BRAZIL: Annual Update – Expected Labour Law Changes in 2017
Labour law reform
The new Government plans to review/reform labour law. In theory, the main goal of the reform would be to make employment contracts more flexible, with more possibilities for negotiations between the parties and unions involved. However, by now, there is no official proposal, bill or even schedule explaining such review/reform, and the matter is just an ongoing source of rumour.
The effective date is not known.
Action required: None at present.
Social Security
The new Government plans to review/reform social security in the public system: This reform will establish stricter criteria for the receipt of a public pension on retirement. In theory, although it will not directly impact employers in the private sector, it will certainly impact the employees who contribute to public social security system as this is compulsory in Brazil.
The effective date is not currently known but is likely to be in 2017.
Action required: None at present.
Outsourcing
Court decision in relation permitted outsourcing: Currently outsourcing is permitted only if the outsourced services are related to the company’s ‘non-core’ activities. There is an important leading case awaiting judgment at the Supreme Federal Court (“STF”) concerning this issue. The case is meant to clarify the definition of what counts as a company’s core activity and, thus, the limits allowed for outsourcing.
Effective date : There is no specific date for the court’s decision to be issued but the expectation is that it will could be handed down within 2017.
Action required: Regardless the outcome of this case, companies will have to review their outsourcing activities to ensure they comply the limits of the new ruling. It is expected to have a large impact on all fields of the business.
E-Social System
Development of the E-Social System: This is a Federal Government project to unify in an electronic cloud system all information regarding employees and payroll. Employers will be required to make available to the authorities specified information about their employees in order to give the authorities a complete picture of the employer’s compliance with local law and statutes.
Effective from January 2018.
Action required: During 2017 companies must prepare for the implementation of the e-social system.