Brazil: Labor Law: Compliance Update: Brazilian Government Updates Labor Laws
Effective: November 11th and phasing in over a number of years
The Brazilian government recently updated its labor laws to create a more business friendly environment. The changes relate to new employment agreements only, and every job category will need redesigned benefits, as will employees with more than one job.
There is no need for employers to take immediate action, but the new legislation should affect the entire benefits market in the upcoming years.
Major changes include:
- The creation of a more flexible job market.
- Unions will no longer be able to fix minimum benefits and apply minimum annual increases to salaries.
- Part time jobs, jobs on demand, working from home part-time, and third party contractors are now legally recognized as “real” jobs.
- Legalized salary minimums, formal recognition of the 13th month salary, and holidays will now be agreed to in individual job agreements.
Brazil’s Labor Law Changes in More Detail
Holidays
Current law: Holidays could be split in 2 periods, where one must be no less than 10 days.
New law: Holidays can be split up to 3 periods, through negotiation, where one period must be at least 14 working days.
Pregnancy
Current law: Pregnant or breastfeeding employees are forbidden to work in places with unhealthy conditions. There is no time limit to tell the company about the pregnancy.
New law: Pregnant or breastfeeding employees are allowed to work in unhealthy environments, unless they present a medical certificate that recommends they stay away from work. Dismissed women will have up to 30 days to inform the company about the pregnancy.
Outsourcing
Current law: The Project of Law that allows the outsourcing for end-activities is sanctioned. Examples of employees who are part of an end activity are engineers, masons, and electricians who work for a real estate construction company. They carry out the activity-end, or final product, for the company, which is to build real estate.
New law: A quarantine period of 18 months prevents the company from dismissing any effective employee to re-hire them as an outsourced employee. Outsourced employees should have the same working conditions as effective employees.
Negotiation
Current law: Conventions and Union Agreements can establish different work conditions from the ones provided in the Labor Law only if they give the employee a more money, benefits and/or perks than the one provided by law.
New law: Conventions and Union Agreements can establish different work conditions from the ones provided in the Labor Law, but not necessarily in a higher level for the employees.
- These can be negotiated: working day, profit sharing, bank hours, holiday exchange, work break schedule
- These cannot be negotiated: unemployment insurance, minimum wage, 13th salary, annual leave, maternity / paternity leave
Working day
Current law: Workdays are limited to 8 hours a day, 44 hours a week and 220 hours a month. Two extra hours can be added to any workday.
New law: Workdays are limited to 12 hours a day with 36 hour of rest, respecting the limit of 44 hours a week (48 hours with overtime) and 220 hours a month.
Home Office
Current law: The Labor Law did not include this modality of work.
New law: Everything the employee will use at home will be formalized with the company via contract.
Breaks
Current law: For every 8 hour workday employees get at least one hour and a maximum of two hours of break time to rest or eat.
New law: Time limits can be negotiated, as long as the employee has at least 30 minutes to rest or each for each 8 hour workday.
Dismissal
Current law: When the employee resigns or is dismissed for good cause, he is not entitled to receive the 40% fine over the FGTS (Time of Service Guarantee Fund) balance or to withdraw from the fund.
New law: The contract may be terminated by mutual agreement, with the payment for half of the notice period and half of the 40% fine over the FGTS balance. The employee can still move up to 80% of the amount deposited by the company in the FGTS account, but won’t be entitled to the unemployment insurance.
Union contribution
Contextual note: The destination of the union contribution is divided between the union itself, federations, confederations, and the federal government. The federal government applies its share to the Fund of Assistance to the Worker and the Unemployment Insurance.
Current law: The union contribution is mandatory.
New law: The union contribution is optional.
Hour Bank
Current law: Excess hours in one working day can be compensated on another day, if it does not exceed the maximum weekly working hours for a maximum period of one year. There is also a limit of accumulating 10 extra hours per day.
New law: The number of hours banked can be agreed upon by individual, written agreements. Compensation must be paid in the same month the work is done.
Need benefits assistance in Brazil?
We’d be happy to connect you with our Brazilian Partner SCIATH.