Brazil: Labor Court Rejects Agreement to Reduce Overtime

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By Ed Taylor

April 13—Brazil’s supreme labor court has ruled that companies cannot reduce employee overtime even if this is accepted by unions representing the employees.

Still reeling from the global financial crisis, many Brazilian businesses reached agreements with their labor unions in 2009 to reduce salaries or overtime, some of which were later challenged by individual workers.

In its April 1 decision, the country’s highest labor court ruled in one of these cases that companies cannot limit overtime in periods of hardship even if this is agreed to by the affected unions.

Prejudicial Decision

The case involved a Brazilian company that in 2009 limited overtime hours to a maximum of two a day. The local union agreed to the limitation and signed a collective bargaining agreement protecting the employer from any fine for reducing overtime. A company employee challenged this agreement on the grounds that it violated his rights as guaranteed by law. The company argued that it could not be penalized for reducing overtime because the decision was not unilateral and was taken in agreement with the local union.

In its ruling, the supreme labor court upheld a lower court decision that the company's action to reduce overtime was prejudicial to employees and the agreement signed with the local union exempting the company from penalization was null and void.

According to the high court's ruling, employee overtime is a basic right “not subject to collective bargaining,” so whatever the contents of the 2009 agreement with the local labor union, the company remained subject to the penalties established by law for limiting overtime. The court fined the company and ordered it to pay damages to the employee who brought the suit.


Labor attorneys criticized the court’s decision, arguing that the terms of agreements between management and labor should prevail.

According to attorney Juliana Bracks Duarte of the law firm Bracks Associated Attorneys, the clause exempting the company from paying fines should not be declared invalid because it was accepted by the union.

“It is absurd to reject a clause like this which is not endangering the health or safety of employees,” Duarte said. “On the contrary, it is reducing the daily work period, giving the employee more time with his family.”

For attorney Antonio Carlos Aguiar of the firm Peixoto & Cury Attorneys, “if the union can negotiate constitutionally and this was not a unilateral decision, there is no reason to impose a fine.”

Aguiar added that overtime amounts to a “variable salary” that can be eliminated when it is no longer necessary.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at

To contact the editor responsible for this story: Rick Vollmar at

For More Information

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

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