Brazil: Courts Divided on Precedence of Labor Law and Collective Bargaining

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By Ed Taylor

Oct. 3—A labor reform proposed by Brazil's new government has run into serious opposition from the country's highest labor court.

President Michel Temer, who took office in August following the impeachment of his predecessor, has promised a far-reaching reform that would favor collective bargaining agreements over Brazil's antiquated and restrictive labor laws.

Temer's reform proposal received an important boost from the supreme court's Sept. 14 ruling that companies and unions can legally agree to expand working hours beyond established limits.

On Sept. 26, however, the supreme labor court announced a ruling that moves in the opposite direction of Temer's reform. In a case ( RR-205900-57.2007.5.09.0325) that also involved an agreement to alter working hours, the court said that collective bargaining agreements cannot override labor laws and that supreme court rulings in favor of union-management agreements should not be seen as establishing blanket precedents.

Balancing Rights

In its decision, the labor court's majority stated that there is no absolute right for agreements between management and unions to take precedence over established legislation. In rejecting the agreement between workers at a sugar mill and mill management, the court stated that the workers had given up rights guaranteed by labor laws without receiving any compensation.

“It's one thing to ease the application of labor laws and reinforce collective bargaining,” said court Minister Joao Oreste Dalazen. “It's another to send a green light for the pure and simple reduction of legal rights.”

The court did hold out the possibility that in certain cases an agreement could be accepted even if it went against labor laws, but the decision did not define which cases would qualify.

One of the court's members, Minister Aloysio Silva Correa da Veiga, admitted that a more comprehensive ruling is necessary to define the limits of collective bargaining agreements. For Minister Jose Roberto Pimenta, however, such a definition should be made by Brazil's congress or the presidency and not the courts.

“This is up to the other powers to legislate on and assume the historic responsibility,” he said, according to the court's press office.

Regarding the supreme court's Sept. 14 ruling and similar decisions in favor of collective bargaining, the labor court said they did not set a precedent and had no application to the labor court's case. The court's president, Ives Gandra Martins Filho, sided with the minority, however, arguing that the case fell within the criteria accepted by the supreme court.

Reaffirmation

Attorneys told Bloomberg BNA that they saw in the ruling a reaffirmation of the supreme labor court's traditional authority over this question, rejecting the imposition of the supreme court.

“The labor court in its decision said that there are limits to the autonomy of collective bargaining agreements, while the supreme court understood that there is ample autonomy,” said attorney Wagner Gusmao of the law firm Tristao Fernandes Advogados.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

Text of the labor court ruling is available here.

For more information on Brazilian HR law and regulation, see the Brazil primer.

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