Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
By Ed Taylor
July 14—A justice of Brazil's supreme federal court has overruled a dramatic change in the indexer used to correct company labor debts.
In August of last year, Brazil's superior labor court replaced the indexer that had been in use with another that amounted to a significant increase in the cost for companies to appeal Brazilian labor court decisions.
It is common for companies in Brazil to appeal labor court rulings that go against them, and these appeals can drag on for years. Over this period, the courts correct the charges the companies are appealing for inflation. Until last August, the courts used an indexer that was favorable to companies, falling below annual inflation, but the superior labor court replaced this with Brazil's consumer price index, which is significantly higher.
Companies and banks have challenged this decision, and on July 5 supreme court justice Dias Toffoli issued a ruling suspending the labor court decision. The ruling came in a challenge of the new indexer filed by Brazil's national federation of banks and the Safra bank.
The plaintiffs pointed out that the previous indexer, known as the reference rate, had shown a variation of 1.1 percent in 2015, while the consumer price index posted a rate of 10.70 percent. According to the Safra bank, this raised its labor debt by $303 million.
Toffoli rejected the labor court's use of the new indexer against Safra, stating that a supreme court injunction issued last October had already suspended the application of the indexer. His decision now must be ratified by the full supreme court, but no date was set for this.
Attorney Juliana Bracks of Bracks Attorneys complained in an e-mail to Bloomberg BNA on July 12 that the labor courts are continuing to ignore the October injunction of the supreme court. Bracks stated that all lower courts should now follow Toffoli's decision. Brazil's judicial system, however, does not use the concept of binding precedents.
To contact the reporter on this story: Ed Taylor in Rio de Janeiro at email@example.com
To contact the editor responsible for this story: Rick Vollmar at firstname.lastname@example.org
The text of Toffoli's ruling is available here.
For more information on Brazilian HR law and regulation, see the Brazil primer.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)