Brazil passes major labor reforms

Amid political turmoil, Brazil seeks to provoke job growth with the passing of major labor reforms. Last Thursday, July 13, Brazil’s president, Michel Temer, signed into law a labor reform bill that will make extensive changes to the country’s onerous labor laws, some which date back to the 1940s.

Here are some of the key changes to the existing labor laws outlined in this bill:

• Employee union dues are now voluntary.
• Vacation time may be divided up to three periods, one being at least 14 days, and none being less than five days (currently employees are entitled to 30 consecutive days of vacation).
• Workers may now work up to 48 hours per week (previously 44) and up to 12 hours per day (previously eight or up to 10 if approved in collective bargaining agreements).
• Breaks for employees during working hours decrease from one hour to 30 minutes (for shifts of six hours of greater).
• Workers who file labor claim lawsuits are responsible for litigation fees, as well as court costs, if they lose the case (previously covered by public funds). In addition, the law provides for monetary penalties for workers who file lawsuits deemed to be frivolous, or in bad faith.
• Establishment of two other forms of employment, intermittent employment, both daily and hourly, and remote employment.
• Employers may not terminate and rehire an employee as third-party contractors for a period of at least 18 months.
• Employers must now give only 15-day notice, rather than 30, when dismissing employees.
• Union approval is no longer required for employment terminations; however, counsel of both the employer and employee must be present.
• Carryover liabilities: In the case of an acquisition, the law states that the labor obligations become the responsibility of the successor company.

Upon passing of this bill, President Temer indicated that he will propose some alterations to some of the most controversial aspects of the bill by way of executive order. We will continue to provide you with relevant updates as this matter progresses.