Brazil

Sources of regulation

The Constitution of the Federal Republic of Brazil (FC) of 1988 is the primary source of labour law. Chapter II, which deals with social rights, contains comprehensive provisions on the rights of workers (art. 7), security of tenure (art. 7(1)) and protection against arbitrary dismissal.

The source of labour law on termination of employment is to be found in the Consolidation of Labour Laws (CLL), adopted in Legislative Decree No. 5452 of 1 May 1943. It contains standards of substantive and procedural law on termination of employment. An additional source of labour law dealing with compensatory indemnification for termination of employment by the employer is Act No. 8036 of 11 May 1990, which establishes the Guarantee Fund for Length of Service (see below).

The decisions of the labour courts and arbitration awards (art. 114, FC), international treaties and case law supplement these sources of law. Case law is a subsidiary source when it is compatible with the fundamental principles of labour law (sec. 8, CLL).

Scope of legislation

Public employees of the Federal Union, the states and counties, staff working in these administrative bodies, and employees of parastatal administrative bodies subject to special conditions of service which put them in the same category as public employees,[1] are excluded from the scope of application of the CLL (sec. 7(c) and (d), CLL).[2]

Persons employed in the banking and cinematography industries, the telephone services, musicians, railway workers, crews of vessels of the national merchant marine and vessels engaged in river and lake navigation, workers employed in cold storage, stevedoring and dockers’ services, miners, journalists, teachers, chemists, women workers and young persons are subject to special labour protection rules (Part III, CLL).

Contracts of employment

An individual contract of employment is a tacit or express agreement respecting the employment relationship (sec. 442, CLL). Such contracts may be concluded either orally or in writing, for a specified or unspecified period. A contract for a specified period is a contract in which duration is fixed in advance or which depends upon the performance of specified services or on the occurrence of a particular event, the approximate date of which can be foreseen. Contracts for a specified period are valid only if they govern services whose nature or transitional character justifies the fixing of their duration in advance, transitional activities carried out by the undertaking, and contracts of a probationary nature (sec. 443, CLL).

Contracts concluded on a probationary basis may not exceed 90 days (sec. 445, CLL). The first year of a contract for an unspecified period is deemed to be a trial period and compensation for termination of employment is not payable until it has been completed (sec. 478, CLL).

Termination of employment

The CLL does not stipulate the conditions for the termination of the employment contract (other than at the employer’s initiative), but it does refer to such conditions in the provisions governing compensation. Employment may be terminated, other than at the initiative of the employer, as follows:

• by the worker;
• for reasons unrelated to the wishes of the parties;[3]
• through the operation of law;
• by mutual consent of the parties;
• upon the retirement or death of the worker; and
• on expiry of the contract period or completion of the task.

Termination of employment by the worker includes resignation. In this regard, the law provides that if the worker has been employed for more than one year, the letter of resignation or the attestation releasing the worker from the employment contract, signed by the worker, will be valid only when it is submitted with the support of the competent trade union or presented to the competent authority of the Ministry of Labour (sec. 477(1), CLL).

Resignation for valid reasons is also permitted and a worker is entitled to consider his or her contract cancelled and claim the compensation due in the following cases (sec. 483, CLL):[4]

• if he or she is required to perform services which are beyond his or her powers or are prohibited by law, contrary to morality or not covered by the contract;
• if he or she is treated with excessive severity by the employer or his or her superiors;
• if he or she runs an obvious risk of serious injury;
• if the employer fails to fulfil his or her contractual obligations;
• if the employer or his or her representative commits any act detrimental to the honour and good repute of the employee or a member of the employee’s family;
• if the employer or his or her representative assaults the employee, except in case of legitimate self-defence or defence of another; or
• if the employer reduces the work of an employee who is paid at piece or task rates in such a manner as to affect materially the amount of the wages earned.

In the situations envisaged by the fourth and seventh grounds above, the employee may request cancellation of the contract and payment of the corresponding compensation, whether or not he or she continues to work in the undertaking until the final ruling has been handed down. 

In addition, the employee is entitled to suspend work or cancel the contract if he or she has to perform any statutory duty that is incompatible with the continuation of the employment. In the case of an individually owned undertaking, the employee is entitled to cancel the contract of employment in the event of the death of the employer.[5]

Dismissal

The employment relationship may be terminated by the employer for just cause (sec. 482, CLL). The following constitute situations sufficient to establish just cause: :

• dishonesty;
• misconduct or bad behaviour;
• habitual engagement by the employee in commercial transactions on his or her own account or for another without his or her employer’s permission, if this involves competition with the undertaking in which he or she is employed or is prejudicial to the performance of his or her work;
• a sentence passed on the employee by a criminal court without suspension of the execution of the penalty;
• idleness of the employee in the performance of his or her duties;
• habitual drunkenness or drunkenness while on duty;
• disclosure of a secret of the undertaking;
• breach of discipline or insubordination;
• desertion of post;
• any act detrimental to the honour or good repute of another which is committed during employment, or an assault under the same conditions, except in case of legitimate self-defence or defence of another;
• any act detrimental to the honour or good repute of, or an assault against, the employer or a superior, except in case of legitimate self-defence or defence of another; or
• habitual indulgence in games of chance.

If it is established by an administrative inquiry that the employee is guilty of acts which are detrimental to national security, such proof would also constitute valid grounds for the dismissal of the employee.

Further, the law prescribes the following series of situations as grounds for the employer to terminate a contract:

• abusive acts committed by strikers during a strike action, depending on the nature of any prejudice caused as regards the rights of others (art. 9(2), FC). In this sense, mere participation in a strike action does not constitute serious misconduct, but active participation in a strike which is recognized as illegal, or in violent or restraining acts which impede the access of others to the workplace, is a valid reason for dismissal;[6]
• in the case of banking employees, the persistent failure to pay debts which are lawfully due (sec. 508, CLL); and
• the unjustified refusal of the employee to obey the employer’s policies on occupational safety and health and on the use of personal protective equipment against harmful substances, supplied by the employer, which are measures taken to safeguard the health of the worker himself or herself (sec. 158, CLL).

The Constitution also contains provisions on trade union immunity. It prohibits the  dismissal of a unionized employee, except on account of a serious offence, from the moment he or she registers as a candidate for a leadership or representative position in the trade union and for one year thereafter (art. 8(VIII), FC).[7]

Federal employment law provisions also protect workers’ representatives on the Internal Accident Prevention Commission (CIPA) may not be arbitrarily dismissed (sec. 165, CLL). This is also enshrined in the Constitution, which prohibits arbitrary or unjustified dismissal of employees elected to the position of a director of the CIPA, from the date of registration as a candidate until one year after the end of his or her term of office (art. 10(IIa), FC, Transitional Provisions).

Similarly, the Constitution protects pregnant workers from the date the pregnancy is confirmed until five months after confinement, and declares dismissals on the grounds of pregnancy null and void (art. 10(IIa), FC, Transitional Provisions). Moreover, the fact that a woman marries or becomes pregnant is not regarded as a legitimate reason for the termination of her contract of employment (sec. 391, CLL). By the same token, a pregnant woman is entitled to terminate the contract of employment if it is proved by a medical certificate that the work she performs is prejudicial to her condition (sec. 394, CLL).

Security of employment is guaranteed through reinstatement to employees who, because of an employment accident or occupational disease, were obliged to suspend the employment relationship (Act No. 8213 of 24 July 1991).

Notice and prior procedural safeguards

Pursuant to sec. 487 of the CLL, a party who wishes to cancel the contract without lawful cause is bound to give notice to the other party of his or her intention as follows:

• eight days in advance if wages are paid weekly or at shorter intervals;
• thirty days in advance if wages are paid fortnightly or monthly, or if the employee’s length of service in the undertaking exceeds 12 months;

If the employer fails to give due notice, the employee is entitled to his or her wages for the period of notice, and that period is always deemed to be included in the period of employment. If the employee fails to give due notice, the employer is entitled to deduct the amount of wages corresponding to the period of notice. In the case of wages paid at piece rates, the calculation for the purposes of these two instances is to be based on the average of the wages for the last 12 months of employment.

If the contract is cancelled by the employer during the notice period, the employee’s normal hours of work must be reduced by two hours a day during the period of notice, without any reduction in wages. A worker who decides to continue working normal working hours is also allowed to be absent from work for one to seven days depending on the case (see sec. 487(I) and (II), CLL (see above)).

After the submission of notice, termination of the contract will take effect upon expiry of the term of notice. However, if the party which gave notice reconsiders his or her decision before the expiry of the term of notice, the other party is entitled to either accept or reject the withdrawal of the notice. If the withdrawal is accepted, or if work continues to be performed after the expiry of the term of notice, the contract continues in operation as if notice had not been given (sec. 489, CLL).

If, during the period of notice given to the employee, the employer commits any action justifying immediate cancellation of the contract, he or she is obliged to pay the wages for the period of notice, without prejudice to any compensation which may otherwise be due (sec. 490, CLL). An employee who, during the period of notice, commits any action deemed by law to be a lawful ground for the cancellation of the contract forfeits the right to wages for the remainder of the period of notice (sec. 491, CLL).

Severance pay

Job security provisions, in the form of severance pay, existed in Brazil well before its new 1988 Constitution.  Since the early 1940’s, workers with less than ten years and more than one year of tenure were, upon dismissal, entitled to the equivalent of one monthly wage per year worked at the firm in severance payment.  Workers with more than ten years could only be dismissed for “just cause” or after a severance payment of two month’s wages per year on the job.  In 1966, Law 5107/66 established the Unemployment Guarantee Fund (FGTS), a welfare initiative intended as an alternative to the tenure system (sec. 9, Decree No. 1382)[8].  It has since become compulsory.  The FGTS system required employers to deposit 8% (8.5% since September 2001) of each employee’s formal monthly wage into an account managed by a state bank on behalf of the employee.  Deposits are adjusted for inflation and an annual interest rate.

Any employee unfairly dismissed under FGTS is entitled to withdraw a proportion of the FGTS balance accumulated while he or she was at the firm. Originally fixed at 10%, the 1988 Constitution increased the penalty amount to 40% of the balance (art. 7(I), FC).  Legislation passed in 2001 increased the fine for unjustified dismissals to 50% of the FGTS balance, with the extra 10% paid by the firm directly to the government (not the worker) (Complementary Law 110).[9] This holds even where the termination is indirect (constructive), produced by mutual fault, through force majeure, or if the normal expiry of the contract is confirmed (including in the case of temporary workers). The employer is obliged to pay even if the worker has not collected wages (sec. 9, Decree No. 1382).[10] All payments are made without prejudice to any legal proceedings that may follow dismissal and respecting the minimum limit of 60 per cent of the compensation prescribed by the CLL (sec. 14(2), Act No. 8036).

For those workers who had acquired the right of security of tenure after ten years of service before the adoption of the Constitution in 1988 the CLL is still applicable and prohibits dismissal except on account of a serious offence or force majeure (sec. 492, CLL, and sec. 14, Act No. 8036 of 11 May 1990)[11], as well as providing other guarantees for security of employment prescribed by law.[12]

Non-permanent employees who have not chosen to participate in the FTGS remain governed by the provisions of the CLL, under the following terms (secs. 477, 478 and 497, CLL, and sec. 14(1), Act No. 8036):

• compensation is based on the highest remuneration which the employee has received in the undertaking (sec. 477, CLL);
• compensation for the cancellation of a contract of indeterminate duration must be equal to one month’s remuneration for each year of actual service or any fraction of a year exceeding six months;
• if the wages are paid by the day, compensation is calculated on the basis of 30 days;
• if the wages are paid by the hour, compensation is calculated on the basis of 240 hours a month;
• if the worker is paid by commission or entitled to a supplement, compensation is calculated on the basis of the average amount of the commission or percentage received during the last 12 months of employment;
• if the worker is employed at piece rates or by the job, compensation is calculated on the basis of the average time usually spent by the person concerned in the performance of his or her task, according to the work which would be done in 30 days (sec. 478, CLL); and,
• in the case of contracts for which a time limit has been fixed, if the employer dismisses the worker without a valid reason, he or she is obliged to pay the worker, by way of compensation, a sum equal to half the remuneration to which he or she would have been entitled on the expiry of the contract. For the purpose of the application of the legislative provisions, the variable or uncertain part of the wages is to be calculated in the manner prescribed for the calculation of the compensation payable for the cancellation of a contract of indeterminate duration (sec. 479, CLL).

Avenues for redress

Pursuant to sec. 643 of the CLL, disputes arising out of relations between employers and employees should be settled by the labour courts. The Labour Appeal Court, regional labour courts, and the conciliation and arbitration boards or the courts of ordinary jurisdiction have jurisdiction (sec. 644, CLL). Recourse to the labour courts is compulsory, without exemption, except for good and sufficient reason (sec. 645, CLL). The conciliation and arbitration boards are competent to judge and settle (among others) disputes in which the recognition of the security of tenure of the employee is claimed and disputes relating to compensation for the cancellation of a contract of employment (sec. 652, CLL).[13] The regional courts, on the other hand, are responsible for conducting conciliation proceedings and handing down judgement in the last instance on appeals against decisions of the conciliation and arbitration boards and the ordinary courts dealing with labour matters (sec. 678(1)(c), CLL).

In terms of remedies, if both parties are to blame for the act which brought about the termination of employment, the labour court may reduce the compensation to half the amount which would otherwise be due (sec. 484, CLL). 

Further information

• ILO NATLEX Brazil
• National Legislation of Brazil, (Legislação Federal Brasileira),
• LexUniversal: Labor Law in Brazil
• Cook, Maria Lorena, “Labor reform and dual transistions in Brazil and the Southern Cone,” in Latin American Politics and Society. Spring, 2002.
• Gonzaga, Gustavo, “Labor Turnover and Labor Legislation in Brazil,” in Economia. Fall 2003.  Vol. 4, n.1.
• Heckman, James, and Carmen Pagés, “The Cost of Job Security Regulation: Evidence from Latin American Labor Markets,” Working Paper, Inter-American Development Bank. August, 2000.
• Marshall, Adriana, “Labor market policies and regulations in Argentina, Brazil and Mexico: Programmes and impacts,” International Labour Organization Employment Strategy Papers. 2004. 
• Sabatini, Christopher, “The Urgent Need for Labor Law Reform,” in Journal of Democracy. Vol. 17.4, 2006, p. 50-64.

[1] In this respect, the Constitution confers the right to security of employment to public employees with at least five years’ continuous service in the public sector (arts. 18 and 19 of the Transitional Provisions of the Constitution).

[2] Secs. 7(a) and (b) of the CLL have been repealed. They formerly excluded domestic workers (art. 7, FC) and rural workers (art. 7, FC) from the scope of the CLL. These workers are now covered by the legislation.

[3] For example, force majeure (sec. 502, CLL) and closure of the undertaking (sec. 497, CLL).

[4] These circumstances coincide with indirect (constructive) dismissal, whereby the employer deliberately uses indirect means to make the worker resign from his or her job.

[5] When the operations of the undertaking are wound up because of the death of the employer, the employee may claim, depending on the circumstances, compensation based on the highest remuneration paid him or her during the period of service or twice the normal compensation, as provided by secs. 477 and 497 of the CLL.

[6] See Act No. 7783 of 28 June 1989, and court judgement in TRT-4.a, Reg. 4th Round, Proc. 9.016/87, 31 May 1988.

[7] This is also the case for legislation relating to trade union officers and alternates from the time of registration of their candidature up to 90 days following the expiry of their term of office.

[8] Decree No. 1382 of 31 January 1995, which amends the regulatory standards of the Guarantee Fund for Length of Service (Diario Oficial, 1 February 1995).

[9] Complimentary Law 110 of 06/25/2001, regulated by the Decree-law 3914 of 09/11/2001).

[10]10 Decree No. 1382 of 31 January 1995, which amends the regulatory standards of the Guarantee Fund for Length of Service (Diario Oficial, 1 February 1995).

[11] Act No. 8036 of 11 May 1990 groups in one piece of legislation the regimes of the Guarantee Fund for Length of Service and the CLL. It provides that, after 5 October 1988, all workers will have the right to an interest-bearing account, adjusted for inflation, in which an employer makes monthly deposits of 8 per cent of the employee’s wages in the previous month. Security of tenure acquired before 15 October 1988 (date on which the Constitution was promulgated) is thereby safeguarded. It further states that the period of service of workers who entered into contracts under the protection of the CLL before the Constitution took effect will be compensated on the basis of the provisions of the CLL.

[12] As, for example, under secs. 497 and 498 of the CLL, by virtue of which, in the event of the closing of the undertaking, establishment, branch or agency, or of necessary downsizing, for reasons other than reasons of force majeure, a permanent employee who is dismissed is entitled to twice the amount of compensation due in the event of the cancellation of a contract of indeterminate duration. Note that an application for the dismissal of a permanent employee is valid only if it is made with the cooperation of the trade union concerned, or, if there is no union, before the competent local authority of the Ministry of Labour (secs. 498 and 500, CLL).

[13] In localities which do not fall within the jurisdiction of the conciliation and arbitration boards, the judges of ordinary jurisdiction shall be responsible for the administration of justice in labour matters (secs. 668 and 669, CLL).