Employee Rights When an Undertaking is Transferred in Brazil

1. Employees’ Rights

Employee labor conditions must not be reduced or negatively impacted from a transfer of undertaking. Employers are prevented from making changes to employment terms and conditions that are detrimental to employees, whether or not the employee has previously consented to the change.

Due to the concept of labor succession, the new owner of a company or business will be considered liable for all labor rights and liabilities. Brazilian Labor Courts have consolidated the concept that an acquisition of a company’s control or a transfer of relevant parts of its assets to another company – when assets represent a business unit – characterize labor succession. Once the succession is characterized, the new owner is liable before the employees for any and all labor liabilities relating to the acquired business units or companies, even those connected with the period preceding the transfer of ownership.

2. Requirements for Predecessor and Successor Parties

From a labor standpoint, there is no need to request any authorization for an authority or Union to proceed with a takeover.

For more information on these articles or any other issues involving labour and employment matters in Brazil, please contact TozziniFreire Advogados
This entry was posted in Transfer of Undertakings on and modified on .