LABOR AND EMPLOYMENT LAW IN BRAZIL



I. INTRODUCTION

A. Historical Background

In 1943 a new body of statutes known as CLT ("Consolidação das Leis do Trabalho") was enacted by the Brazilian President, Getúlio Vargas, incorporating all the existing legislation and introducing new concepts to the labor and employment relationships.


B. Legal System

One of the most significant characteristics of the Brazilian labor system is that the laws, to a much greater extent than in the U.S., regulate the details of labor-management relations. The Brazilian Federal Constitution provides the general labor rights and grants to the federal government the competence to legislate on the subject.

The CLT, which is still in force, constitutes the basis of the labor laws and is enhanced by complementary legislation and the Brazilian Federal Constitution. Most of employees' rights are compiled in the CLT.



II. INDIVIDUAL EMPLOYMENT

A. Employment Contract

Employment contracts in writing are not required by law. The employment relationships are usually for an undetermined period of time and can be terminated at any time, other than arbitrarily. Employment contracts for a determined period of time are possible only when they are in accordance with the specific legal requirements.


B. Termination of the Employment Relationship

Early termination may take place at any time during the employment relationship, except when the employee is under job stability.




The categories of workers, who enjoy job stability, under the law, are:
" Union managers (from the time he/she is in the managing position, up to one year after the end of his/her term);
" Members of the Internal Accident Prevention Commission (up to one year after the his/her term);
" Pregnant women (from confirmation of the pregnancy to 120 days after birth);
" Members of Cooperative Credit Associations;
" Those called to military service (from the draft to the end of the service); and
" Victims of occupational accidents or diseases (from the 16th day of the leave, if under the care of the INSS ("Instituto Nacional de Seguridade Social"), up to one year after medical release).

Other forms and the term of the job stability may be agreed to and set forth in collective bargaining agreements between unions and managements. The most common categories of provisions include:

" Victims of occupational accidents (period of stability extended to full recovery, or up to retirement, if disability is permanent); and
" Workers in pre-retirement period (twelve or twenty four months before eligibility for retirement).

The employment relationship may be terminated by either party with or without cause. Severance payments are determined based on (i) which party initiates the termination, (ii) the duration of the agreement, (iii) the length of time the employee has been in the terminating employment relationship, and (iii) with the termination is with or without cause.


B1. Trial period

a) Early termination without cause by employer's initiative:

" Severance of half the amount to which the employee would be entitled to be paid up to the end of his/her employment agreement;
" 13th salary
" family allowance
" proportional paid vacation
" salary balance
" Employment Security Fund ("FGTS"): deposit in employee's blocked account of the amounts corresponding to the termination period
" Fifty-percent fine on the amount deposited in employee's FGTS blocked account



b) Early termination by employee's initiative:

" proportional 13th salary
" salary balance
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period

c) Regular expiration of the trial period without continuing with the employment agreement:

" salary balance
" family allowance
" proportional paid vacations plus one-third
" proportional 13th salary
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period


B2. Employment agreement for undetermined term - termination without just cause

a) Early termination by employer's initiative

Before employee's completing one year of work:

" prior notice
" family allowance
" proportional paid vacations plus one-third
" 13th salary
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period
" Fifty-percent fine on the amount deposited in employee's FGTS blocked account

After employee's completing one year of work:
" prior notice
" family allowance
" overdue vacations plus one-third
" proportional paid vacations plus one-third
" 13th salary
" salary balance
" fifty-percent fine on the amount deposited in employee's FGTS blocked account




b) Early termination by employee's initiative

Before employee's completing one year of work:

" salary balance
" family allowance
" 13th salary
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period

After employee's completing one year of work:

" salary balance
" family allowance
" 13th salary
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period
" overdue vacations plus one-third
" proportional paid vacations plus one-third


B3. Early termination of the employment agreement by the employer for cause (as established in section 482 of the CLT):

" salary balance
" family allowance
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period


B4. Early termination of the employment agreement in the event of employee's death:

" 13th salary
" family allowance
" salary balance
" FGTS Fund: deposit in employee's blocked account of the amounts corresponding to the termination period


B5. Voluntary Redundancy Program

Companies in need of restructuring are allowed to implement a Voluntary Redundancy Program by which employees may request their dismissal for an additional severance bonus.



III. COLLECTIVE BARGAINING

A. Employee Representation

The concept of collective bargaining is not as strong in Brazil as it may be in other countries due to the rigid statutory system, which provides little room for bargaining or negotiation. Unions (known in Brazil as "sindicatos"), however, still play an important role in labor management and labor-government relations, and in ensuring the protection of workers' rights under the law.

However, the concept of collective bargaining is gradually becoming stronger in Brazil and the government is signalizing its willingness to flex the labor rules by granting more negotiating power to the Unions.


B. Dispute Resolution

Any and all labor and employment rights may be disputed in court. In Brazil there are special courts to hear labor and employment related issues, which are called Labor Courts.

In addition, the companies with the participation of the Unions may implement Preliminary Conciliatory Commissions within the companies to discuss and settle disputes. The Preliminary Conciliatory Commissions are regulated by specific law.

Arbitration is also available for labor and employment related disputes when the employment agreement provides it. Such mechanism is not widely used in the labor and employment areas and it is more likely seen in agreements involving high rank employees.



IV. COMPENSATION, BENEFITS AND LEAVE

A. Wages

There is a mandatory minimum wage, the value of which is set by law and periodically adjusted. As per today, the minimum wage is R$ 180, approximately US$ 75.


B. Hours

Normal working week of 44 hours. However, the working week may be altered through convention or agreement entered into with the labor union.



C. Benefits

" After 1 year of work, paid vacation of 30 days per year, plus an extra 1/3 of that amount as bonus;
" A yearly bonus, called 13th salary ("13º salaried"), which corresponds to 1/12 of the December salary for each month worked during the year;
" Participation in the profits of the company (ruled by specific law);
" Overtime pay of at least 50%;
" Prior notice of dismissal of at least 30 days; and
" Paid weekly rest, preferably on Sundays.


D. Leave

" Paid maternity leave of 120 days (paid by Social Security); and
" Paternity leave of 5 days.


E. Pensions

The Social Security in Brazil is the INSS. Employers and employees are required to contribute to it as follows: 20 % to 28.8 % of the payroll shall be paid by the company to the INSS; additionally, employees pay 7.65% to 11% up to R$ 157.30, which is deducted from their salaries and collected by the company.

Private pension funds may also be implemented in accordance with the specific law.



V. ANTIDISCRIMINATION

The adoption of any discriminatory and restraining practice in the admission process or their continuation during the employment relationship based on gender, origin, color, marital status, family status or age is prohibited by law, except to protect the underage workers as provided for in item XXXIII, article 7 of the Brazilian Federal Constitution.

The practice of the following acts, by the employer or any legal representative of the employer is considered a crime with a penalty of 1 to 2 years of imprisonment and fine:

I - the request of a test, exam, evaluation, report, certification, statement or any other proceeding regarding infertility or pregnancy;

II - the adoption of any measure by the employer, which constitutes:

a) induction or instigation of infertility;

b) promotion of birth control. It is not included the offer of such services and of family counseling and planning by public or private institutions as regulated by the Unified Health System (Sistema Único de Saúde - SUS) is excluded.

The employee, who has his or her employment relationship terminated based on a discriminatory act, may claim compensation for damages in court pursuant to the law.

There is also specific legislation defining sexual harassment. The perpetrator of a sexual harassment conduct may be any direct or indirect hierarchical superior of the victim. It is considered a crime, subject to detention of one to two years. The labor courts have been granting compensation damages for sexual harassment in the workplace.



VI. OCCUPATIONAL SAFETY AND HEALTH

A. Occupational Safety

The CLT provides the basic rules for the Occupational Safety and Health, including the competence for coordination, supervision and inspection of the subject matter. In addition, other specific rules apply.


B. Additional compensation for unhealthy and hazardous working conditions

The labor legislation provides for the compensation of unhealthy and hazardous work as follows: for hazardous working conditions, the employee is entitled to receive 30% of the basic salary and for unhealthy working conditions, 10%, 20% or 40% of the minimum wage, depending on the degree of unhealthiness.



VII. IMMIGRATION

Visas may be obtained in accordance with Immigration laws and regulations issued by the National Immigration Council, the Ministry of Labor or the Ministry of Justice, depending on the type of visa.


A. Permanent Visas

Permanent visas are granted to personnel who are transferred to Brazil from foreign companies to work in their subsidiaries or affiliates as officers or directors. Also, individual foreign investors may apply for such visas.

Foreigners who are married to Brazilian citizens or have Brazilian children may apply for permanent residence visas as well.

Other requirements are established in the resolutions of the National Immigration Council.


B. Temporary Visas

Temporary visas may be granted for a maximum period of two years to foreigners, who are transferred from the foreign company to its Brazilian subsidiary or affiliate by means of an employment agreement valid for two years. The Brazilian hiring company must demonstrate to the immigration authorities that it cannot find in the Brazilian market an employee with the same capacity and qualifications. This temporary visa can be extended once for an additional two-year period upon the authorization of the Ministry of Justice.

The same requirements apply in case a Brazilian company offers a job to a foreigner that has no relation to other companies of the same group. This temporary visa can be extended once for an additional two-year period upon the authorization of the Ministry of Justice.

Furthermore, temporary visas may be granted to foreign workers that are involved in technology transfer services. In such cases, the foreigner does not maintain an employment relationship with the Brazilian company and receives compensation solely from the foreign entity transferring the technology. This temporary visa can be extended once for an additional two-year period upon the authorization of the Ministry of Justice.

Other requirements are established in the resolutions of the National Immigration Council.