Labor Reform is a positive milestone in labor relations in Brazil. It gives more flexibility for employers and employees to negotiate labor conditions and may reduce the number of labor claims and labor liabilities. Law 13.467/2017 finally addressed some matters that for decades had been discussed in courts.
The main aspects addressed by Law 13.467/2017 are:
- negotiation with the Union prevailing over the Law, except when regarding health and safety matters and the rights established by the Federal Constitution,
- home office work,
- intermittent work,
- work of pregnant employees in hazardous conditions,
- mandatory employees’ representative body for companies with more than 200 employees,
- alternatives for resolution of conflicts, including arbitration, validation of private release agreements by courts, negotiation and annual release of labor obligations,
- premiums, even if paid on a habitual basis, will not be part of the employees´ salary, thus not subject to labor and social security charges,
- union contributions are no longer mandatory,
- outsourcing of core business is now allowed,
- classification for moral damage indemnification in light, medium, serious and extremely serious, with indemnification from 3 to 50 times the last monthly salary, and
- attorney fees applicable to the losing party.
In addition, the Law also changed rules applicable to vacation. Employees will remain entitled to an annual 30 day paid vacation, however, the vacation period can be taken in up to 3 periods instead of only 1. One of the periods must not be shorter than 14 days and the others cannot be shorter than 5 days.
With regards to working hours, the Law (i) extinguished commute hours as part of the working hours of the employees, (ii) authorized the implementation of bank of hours to be offset in up to 6 months through individual agreement rather than through collective bargaining agreements, and (iii) established two types of part-time workers.
As per termination, the Law established termination by mutual agreement as a new type of termination with reduced severance in comparison to a termination without cause. For all types of termination, mandatory severance must be paid in 10 days and there will no longer be the need to validate the termination by the Union. Mass dismissal will not require prior negotiation with the Union as has been demanded by courts, and the voluntary dismissal plan (known and “PDV”) implemented under Union negotiation can establish a full release of the relationship.
Certain aspects of the new Law, such as intermittent work, work of pregnant employees in hazardous conditions, Union contributions and the parameters for moral damage indemnification, among others, may still be changed in the future by specific regulation.