Labor and Employment Newsletter | Issue no 02

Demarest is pleased to share its Labor and Employment Newsletter, which gathers news on case law, in addition to opportunities and labor alerts resulted from the latest regulatory changes.

Enjoy your reading!

STF decides on the lawfulness of pejotização

In the case record of Interlocutory Appeal within Claim 47,843, the first Panel of the Federal Supreme Court (“STF”) decided that it is lawful for a company to outsource its core activities through Pejotização – an expression coined to denote the employer’s requirement that individuals turn into legal entities to be hired as independent contractors – and reversed the decision of the Superior Labor Court, which determined that the practice of a hospital to employ doctors as independent contractors was fraudulent.

During the trial, the STF stated that there was not an attempt to avoid labor payments, given that the case involved the hiring of doctors, that are, informed, knowledgeable and competent professionals, who are usually not directly subordinated to a single employer and they constitute a legal entity in search of a better tax framework.

The decision was rendered in reference to the judgments of General Repercussion Subject 725 and Claim of Non-compliance with a Constitutional Precept (“ADPF”) 324, in which the Supreme Court had already declared lawful the possibility of outsourcing or any other form of division of labor among distinct legal entities, regardless of the corporate purpose of the companies involved.

Changes in working hours according to Decree No. 10,854/2021 and Ordinance No. 671/2021

Sunday work is often the subject of heated debates, especially because the Brazilian legislation prioritizes mandatory and paid weekly rest for employees on Sundays. Every employee is entitled to weekly paid rest of twenty-four consecutive hours, preferably on Sundays, as the law provides. In addition, holidays established by law are considered as rest days.

However, there are multiple services that require work on Sundays and holidays, and Decree No. 10,854/2021 established significant changes by regulating this topic, along with Ordinance No. 671/2021, which came into force in December 2021.

Prior to the publication of these rules, activities that did not have permanent authorization to be carried out on Sundays were entitled to obtain a provisional, transitional authorization, for up to two (2) years, upon (i) the formalization of a Specific Collective Bargaining Agreement (“ACTE”), signed between the company and the Union representing the employees; or (ii) request for a temporary authorization directly from the Regional Labor Department, with express consent of the Union.

Following the implementation of Decree No. 10,854/2021, companies whose activities are not listed as permanently authorized can only operate on Sundays and public holidays upon request for a transitional authorization. Such request must be submitted, mandatorily, to the head of the decentralized unit of Labor Inspection of the Ministry of Labor and Social Security, in case of force majeure, to complete or execute the services that cannot be postponed or whose non-execution can result in indisputable loss and must be limited to a period of 60 (sixty) days.

Considering these new provisions, old measures must be reviewed, and companies must adapt their procedures, especially concerning paid weekly rest and Sunday work.

Burnout recognized as an occupational disease

Recognized by the World Health Organization (“WHO”) as an occupational disease in January 2022, Burnout Syndrome is now included in the list of occupational diseases within the International Statistical Classification of Diseases and Related Health Problems (“ICD”).  As a result, workers diagnosed with Burnout will have the same labor and social security rights as all other occupational diseases, such as Repetitive Strain Injury (“RSI”) and Work-related Musculoskeletal Disorders (“WMSD”).

Also known as Professional Exhaustion Syndrome, Burnout Syndrome can be understood as a psychic disorder characterized by a state of emotional tension and stress resulted from exhausting working conditions. The most frequent symptoms are negative thoughts, headaches, insomnia, difficulty concentrating, memory lapses, anxiety, depression, widespread pessimism, and a sensation of failure and hopelessness.

The immediate impact of this change should soon be perceived by employers, given that the worker diagnosed with Burnout will receive sick pay due to occupational accident/disease. As a result, employees will be entitled to employment tenure for twelve months, while the employer must carry out Guarantee Fund for Length of Service (“FGTS”) deposits during the employee’s leave.

Subsequently, the number of labor lawsuits involving claims for damages related to Burnout must be taken into consideration and will certainly still lead to numerous controversies on the topic. Given that this is a case of psychological injury, the matter will always be subjective, especially due to the difficulty of specifying whether the disease was originated or aggravated because of work, and not related to any other personal matters of the employee.

Given the sensitivity and importance of the subject, in addition to the severity of possible consequences of recognizing Burnout Syndrome as an occupational disease, the amendment encourages employers to create and reassess measures aimed at preventing harassment and other issues that may trigger professional exhaustion. The creation of reporting channels, the prohibition from imposing grueling and restless schedules to workers, and the development of action plans to ensure a healthy and harmonious working environment are just a few examples of measures that must be immediately considered by companies.

In summary, the adoption of preventive measures is the best strategy to mitigate risks and financial losses resulted from potential labor liabilities.

New rules on the operation of Electronic Time Tracking Recording System

On November 08, 2021, the Ministry of Labor and Social Security published Ordinance No. 671/2021, which established a series of provisions concerning labor law and labor inspection, and introduced new methods of using Electronic Time Tracking Systems (“REPs”), as well as suggestions to adapt Time Tracking Treatment Programs for companies that use REP (according to the rules provided for in article 83 of the new Ordinance), dividing REP into three modalities:

  • The REP-P, or electronic time tracking via “Program”, which, in summary, is a time tracking system via computer programs, mobile or tablet applications, and other electronic methods of time recording and control based on a program and on a non-exclusive tracking equipment to record working hours;

 

  • The REP-C, or the “conventional” electronic time tracking system, consisting of an equipment that records working hours, along with a record-treatment program. This is the original REP, created by Ordinance 1,510/2009 (now repealed); and

 

  • The REP-A, or “alternative” electronic time tracking system, which refers to the electronic registration system and/or equipment established by a collective bargaining agreement previously established in Ordinance 373/2021 (also repealed). REP-A can only be employed while the employee’s special collective agreement or collective bargaining agreement remains effective

 

The REP-P was designed as the most appropriate system, especially (but not exclusively), to control the working hours of external employees and those working remotely at home or in a hybrid work framework, if the company is obliged to record the working hours of these employees, without the need to carry out a parallel manual time tracking control.

It is worth highlighting that REP-P can be the sole electronic time tracking system for employees of a company, including those working on site, and can fully replace the conventional REP, or REP-C, which was previously used. In fact, the REP-P must meet certification and compliance rules quite like the REP-C, which reinforces the understanding that REP-P not only can be, but is, in fact, a digital replacement for the REP-C, which is physical-electronic.

REP-A can still be an alternative to the conventional system if companies do not wish to implement a manual time tracking control system, nor adopt REP-P for external employees, or for those who will work in a hybrid or remote work framework. However, given that this modality of working hours control still depends on a collective bargaining agreement to be implemented and is limited to the effectiveness of such agreement, the REP-A was certainly kept in the legislation only for those situations in which it is, in fact, impossible to adopt the REP-C or the REP-P.

For clarification purposes, the main changes provided for in Ordinance 671/2021 concerning electronic time tracking systems are as follows:

  • The REP-C and REP-P must issue or provide access to the employee’s time tracking voucher, which serves as proof of record of hours worked, and can be issued in paper or electronic file format (subject to the requirements of article 80 of Ordinance 671/2021, in the latter case).
  • All types of electronic time tracking systems (REP-P, REP-C, and REP-A) must generate a Data Source File, according to the model provided for in the Ordinance.

Subsequently, companies will be able to adopt the use of programs and applications that meet the requirements set forth in Ordinance 671/2021, in the REP-P modality, to control the working hours of their employees, without the need to adopt different systems for each type of employee (on site, external or remote), nor any obligation of executing a collective bargaining agreement, provided that the programs comply with the legislation.

Changes in the Telework Framework – MP 1,108/2022

On March 25, 2022, Provisional Measure No. 1,108 was published, which introduced changes to the telework framework included in the Consolidated Labor Laws (“CLT”) through Law No. 13,467/2017.

The main change in Article 75-B, with the inclusion of paragraph 1, which introduced greater flexibility to the telework framework, allowing employees to work at the company’s facilities, even on a usual basis, without any prejudice to the framework. It is also important to highlight the inclusion of Article 75-F, which gives priority for employees with disabilities or that parent children of up to 4 years old regarding telework or remote work opportunities.

Since the MP was not approved by the National Congress to become an ordinary law, it became ineffective on July 26, 2022. As a result, rules that were previously valid for the telework regime are back in force until new rules are approved by Congress.