This report covers Brazil’s recently published labor law reform legislation that significantly amends the rights and responsibilities of employers, employees, and unions.
On July 14, 2017, Brazil’s Law 13.467/2017 was enacted, introducing several amendments popularly referred to collectively as the “labor law reform.”1 These reforms cover such rights and responsibilities as collective bargaining, vacation hours and pay, termination (severance) pay, the tax treatment of medical insurance contributions and travel allowances, etc., and set down the roles of employers, unions, and employees and the obligations governing relations between them. The Law also stipulates new rules around the effect on FGTS2 when paying severance, as well as the impact on social security and FGTS calculations when providing travel allowances.
All employers in Brazil are obligated to comply with the new rules, and employees in Brazil, including international assignees in Brazil, subject to the country’s labor laws, should be familiar with their rights and responsibilities under the new rules, as they will soon come into effect.
Failure by employers to fulfill their obligations under the new rules could lead to fines and other sanctions.
Highlights of some of the Law’s measures include:
The amendments introduced by Law 13.467/2017 will take effect 120 days following the Law’s publication, during which period an organization’s labor law practices and policies should be adjusted to accommodate the new requirements stipulated by the terms of the Law. If the Brazilian government publishes the related Provisional Measure in the days ahead, the recently published Law may be subject to modifications.
1 Law 13.467/2017 (Lei Ordinária nº 13467 de 13 de Julho de 2017) was published in the Diário Oficial da União - Seção 1 - 14/7/2017 (Brazil’s official journal). Law 13.467/2017 formalizes and triggers the implementation of around 100 amendments to the Consolidated Labor Laws (Consolidação das Leis do Trabalho or “CLT”), in addition to amending Law 6.019/1974 (Temporary Labor and Outsourcing), Law 8.036/1990 (Employee Time of Service Guarantee Fund - FGTS) and Law 8.212/1991 (Social Security).
2 FGTS stands for “Fundo de Garantia do Tempo de Serviço,” which is a type of personal reserve savings scheme for employees.
The information contained in this newsletter was submitted by the KPMG International member firm in Brazil.
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