This complete global solution for HR professionals combines custom research, strategic white papers, country primers, webinars, and the expert guidance you’ve come to expect from...
By Ed Taylor
Oct. 27— Brazilian companies facing a major increase in their labor debts received a reprieve when a supreme court justice suspended a labor court decision changing the index used to correct the debts.
It is common for companies in Brazil to appeal labor court rulings that go against them, and these appeals can take years. Over this period, the labor courts adjust the charges the companies are appealing for inflation.
In its August decision, the labor court declared unconstitutional the previous index used to correct the charges, which traditionally fell below inflation, and substituted Brazil's consumer price index, the official inflation rate. This change threatened to produce a massive increase in corporate debts, since last year the previous index applied to employer liability was 0.86 percent, while the consumer price index was 6.46 percent, and over the past five years the CPI was 30 percent higher than the index used to correct potential employer charges.
Compounding the problem, the new index factor was to be applied to all pending appeals filed after June 30, 2009. Employers rushed to challenge the court's decision, and on Oct. 19 supreme court justice Dias Toffoli issued an injunction not only suspending the labor court's ruling but allowing employers using the new index factor to be reimbursed for the extra expense. The previous index value will now be restored at least until the entire supreme court rules on the question.
“The supreme labor court created a giant problem for companies with losses that would easily run into the billions at a time when the country is fighting to emerge from a recession,” said attorney Maurico Pessoa of the law firm Barbosa Mussnich Aragao, which represented the bank federation that brought the lawsuit in which Justice Toffoli's injunction was issued.
Toffoli accepted the federation's argument that the labor court lacks authority to declare laws unconstitutional and in addition held that the labor court's argument was based on a misinterpretation of the 2009 case used as precedent.
“With this decision, everything is back to normal,” said labor attorney Rafael Ferraresi Holanda Cavalcante of the firm Siqueira Castro Attorneys.
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
For more information on Brazilian HR law and regulation, see the Brazil primer.
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)