,privacyandnon-retaliation,amongothers. The Federal Constitution’s principles such



astherightofprivacyandintimacy,theprotectionof image and reputation and non-discriminationrights,shouldbecompliedwithwhenimplementingawhistleblowingprogram.


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1. definition of restrictive covenantsThereisnospecificregulationinBrazilonrestrictivecovenants or the enforceability thereof followingterminationofemploymentagreements.However,the Brazilian Federal Constitution establishesfreedomofwork,whichmeansthattheemployercannot force or oblige an employee to remainemployedand/or imposeotherobligationsnottohireitsownemployees.

Also, Brazilian Industrial Property Law (Law9.279/1996)preventsanemployeefromdisclosingor using the employer’s confidential information,without its authorisation, at any time (duringthe employment or after its termination, foran indefinite period), under the penalty ofcharacterisationofthecrimeofunfaircompetition.

2. tyPes of restrictive covenants

A. non-compete cLAuses

The Brazilian Labour Code establishes that anemployeecannotcompetewithhis/heremployerduring the term of the employment agreement.Incaseofbreachofsuchobligation,theemployermay terminate the employee with cause, inadditiontothepossibilityoffilingaclaimtoreceivean indemnification linked to the damages causedbytheemployeeregardingsuchconduct.

Based on case law, Brazilian Labour Courts tendto consider a non-compete agreement validand enforceable after termination provided thefollowingelementsarepresentintheagreement:

•Limitationintime-theperiodofrestrictionmustbereasonableandexpresslylimitedto24monthsmaximum;

•Geographic limitation-areasonablegeographiclimitationfortherestrictionmustbeestablished.This means that the former employee will notbeallowedtoworkinacertaingeographicareawhere the employer develops its business; it ispossibletoincludethattherestrictionappliesinaworldwidebasisorinaspecificregion;

•Limitation of object - the obligation must beestablishedinrelationtoadeterminedobject.Itmustnotexceedthelimitsofwhatisconsideredreasonable to protect the former employer’sinterests;

•Fair compensation - the parties may negotiatewhatisreasonableonacase-by-casebasisbasedontheextensionofthenon-competeobligation,non-compete period, object and geographicrestriction.Ifitwillbeabroadrestriction(i.e.theformeremployeecannotworkforanycompanythatisacompetitoroftheformeremployer)therecommendation is topay,during theperiodofthenon-competeobligationaftertermination,theamounttheformeremployeewouldearnashis/her ordinary compensation if he/she remainedemployed for such period. Law experts agreethatafaircompensationmustcorrespondtothelast compensationmultiplied by the number ofmonthsforthenon-competeobligation.

b. non-soLicitAtion of customers / empLoyees

ThereisnoruleinBrazilianLabourLawaboutnon-solicitationprovisions.However,itisverycommonthat Brazilian employers address this restrictionin employment agreements of managementemployees. This type of restriction is not usuallyexecutedbeforeLabourCourts,whichmeansthere


ix. restrictive covenants



arefewdecisionsaboutitsenforceability.Scholars’opinion,ontheotherhand,havealreadydiscussedthismatterandcurrentlyitisunderstoodthatnon-solicitationclausesarevalidaslongasthepartiesagree on: (a) limitation in time; (b) geographiclimitation and (c) limitation of object. If theseprinciplesarefollowed,itispossibletoenforcesucharestrictionthroughthelabourcourts,aswellasaclaim for payment of penalty from the employeewhopracticedthesolicitation.

3. enforcement of reStriCtiVe COVenAntS – Process and remediesThepartiesmaynegotiatetherestrictivecovenantstobeenforcedaftertermination(i)atthebeginningoftherelationship-intheemploymentagreementor in a separate document; (ii) during therelationship;and(iii)attheendoftherelationship.Intheeventofviolationoftherestrictivecovenants,itispossibletofileajudicialclaim.

4. use and limitations of garden leave GardenleaveinBrazil isnotlegallyregulated,noris it a common practice. The enforceability of agardenleaveprovisionisquiteeasytochallengeincourt.



x. transfer of undertaKings 1. emPloyees’ rights in case of a transfer of undertaKingEmployeelabourconditionsmustnotbereducedornegativelyimpactedfromatransferofundertaking.Employers are prevented from making changesto employment terms and conditions that aredetrimental to employees, whether or not theemployeehaspreviouslyconsentedtothechange.Duetotheconceptoflaboursuccession,thenewownerofacompanyorbusinesswillbeconsideredliable for all labour rights and liabilities. BrazilianLabour Courts have consolidated the conceptthat an acquisition of a company’s control or atransfer of relevant parts of its assets to anothercompany – when assets represent a businessunit – characterise labour succession. Once thesuccession is characterised, the new owner isliablebeforetheemployeesforanyandalllabourliabilitiesrelatingtotheacquiredbusinessunitsorcompanies,eventhoseconnectedwiththeperiodprecedingthetransferofownership.

2. requirements for Predecessor and successor PartiesFrom a labour standpoint, there is no need torequest any authorisation, froma union or otherauthority,inordertoproceedwithatakeover.



xi. trade unions and emPloyers associations 1. brief descriPtion of emPloyees’ and emPloyers’ associations All employers and employees are mandatorilyrepresentedbytheirrespectiveunion.Theunionsthatwillrepresenttheemployeranditsemployeesare linked to the activities performed by thecompanyineachcityorstate.

2. rights and imPortance of trade unionsUnions cannegotiateonbehalf of theemployersand employees and execute collective bargainingagreements. Collective bargaining agreementsare instruments executed between the unionsrepresenting employers and employees forpurposes of establishing general and normativerules that govern the relationship of a givencategoryofemployersandemployees.The termsand conditions negotiated by the unions aremandatoryandcovertheemployersandemployeesofthecategory.

Anemployermayalsonegotiateaspecificcollectivebargainingagreement,applicabletoitsemployees,directlywiththeemployees´union.

There are some matters that can only beimplementedbymeansof a collectivebargainingagreementsuchasanoffsettingofaworkinghourssystemandprofit/resultsharingprogram.

3. tyPes of rePresentation

a. nUmBer of repreSentativeS

As per the Labour Code, companies with morethan 200 employees may elect an employees’representative committee in order to improvecommunications between employer andemployees.

In accordance with the Labour Reform, theemployees’ committee should be composed asfollows:

•3committeemembersforcompanieswithmorethan200andupto3,000employees;

•5committeemembersforcompanieswithmorethan3,000andupto5,000employees;

•7committeemembersforcompanieswithmorethan5,000employees.

B. appointment of repreSentativeS

The election date of the committee must becommunicated at least thirty days in advance,counted from the end of the previous mandate,bymeansofapublicnoticethatmustbefixed inthecompanyandenable theemployees toenrollthemselvesascandidates.

The election committee shall be composed of 5employees who are not candidates, in order toorganiseandmonitortheelectionprocedure.

Employees hired on a fixed-term, with theemployment agreement suspended or who arein a notice period, even indemnified, cannot becandidates.



Themembersof theemployees’ committeehavejob stability, as of the register of their candidacy,up to 1 year after the end of themandate. Suchmembers cannot suffer arbitrary termination. Inother words, they cannot be terminated if theirterminationisnotbasedonadisciplinary,technical,economicorfinancialreason.

4. tasKs and obligations of rePresentativesThemembersof theemployees’ committeehavethefollowingtasks/duties:

•represent the employees before the Board ofDirectorsofthecompany;

•improve the relationshipbetween thecompanyand its employees based on the principles ofgoodfaithandmutualrespect;

•promote dialogue and understanding in theworkplaceinordertopreventconflicts;

•seek solutions to the conflicts arising from theemployment relationship, ina fast andefficientway, aimed at the effective application of legalandcontractualnorms;

•ensurefairandimpartialtreatmentofemployees,preventing any form of discrimination basedon sex, age, religion, political opinion or unionactivity;

•forwardspecificclaimsoftheemployeesoftheirscopeofrepresentation;and

•monitor the compliance with labour and socialsecurity norms and the collective bargainingagreements.

5. emPloyees’ rePresentation in managementAs mentioned, the members of the employees’committee have the duty of representing theemployeesbeforetheBoardofDirectors.

In addition, Law 12.353/10 defines that publicentitieswithmorethan200employeesmustelectanemployees’representativetooccupyapositionandrepresentthemontheBoardofDirectors.Such

representativemust be elected among the otheremployees,inanelectionwiththeparticipationofamemberoftherepresentativeUnion.

6. other tyPes of emPloyee rePresentative bodies Dependingon thenumberof employees and therisk degree of the employer’s facility activity, theemployer must have an Internal Commissionfor Accident Avoidance (“CIPA”), composed ofboth employee– and employer– representatives.Individuals elected as employee representativemembers of CIPA (either as full or alternatemembers)maynotbe terminated fromthedateoftheirregistrationascandidatesforsuchpositionupto1(one)yearaftertheexpirationoftheirone-yearterm-in-office.

Also,dependingonthenumberofemployeesandthe risk degree of the employer’s facility activity,theemployermustimplementaSpecialisedSafetyEngineeringandOccupationalMedicine(“SESMT”),whichisateamofhealthandsafetyprofessionalshiredbytheemployer.



xii. emPloyee benefits 1. social securityEmployers and workers must make compulsorycontributions to the Brazilian Social SecurityAgency,which is in charge ofmanaging a systemdesigned to protect the employee in case ofillnessandretirement.Withregardstohealthcare,despite the fact that employers are not obligedto grant private healthcare to their employees, itis a very common practice. Collective bargainingagreements may establish additional benefits toemployeesand,therefore,employersmustcomplywiththeconditionssetforthandgrantsuchbenefitstoitsemployees.

a. reQUired ContriBUtionS

Theemployer’scontributionsaveragetwenty-sevenpercent (27%) of the employee’s overall salary.Contributions may be higher than this averageif the employees are subject tohealthhazardousworking conditions. Companies in some specificindustriesaresubjecttoa1%or2%socialsecuritycontribution on top of their revenue instead ofthe employees’ salary. The employer withholdsthe employee’s individual contributions. TheindividualcontributionisproportionaltothesalaryamountandiscappedbytheFederalGovernment,currentlyatapproximatelyBRL855.00permonthand adjusted on an annual basis. For differentlabourstructureswhicharenotemployment,othermandatorysocialsecurityschemesmayapply.

2. healthcare and insurancesThesocialsecurityauthorityprovidesthefollowinginsurances to workers who have contributed tothe system,whichwill dependon thenumberofcontributionsmadeandon theamounts involvedineachcontribution.Themaininsurancesprovidedby the social security authority are: 1) deathallowance; 2) accident allowance; 3) diseaseallowance;and4)imprisonmentallowance.

3. required leave

a. HolidayS and annUal leave

In accordance with Brazilian Labour Law, aftereachperiodof12monthsworked,employeesareentitledtoa30calendar-daypaidvacation,whichmustbetakenwithinthesubsequentperiodof12months, in theperiod that ismost convenient totheemployer.TheLabourReformallows thesplitofthevacationperiod,providedthattheemployeeagrees.Thevacationperiodcanbetakeninuptothree periods, one of which cannot be less than14daysandtheotherscannotbelessthan5dayseach.Moreover,thevacationperiodcannotstart2daysbeforeaholidayoraweekend.Additionally,note that the employee may “sell” 1/3 of his/her vacation period. The vacation remunerationcorrespondstothemonthlysalaryplus1/3oftheemployee’smonthlysalaryasvacationbonus.

Employees are entitled to be absent from workon public holidays as established by law tocelebrate some special occasion (e.g. Christmas,Independence Day, etc.), being entitled tothe regular remuneration for such days. Local(Municipal or State) holidays may also apply,dependingonwherethecompanyisbased.Iftheemployer demands the employee to work on aholiday,theremunerationpaidwithrespecttotheworkedholidaymustbeatleastdoubletheregularcompensation. Applicable collective bargainingagreements may establish a higher rate for theholidayremuneration.

B. maternity and paternity leave

All female employees are eligible for maternitybenefits, including when adopting a child. Thematernity benefit will be paid to the employeefor aperiodof 120days and is paidby INSS, theBraziliansocialsecurityagency. Inpracticalterms,the employer pays the benefit to the employee



and deducts the amount from the social securitycontributions due to the INSS. Male employeesare entitled to 5 days of paid paternity leave. IfthecompanyisenrolledinaGovernmentProgramcalled“EmpresaCidadã”,thematernityleavemaybeextendedto180daysandthepaternityleaveto20days,providedsomerequirementsestablishedbythegovernmentprogramareobserved.

C. SiCkneSS leave

Intheeventofsicknessleave,theemployerwillberesponsible for the employee’s salary during thefirstfifteendays.Afterthefifteenthdayofabsencedue to sickness, the INSS will pay a sick leavebenefit to the employee. However, the benefitdoesnotcorrespondtotheactualsalary,butrathertoaspecificINSSbasedcalculationmadeoverthelast contributionsand is cappedatapproximatelyBRL6,100.00.

d. diSaBility leave

Intheeventofaninjuryatwork,theemployerwillberesponsiblefortheemployee’ssalaryduringthefirstfifteendays.

4. Pensions: mandatory and tyPically Provided On13November2019,thePensionReformchangedseveral rules for retirement pension applicableto Brazilian citizens and defined transition rulesapplicabletothosewhowereclosetoretirement.

Accordingtothenewrules,tobeeligibletoreceivethe retirementpension,male individualsmustbeatleast65yearsoldandhavepaidaminimumof240monthlycontributions to INSS.Femalesmustbeatleast62yearsoldandhavepaidaminimumof180monthlycontributionstoINSS.Inaddition,retirementisnolongerbasedsolelyonthelengthofservice;nowadaysindividualsmusthavemettheminimumagementionedabove tobeeligible fortheretirementpension.

There is also a special retirement for employeeswho have worked under unhealthy conditions;their contribution periods are shorter than theregular period. A company that has employeesworking under unhealthy conditions that entitle

themtothespecialretirement,mustpayadditionalsocial security contributions. The additionalcontribution is 6%, 9%or 12%of the employees’salary,dependingontheleveloftherisk.

Disability pensions are also available to workerswho have become disabled due to work relatedillnessoraccident.ASocialSecuritymedicalexpertmustdocumentsuchdisabilityandthebeneficiarymust be subject to regular exams. The benefitpaymentsendwhentheemployeerecovershis/herabilitytowork.

Apart fromtheaforementionedpublic retirementsystem,somecompaniesprovidetheiremployeeswithaprivatepensionplan,inwhichtheamountsofthecontributionsfrombothparties(employersandemployees),canbedefinedbythecompaniesdirectly,subjecttospecificrulesinBrazilasissuedby the government agency Superintendência deSegurosPrivados(SUSEP).

MihokoSirleyKimuraPartner,tozzinifreire [email protected]+551150865262

GabrielaLimaArantesPartner,tozzinifreire [email protected]+551150865506

MarianaFiorottoPereiraAssociate,tozzinifreire [email protected]+551150865575

http://www.tozzinifreire.com.br

mailto:mkimura%40tozzinifreire.com.br%20?subject=

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2021-2022 / brazil

TozziniFreire Advogados has extensive experienceinallaspectsofemployment law includingprofit-sharing plans, stock options, flexible benefits,variable compensation, executive compensation,and employment and service agreements. Ourlabour team has assisted clients from manydifferentindustrysectorsinmanagingtheirlabourand employment needs. The group has workedon numerousmatters involving the improvementofunionrelationstoachievecollectivebargainingagreements, as well as on strategies to reducelabourliabilitiesandimproveon-the-jobsafetyandhealth.

Over the years, TozziniFreire has played a majorrole inmany of themost significant transactionsin the Brazilian market, becoming one of thelargestandmostprestigiousfirmsinLatinAmerica.TozziniFreire has been recognised as a first-tierfirm by Chambers Latin America and The Legal500, along with other national and internationalspecialisedpublications.

This memorandum has been provided by:

tozzinifreire advogadosRuaBorgesLagoa,132804038-904,SãoPaulo,SP,BrazilP+551150865000www.tozzinifreire.com.br

tozzinifreire advogados Brazil

ContaCt USFormoreinformationaboutL&EGlobal,oraninitialconsultation, please contact one of our memberfirmsorourcorporateoffice.We look forward tospeakingwithyou.

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2021-2022 / brazilwww.leglobal.org

Thispublicationmaynotdealwitheverytopicwithinitsscopenor cover every aspect of the topicswithwhich it deals. Itisnotdesigned toprovide legalorotheradvicewith regardtoanyspecificcase.Nothingstatedinthisdocumentshouldbe treated as an authoritative statement of the lawon anyparticular aspect or in any specific case. Action should notbetakenonthisdocumentalone.Forspecificadvice,pleasecontacta specialistatoneofourmemberfirmsor thefirmthatauthoredthispublication. L&EGlobal CVBA is a civil company under Belgian law thatcoordinates an alliance of independentmember firms. L&EGlobal does not provide client services of any kind. Suchservices are solely provided by the member firms in theirrespectivejurisdictions. Incertaincircumstances,L&EGlobalisusedasabrandorbusinessnameinrelationtoandbysomeorallofthememberfirms.L&EGlobalCVBAanditsmemberfirms are legally distinct and separate entities. They do nothave, and nothing contained herein, shall be construed toplacetheseentitiesintherelationshipofparents,subsidiaries,agents,partnersor jointventures.Nomemberfirm,northefirm which authored this publication, has any authority(actual, apparent, implied or otherwise) to bind L&EGlobalCVBAoranymemberfirm,inanymannerwhatsoever.


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employment law overview brazil 2021-2022