All Contracts Subject to New Rules: Ministry of Employment

Written by | Contracts

Brazil’s employment law reform (Law 13,467/2017) came into force on 11 November 2017. To avoid issues relating to its interpretation, Brazil’s President issued Provisional Measure 808/2017, expressly stating that the reforms were to apply to all existing as well as future employment contracts (see further here). Unfortunately, Provisional Measure 808/2017 was not approved by Congress within required 60 days and, thus, lapsed.

On 15 May 2018, the Minister for Employment (Helton Yomura) issued an order approving as binding on the Ministry the legal advice received from the Federal Attorney General’s Department of 14 May 2018. The advice concludes that:

  • the employment law reforms apply to all existing contracts, as an employment contract is an ongoing obligation; and
  • entitlements accrued prior to Law 13,467/2017 coming into force will be governed by the previous law.

The practical consequences of this is that the Ministry of Employment’s auditors will not have the power to fine companies that are regarded as non-compliant or seek to enforce the legal provisions that existed prior to the employment law reform coming into force over rights accrued by employees from 11 November 2017.

This Ministerial order is not binding on the courts but it is expected that the Superior Labor Court will issue guidelines through their Employment Law Reform Committee, which is responsible to reconcile the court’s precedents with new rules.

I ultimately expect the Ministry of Employment’s position to prevail.

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Last modified: December 5, 2018