Brazilian Senate approves labor reform. Find out what changes

Brazilian Senate approves labor reform. Find out what changes

After protests from senators, Congress approves the overhaul of the labor legislation
Brazil Business

After a tumultuous sitting, the Brazilian Senate has approved the labor reform bill. It will become effective as soon as President Michel Temer signs it. The reform is a major overhaul of the labor legislation. Here are the main points of change:

1. Collective bargaining

One of the main principles to the labor reform is giving legal legitimacy to contracts signed through collective bargaining. The reform will actually give collective contracts greater legal weight than the current book of Labor Laws (CLT), which dates back to 1943. Many consider the CLT, written under the dictatorship of Getúlio Vargas, to have extremely strict regulations about worker protection and rights.

The current government believes the reform will give workers greater agency in negotiating their rights at the contract stage. Furthermore, they believe this reform will simplify the hiring process, strengthen the unions, and generate more jobs. Opposition groups argue that bypassing the CLT would throw fundamental workers rights under the bus.

2. Temporary contracts

The proposed reform will also alter the rules of temporary contracts. Most importantly, the reform would increase the duration of temporary contracts to 120 days, with the possibility of another 120 day extension. Part-time employees would also be able to work under temp contracts.

Under current regulations, temp work can only last 90 days (with the possibility of an extension for another 90 days). To extend the contract further, employers must request an authorization from the Ministry of Labor.

Under the reform, temp workers would have the same rights guaranteed as fully contracted employees. Meaning, they would receive the same salaries, benefits, and overtime pay as their permanent counterparts. One difference is that they would not receive severance pay.

3. 48-hour work week

Perhaps the most misunderstood and controversial aspect of the labor reform proposal is the regularization of the extended work week. The proposal brings the maximum work day to 12 hours once agreed upon among employees and employers. Overtime is then limited to four extra hours per week, extending the hourly work week from 44 hours to a possible 48 hours.

This particular proposal created outrage in Brazilians, and many thought that a 12-hour work day would become the new normal. That’s not true, according to Claudinor Barbiero, a Brazilian expert in social security law. “In fact, employees could work less, because there will be a limit for the weekly journey. As it stands now, there is no limit,” he told plus55.

4. Part-time workers’ rights

The reform also alters part-time workers’ rights. Currently, employers can hire part-time work for up to 25 hours a week without the option of overtime. The reform proposes extending this limit to 30-hour weeks without overtime, or 26-hour work weeks with the possibility of 6 overtime hours.

Another change is to increase vacation time to 30 days regardless of the number of hours worked, equal to the vacation days allotted to full-time workers. Part-time workers may also get the option of exchanging 1/3 of their vacation days for a financial bonus.

5. Outsourcing

And, finally, we get to the outsourcing bill. Under current regulations, companies can only outsource “non-core” activities, such as security or maintenance. However, the new bill liberates outsourcing to any kind of labor, central or otherwise to the company’s services. For example, a hospital may outsource its security or cleaning staff, but now it could even potentially outsource its doctors and nurses – formerly hired directly by the institution.

Furthermore, current legislation allows outsourced employees to seek recourse for labor violations from either the company using their services or the third-party staffing agency. However, the new bill limits workers to seek recourse with third-party staffing agencies rather than the contracting company. Meaning, worker violations will add another middle man who is one step removed from the actual infraction.

Supporters of the bill argue that it improves company productivity, reduces costs, and creates greater flexibility in contract negotiations. They also argue that the bill will provide better work conditions and bring more protection to outsourced employees. However, workers rights groups remain skeptical that the government may just be trying to pass off responsibility for labor disputes. In fact, the numbers don’t look too good for outsourced workers to begin with. They already make on average 25 percent less than directly contracted workers, and have less leverage with which to negotiate pensions, job security, and other benefits.

The outsourcing aspect of the labor reform was actually approved separately due to a little maneuver by Brazil’s Lower House. The tricksters brought in a forgotten outsourcing bill from the 90s that was already approved by the Senate in order to bypass their likely disapproval. Now, President Temer will look over the bill and give the final approval or veto to make it labor law.