Federal Supreme Court decides in favor of applying the IPCA-E and SELIC indexes to restate labor claim credits

The plenary session of the Brazilian Federal Supreme Court (STF) has decided that monetary restatement of labor debts should be carried out using the Special Extended Consumer Price Index (IPCA-E) and the SELIC rate, which are more favorable to workers.

The STF unanimously decided that the Referential Rate (TR) for monetary restatement of labor credit shall not be observed from now on, since such index does not replace the loss of purchasing power caused by inflation during the course of lawsuits.

In judging Constitutionality Declaratory Judgments (ADCs) 58 and 59 and Direct Actions of Unconstitutionality (ADIs) 5867 and 6021, the STF found that, until a bill is approved by the National Congress on the subject, the two indexes must be applied using a standard that has long been known to the Common Justice – that is, the application of the Special Extended Consumer Price Index (IPCA-E) in the pre-judicial phase and, based on the citation of the legal proceeding, the SELIC rate.

The understanding of the Supreme Court also covers appeal deposits made into a judicial account.

Modulation of the effects

After the defeat of Minister Marco Aurélio, the Supreme Court modulated the effects of the decision to determine that all payments made correctly with the application of the TR, the Special Extended Consumer Price Index (IPCA-E) or any other monetary restatement index are valid and will not give rise to new discussions on the topic.

On the other hand, however, lawsuits that are still suspended in the discovery phase, regardless of the sentence being issued, must observe, retroactively, the SELIC rate.

The decision handed down by the STF ends a discussion that has been fought in all the Regional Labor Courts of the country and also in the Superior Labor Court.

Demarest’s Labor Law team is available to provide additional clarifications on the subject.