Labor Reform
The Brazilian Labor Reform will be effective as from 11.11.2017, modifying over 100 articles of the Brazilian Labor Code (the so-called “CLT”). Below are the highlights on the most relevant changes on the perspective of the employer.
Employment Contracts
- Intermittent work or “Zero-hours agreements”*: Creates a special pact for intermittent work, a new type of agreement allowing employer to pay per demand and employee to refuse work.
- Independent work: Admission through an independent arrangement of autonomous work would exclude the statutory employment system even if the relationship is exclusive and work is on a regular basis.
- High-level employees’ autonomy to negotiate: Employees with a university diploma and monthly salary equal to or greater than twice the Social Security benefits limit (currently 11,062.62 BRL) will be at more liberty to negotiate certain employment conditions with their employers. In addition, they will be able to validly include an arbitration clause to their agreements.
- Vacations: Authorization to split vacation days in 3 periods, provided that one is of at least 14 consecutive days and none is of less than 5 days.
- Compensation: Expense allowances (“ajudas de custo”), travel expenses, meals (except those paid cash), rewards (rewards to outstanding performances) and other allowances (“abonos”) even when frequently paid, are not to be considered salary.
- Salary equalization: Creation of further criteria and exceptions. Only employees that work at the same premises may be compared. The difference in terms duration of employment should be of 4 years at the most (2 years on the same position is already required today). Employers will have the authority to create exceptions to the equalization rules by creating their own salary plans. Registration with the Inspection Body of the Ministry of Employment (DRT) will no longer be required.
- Additional pay for position of trust: Suppression will be authorized in case employee returns to previous position, regardless of the time lapsed.
Working hours
- Overtime: The extra time spent by the employee at company’s premises will not be considered overtime if resulting from employee’s choice for personal protection, studying, hygiene, change of clothing / uniform and other personal reasons not involving actual work.
- Part-time work: Increased to up to 30 hours a week. Overtime will be permitted (up to 6 hours per week) if contract is for up to 26 hours a week.
- Home office: Express inclusion of home work as work exempted from overtime control. Written contract will now be required.
- Commuting time: Will no longer be considered part of the work shift in any circumstance.
- Offsetting of working hours (flexible hours): offsetting working hours in excess can be agreed through individual contracts for offsetting within a month.
- “Hour Bank”: Creates the possibility to have time off offset against overtime based on individual written contracts. Offsetting in this case is must be within 6 months, and 12 months depending on a collective bargaining. Habitual overtime will not invalidated hour banks, as is the current opinion of the Courts.
- Rotating Shift (12X36)*: Will no longer require union participation.
- Lunch-break: Can be reduced to 30 minutes by collective bargaining. The time reduced will entitle only to payment of such time, as indemnity*.
Terminations
- Ratification (homologação)*: Ratification by union or inspection body will no longer be a requirement.
- Payment: 10-day deadline for termination payments regardless of cause or notice.
- Termination by mutual agreement: New way of terminating the employment contract by agreement between company and employee.
- Mass dismissal/Collective termination: Union involvement is not required, as opposed to current understanding of the Courts.
- Private settlements: Possibility to submit joint petition of separation agreements to Court to obtain valid waiver of employment rights and general acquittal.
- Annual settlement of employment rights: possibility to have an “annual” release of labor obligations. Validity will depend on union ratification.
Union relations
- Collective arrangements vs. Statutes: Collective arrangements will prevail over the legislation specially when dealing with working hours, overtime offsetting, positions and salaries structure, home office, time on-call, working hours recording modality, unhealthy work condition level and profit sharing.
- Contributions to unions*: Eliminates mandatory contributions to unions.
Inter-company operations:
- Economic group: Broad Interpretation of the concept of economic group is more restricted. Creates the need to demonstrate “integrated interest” between companies.
- Succession of employers: Successor company liability understanding of the Courts is confirmed. Joint liability of the successor and succeeded companies will require evidence of fraud.
- Disregard of legal entity: Personal partner liability now has a regulated procedure allowing adversary proceedings and production of evidence.
- Withdrawing partner liability: The withdrawing partner is secondarily liable for labor debts created during the period he was a partner and for lawsuits filed up to two years after his withdrawal. In case of fraud, he will have joint liability, not secondary.
We are certain that all the modifications above will have to pass the scrutiny of Labor Courts, which have openly demonstrated great reluctance to the reform. It is therefore essential that the points mentioned above are carefully studied before any changes are implemented by the employers.
There are other innovations not mentioned above that might still interest companies depending on their particularities, to wit: creation of employees’ committees in companies with over 200 employees, new procedural rules to discourage exaggerated labor claims (elimination of certain requirements for companies to be represented in court, new limitations to benefit with court costs exemption, attorney’s fees payable to the prevailing party, proportional to claims granted or rejected, objective criteria to fix indemnities for pain and suffering, simpler requirements to access third instance courts, redistribution of the burden of proof, conditions to drop a case or claim, consequences in case employee does not attend a hearing, limitations to the courts’ authority, including ability to change precedents, and other rules), negotiable aspects of unhealthy work, elimination of break before overtime, extension of the effects of a volunteer dismissal programs (PDVs), increase on administrative penalties both in terms of number and amounts.
*The marked topics are expected to be modified soon by means of a Provisional Executive Decree that is already being drafted.
PARTICIPATION OF THE DDSA AERONAUTICAL TEAM AT ANAC’s EVENT – ANAC’S NORMATIVE PROCEDURE
On January 26, 2017, the DDSA Aeronautical Team attended a seminar organized by ANAC’s Normative Management regarding the basis of the new normative procedure to be installed by the Agency through Normative Instruction No. 107. ANAC’s expectation is to apply the following guidelines to the normative procedure: i) imposition of minimum rules; ii) search for the maximum speed, effectiveness and efficiency and iii) adoption of guidelines for measurement and precise definition of the problem to be solved by means of a normative act.
CALL REGARDING THE 1ST REVISION OF THE CONCESSION AGREEMENTS OF THE BRASILIA, CAMPINAS AND GUARULHOS AIRPORTS
The Concession Agreements of Brasília, Campinas and Guarulhos Airports provides for the instrument called Review of Concession Guidelines (“RPC”), by means which there will be a five-yearly review of clauses of the above referenced Agreements in order to allow, among others, the establishment of the Indicators of Service Quality – IQS and the methodology for calculating the X factor to be applied in the tariff adjustments until the next Revision of the Guidelines of the Concession. According to information available on ANAC’s website, with respect to the quality of the rendered services , the Contracts indicate that the RPC is an opportunity in which ANAC, after a public hearing, may review the QSI, as well as the methodology for calculating the X factor in order to create incentive for the improvement of the quality of rendered services. The period of this Call is from December 19, 2016 to February 3, 2017. Airport operators, associations, corporations and other interested parties in the process may participate. The DDSA Aeronautical Team makes itself available for any clarification regarding the main proposed innovations, as well as assistance on sending contributions. |
EXTENSION OF THE TERM FOR REGISTRATION OF FINAL BENEFICIARIES ON THE NATIONAL REGISTRY OF LEGAL ENTITIES (“CNPJ”)
The previous deadline, set for January 1, 2017, is now extended to July 1, 2017. For certain legal entities to identify their “final beneficiaries” on their respective CNPJ cards. Such extension was determined by Normative Instruction RFB No. 1684, dated as of December 29, 2016, which amended RFB Normative Instruction No. 1,634, dated as of May 6, 2016 (“IN 1.634”), which provides for the CNPJ. In accordance to the provisions of IN 1.634, the “tax beneficiaries” would be, among the persons included in the shareholders and management board, those who effectively run the business activity. The identification of the “final beneficiaries” became mandatory in the act of registration of the CNPJ before the Federal Revenue for entities registered after July 1, 2017. For those registered before July 1, 2017, there will be an obligation to report the “final beneficiaries” as soon as any change in its registration occurs as of July 1, 2017 and it must inform them until December 31, 2018. The DDSA Aeronautical Team makes itself at your entire disposal for further clarification on the subject matter, including which entities must comply with the new rule and penalties in case of noncompliance of such rule. |
GROWTH OF BRAZILIAN AIRCRAFT FLEET
According to data from the first edition of the Brazilian Yearbook of Civil Aviation published by the Brazilian Institute of Aviation (IBA) in December 2016 (“Yearbook”), the Brazilian fleet regarding civil aviation grew 2.2% in 2015, resulting in a total of 21,867 units which includes general, experimental and commercial aircraft.
IBA points out that “the greatest growth was registered in the fleet of experimental aircraft, mainly in the conventional class aircraft, where 215 units were incorporated. General aviation, on the other hand, presented an increase on conventional aircraft from 10,894 in 2014 to 11,085 in 2015, helicopters from 2,150 to 2,151 in 2015 and turboprops from 1,210 to 1,254. ”
The DDSA Aeronautical Team is available for legal advice on the subject matter, especially regarding the acquisition or nationalization of aircraft in Brazil.
OPENING OF FOREIGN CAPITAL TO BRAZILIAN AIRLINE COMPANIES
We would like to inform that it is most likely that the Brazilian government will resume the discussions regarding the end of the restriction to foreign capital imposed on airline companies as currently provided for in the Brazilian Aeronautical Code. A provisional measure (“MP”) may be issued ending the 20% limit on the acquisition of shares of airlines companies by foreign investors.
It is our understanding that under the current recession environment of the Brazilian economy, the opening to foreign capital is of interest to Brazilian airlines as an alternative for capitalization. On the government side, the intention is to attract low-cost airlines and by doing that stimulate competition. We would like to recall that in March 2016, former President Dilma Rousseff issued a MP increasing foreign capital to airline companies from 20% to 49%. In the House of Representatives, the percentage was increased to 100%, but the proposal met resistance in the Federal Senate. The DDSA Aeronautical Team is following up on the subject matter on a daily basis and makes itself available for any queries that may be necessary. |
ANAC’S NEW REGULATION REGARDING CHARGE OF BAGGAGE FEES
The Brazilian Agency of Civil Aviation (“ANAC”) published on December 14, 2016, Resolution nº. 400/2016 that provides for the new General Conditions for Air Transportation (“CGTAs”). It is expected that the CGTAs will take effect on March 14, 2017. Among the new rules, the transportation of checked luggage by the passenger will be treated as an accessory transportation agreement which will, in principle, enable to make tickets prices more flexible, reduce the travel costs to passengers who only carry hand luggage and compensate such “discount” by charging an extra fee for the checked luggage of passengers who choose to check their luggage into the hold of the aircraft, facilitating the increase of revenue with cargo and package transportation since there will be more free space in the hold of the aircraft , that can be used for such purpose. Concurrently with the publication of Resolution No. 400/2016, the Federal Senate approved the Proposal for Legislative Decree No. 89/2016, that proposes to suspend the provision that the granting of the above-mentioned baggage allowance is not mandatory, since the Senate understands that there is a possibility that the reduction of tickets will not be achieved and there will be the loss of the passengers’ right to choose whether or not to carry the baggage in the hold of the aircraft. The Proposal for Legislative Decree No. 89/2016 will still be reviewed by the House of Representatives and does not change any of the other provisions of Resolution No. 400/2016. The DDSA Aeronautical Team is following the Proposed Legislative Decree No. 89/2016 and we are available to clarify any doubt that may be required with respect to the CGTAs.
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THE DEADLINE FOR REGULARIZING THE REGISTRATION OF RURAL PROPERTIES OVER 50 HECTARES WAS EXTENDED
On august 18, 2016 was published the Integrated Normative Rule nº 01, which extended the final term for update the registration of rural properties over 50 ha until December 31, 2016.
Thereby, the owners of rural properties over 50ha that do not regularized their properties before the National Institute of Rural Settlement and Agrarian Reform – INCRA and the Brazilian Federal Revenue Service have a larger term to do it.
Such regularization must be done to integrate the information of INCRA and Brazilian Federal Revenue Service cadastral systems, which are made with the purpose to structure the National Cadaster of Rural Property – CNIR and can be done through the website www.cadastrorural.org.br.
In the case of the owner of the rural property does not regularize such updates until the final term, the rural property documentation will be considered irregular until the regularization of the situation before INCRA and Brazilian Federal Revenue Service.
STJ JUDGED ABOUT BROKERAGE FEE AND SATI RATE PAID BY THE CONSUMER
On August 24, 2016 the Superior Court of Justice (“STJ”) judged appeals about the payment of brokerage fee and the Technical Real Estate Advisory Service rate (“SATI”), both commonly paid by consumers of real estate properties to the construction company. STJ unanimously decided that the transfer of the brokerage fee to consumers is valid but; on the other hand, it was decided that the SATI rate is abusive. The SATI is a rate paid by consumers to the lawyers of the construction companies.
Thereby, it was judged that the brokerage fee is a usual practice of the Brazilian market, as occurs in the insurance company. According to the decision, the brokerage fee does not cause any loss to consumers.
Regarding the SATI rate, it was understood that that the transfer of the SATI rate to the consumer is abusive, because it is not originated from an autonomous service as the brokerage fee, but destined to the lawyers from the construction companies.
The decision highlighted the necessity of clarity and transparency in such contractual payment provisions to protect the buyer when signing the purchase and sale agreement, in order that the buyer have the exact knowledge of the values paid and its destination. The STJ judged also that the consumers have three years to question the abusive payment at the tribunal. According to the Court, the justice will not accept new appeals with a different position from the decided.
ELIMINATION OF REQUIREMENT FOR CONSULAR LEGALIZATION OF FOREIGN PUBLIC DOCUMENTS
The Decree No. 8,660 as of January 29, 2016, related to the Brazil’s adherence to the Convention Abolishing the Requirement for Consular Legalization of Foreign Public Documents (“Apostille Convention”), has entered into effective on August 14th, 2016.
As of the date thereto, the consular legalization of foreign public documents will no longer be required to ensure the validity of such documents in Brazil. Among the list of documents exempt from consular legalization, are included the acts committed by public notary, as well as official statements attached to documents of a private nature, such as certificates attesting the registration of a document or its existence on a specific date, and certification of signature authenticity. The suppression of consular legalization is a great benefit for the international transit of documents, as the time and costs for validation of such documents will be reduced.
To ensure that the foreign public documents covered by the Apostille Convention produce effects in Brazil, it suffices the issuance of the Apostille by the relevant authorities where the document was issued, which should be attached to the referred document as an annex (“Hague Apostille”). The Hague Apostille consists of a certificate of the document’s authenticity, valid in all signatory states of the Apostille Convention.
We must emphasize, however, that the formalities required for the issuance of the Hague Apostille will be dismissed in case of existence of agreements between Brazil and other signatory state of the Apostille Convention establishing the simplification or dismissal of legalization of documents. Among the countries with which Brazil already has agreements of dismissal of legalization of documents, prior to the date of the brazilian accession to the Apostille Convention, can be listed France and Argentina.
The National Justice Council (“CNJ”) shall be responsible for coordinating and regulating the enforcement of the Apostille Convention in Brazil. The brazilian system, in development by CNJ, will be based on the model developed by Mexico, which allows the recognition of authenticity through QR Code – a bidimensional bar code that can easily be recognized by the majority of cell phones cameras.
Finally, although the Decree has dismissed the consular legalization of foreign public documents, remains the requirement of translation of such documents by an official sworn translator, as well as the registration of such documents and its translation with the Public Registry of Deeds and Documents to produce effects against third parties in Brazil.
This alert contains a general overview on the main legal aspects in connection to the Decree and is not intended to exhaust its subject.
We remain at your entire disposal.
Kind Regards,
De Luca, Derenusson, Schuttoff e Azevedo Advogados
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