The Employment Law Review: Brazil
Basic employment rights in Brazil are provided for in the Federal Constitution of 1988.
The Consolidation of Labour Laws (CLT), enacted in 1943, is the major statute that regulates labour and employment relationships. In addition, specific regulations are set forth in federal laws for certain professionals (such as engineers, physicians, attorneys) and there are regulations relating to occupational health and safety issued by the labour agency (currently connected with the Ministry of Economy). The labour agency is responsible for controlling compliance with legislation and for regulating employment relationships in Brazil on matters ascribed to it by federal law.
In addition to establishing material rights, the CLT also regulates the entire labour court procedural system. There is no discovery phase or trial by jury, as a labour claim must be filed with a labour court and evidence is produced in the proceeding and before the judge who will rule on the case.
Claims can be individual or class; the former is most common. Class actions may be brought against an employer by the union that represents the employees or by the Labour Prosecution Office.
There are three levels of employment courts. The first includes the lower labour courts in which a judge rules on cases at the local level and the second level are the regional labour courts, which are generally located in the state capitals. The third level is the Superior Labour Court, which is in Brasilia, the federal capital. In addition to the labour courts, the Supreme Court, which is the highest adjudicative body of the Brazilian legal system, also hears labour cases when lower court decisions violate constitutional provisions.
From the administrative standpoint, in addition to audits conducted by the labour agency, the Labour Prosecution Office monitors compliance with legislation through investigative proceedings. The Labour Prosecution Office acts by means of an indictment, which may or may not be anonymous, and also when urged by the labour courts or by a professional union. If any irregularity is found, the Labour Prosecution Office can propose a settlement, granting the company a period in which to remedy the irregularity subject to the imposition of a fine, or file a public civil action against the company.
Year in review
The state of public emergency that was declared by the Brazilian Congress in March 2020, in response to the new coronavirus pandemic, affected several legal frameworks. It triggered an intense period of legislative action in labour matters, aimed mostly at giving companies more flexibility while they navigated through the pandemic. Several provisional acts were enacted during this time, some of which expired during 2020.
The expiry of these provisional acts raised legal concerns about the labour environment in Brazil after the pandemic. This created a key and unique role for unions in the negotiation of collective bargaining agreements to address the lack of proper legal regulations on matters such as teleworking, for example, which started in 2020 and will continue to be a trend in 2021.
Since the beginning of the pandemic, the most relevant employment disputes have been in connection with the new coronavirus, including collective disputes filed by the Labour Prosecutor Office and by various workers' unions. Most of these litigations sought to force companies to adopt health and safety measures to protect workers or to prevent or overrule collective redundancies.
Although individual employment disputes concerning covid-19 infections in the workplace were not a trend in 2020, this is likely to change in 2021. Nevertheless, during 2020, there was much debate as to whether covid-19 is to be considered a workplace illness and thus trigger a specific social security benefit, followed by job stability for one year as of the employee's return from sick leave, and the employer's liability to respond in respect of the corresponding compensation. As yet, the matter is far from being settled. These cases are likely be reviewed extensively by labour courts in 2021, when there will be more clarity in terms of precedents.
During 2020, the Labour Prosecutor Office filed public civil actions against companies in the context of covid-19. Two types of disputes were common: one concerned the economic effects of covid-19 that negatively affected most business; the other was connected to health, safety and environment (HSE). Another very relevant dispute was concluded in December 2020; the Supreme Court finally decided on which monetary index must be used for the purposes of updating labour-related debts.
The pandemic has been very harsh on most businesses. Companies experienced a reduction in revenues during 2020 and had to adapt quickly. Several measures were adopted by employers, including making employees redundant. Some employers engaged in mass or collective dismissals, a concept created by court precedents more than 10 years ago. According to these precedents, it is illegal to terminate the employment of a certain number of employees without previously engaging in negotiations with the relevant workers' unions. Although these precedents were overruled by the 2017 Labour Reform, some labour courts still insist on requiring businesses to negotiate before executing collective dismissals.
Based on the old precedents, the Labour Prosecutor Office challenged collective dismissals executed in 2020 by companies that had not consulted the relevant workers' unions. Some courts granted injunctions ordering the reinstatement of employees in their former positions. Some of these cases were resolved by settlement, but others are still being disputed. At the time of writing, it is still unclear how this discussion will unfold as the labour judges have different understandings on the matter. The case law on collective dismissals will only be settled when the Superior Labour Court reviews its previous opinions in light of the 2017 Labour Reform.
Another common labour-related dispute that took place in 2020 involving the Labour Prosecutor Office concerned HSE standards. Public civil actions were filed seeking judicial intervention in factories and offices that were (apparently) not complying with the hygiene rules issued by the federal and local governments to deal with covid-19.
Some courts ordered the temporary sealing of factories and offices, if the companies were not able to demonstrate that strict measures were in place to reduce risks of infections. In other cases, decisions were issued ordering businesses to adopt stricter HSE measures. Most of these cases are still being disputed and, in come, the Labour Prosecutor Office is seeking collective damages.
In late 2020, the Supreme Court concluded the judgment of actions in which the monetary index or interest used to update labour-related debts was under dispute. The Court decided that the index known as TR is unconstitutional and can no longer be used by the labour courts for the purposes of updating debts and bonds posted by defendants. Until the Federal Congress issues new rules on this matter, the IPCA-E2 index must be used from the time the debts are incurred until the service process is properly carried out and the SELIC3 index must be used from the service process until the final payment of the debt. According to this decision, the monthly interest (1 per cent) will no longer accrue in labour-related debts.
The Supreme Court's official written decision is yet to be made available and it is likely that motions seeking clarifications will still be filed. For this reason, it is still necessary to see how this matter will unfold during 2021. However, from what was decided by the Supreme Court, the accrual of interest or inflation on labour-related awards issued by courts tends to be considerably lower, which will have a positive effect on businesses' reserves.
Basics of entering into an employment relationship
i Employment relationship
Brazilian law does not require the execution of a written employment contract but most companies and employees follow this practice.
In general, written employment contracts establish the duties to be performed, salary, working hours, corporate benefits, possibility of transfer, confidentiality and non-disclosure obligations, obligations to comply with internal policies, payment for damage caused by employees and payroll deductions in addition to the legal deductions.
Employment contracts in Brazil are usually executed for an indefinite term. Contracts executed for a fixed term are limited to two years. To be valid, contracts for a fixed term must be executed only for services whose nature or temporary nature justifies a definite term, or for temporary business activities.
The principal employment rights are the following:
- monthly salary;
- transport vouchers;
- five days' paid paternity leave;
- vacation pay, plus one-third vacation bonus;
- 13th-month salary, equivalent to one-twelfth of the monthly salary for each month worked. This is calculated based on the salary for December and paid in two instalments, the first between the months of February and November and the second on 20 December;
- monthly contribution to the employee severance indemnity fund (FGTS), equivalent to 8 per cent of monthly remuneration, deposited monthly with a government bank;
- 120 days' maternity leave (this is actually a social security right, rather than an employment right, as the Social Security Agency pays the maternity benefit);
- rights provided for in a collective bargaining agreement; and
- severance pay.
The remuneration paid to employees generates social security contribution obligations, the percentages of which (as of March 2020) vary according to the amount of salary paid:
|Salary (for the purpose of social security contributions) (reais)||Index (%)|
|Up to 1,039.00||7.5|
|Between 1,039.01 and 2,089.60||9|
|Between 2,089.61 and 3,134.40||12|
|Between 3,134.41 and 6,101.06||14|
Employees must pay income tax on the full amount of compensation, which must be deducted by the employer. Employers are required to withhold tax and pay the deductions directly to the Federal Revenue Office, providing the employee with annual information that is required for the preparation of an annual tax return. Withholding percentages vary according to the amount of salary paid:
|Monthly tax base (reais)||Rate (%)||Amount of tax to be deducted (reais)|
|Up to 1,903.98||–||–|
|Between 1,903.99 and 2,826.65||7.5||142.80|
|Between 2,826.66 and 3,751.05||15.0||354.80|
|Between 3,751.06 and 4,664.68||22.5||636.13|
|More than 4,664.69||27.5||869.36|
In addition to the payments based on employees' salaries, employers must pay social charges to social security services.
The basic social tax rate applicable to the company on the salary paid, payable or credited to an employee who provides services is 20 per cent. The calculation is based on the total compensation paid, payable or credited for work on any account during the month to socially insured employees providing services.
Sums are added to this 20 per cent contribution to cover the cost of occupational accident insurance, and for contributions intended for social security services that are specific to each activity carried out by the company. The average rate that results from this addition is 28.8 per cent but may vary depending on the economic activity of the company.
Regarding non-employees, the social security contribution rate payable by the company that contracts them is 20 per cent on total remuneration paid or credited to any account. Contributions are not levied to cover the cost of occupational accident insurance, or social security services that are specific to the economic activity of the company.
ii Probationary periods
Pursuant to Brazilian law, a Brazilian company can execute an employment contract containing a probationary period of a maximum of 90 days, which may be extended once if it has been executed for a term that is less than the legal limit.
If the probationary period has expired and the employee continues working, the contract is automatically deemed to be for an indefinite term.
iii Temporary work
Federal Law No. 6,019 of 1974 on temporary employment authorises that in the legal event of the temporary substitution of regular and permanent staff arising from an increase in business demand, temporary workers may be hired for up to 180 days, which can be postponed for 90 days if the increase in business demand arises from unpredictable factors, or predictable factors relating to intermittent, periodic or seasonal features.
The contracting company is responsible for ensuring that health and safety conditions are met when temporary workers perform services on its premises. Medical facilities and meals that are granted to the contracting company's own employees must be provided also to the temporary workers.
iv Establishing a presence
If an employee is hired by a foreign company to work in Brazil, Brazilian law and jurisdiction will prevail regardless of any other provision established by the employment contract.
The employee, consultant or service provider of a foreign company providing services in Brazil may not perform any acts that could be construed as 'doing business in Brazil'. In this respect, Brazilian domestic legislation does not provide for the notion of 'permanent establishment' as that term has been construed by international tax doctrine, foreign laws and model conventions to avoid double taxation.
The aspect that corresponds most closely to regulations on a permanent establishment is Article 147 of the Brazilian Income Tax Regulations, which sets forth very specific situations in which tax legislation subjects non-residents to the same tax regime applicable to Brazilian tax residents. In this sense, Article 147 lists hypothetical circumstances in which non-residents would be deemed to be doing business in Brazil by means of an organisation of persons or assets. As a result of the application of Article 147, income derived by the non-resident through the organisation of persons or assets would no longer be subject to territorial taxation (which is the standard regime applicable to non-residents) and would be subject to the general tax regime applicable to Brazilian resident legal entities to the extent that the income can be attributed to activities carried out in Brazil.
In this context, while Brazilian law acknowledges the legal personality of foreign legal entities, it does not embrace the freedom of establishment of those entities, as is the case in several other countries. In other words, Brazilian law requires foreign legal entities to obtain authorisation to carry out their activities in Brazil.
If a foreign company establishes a subsidiary in Brazil, it will not be able to hire employees until it has filed its organisational documents (articles of association or by-laws) with the commercial registry of the state where the subsidiary is located.
There is no legally provided time frame for the incorporation of a company.
Hiring consultants or service providers through an intermediary company is possible.
During the term of the employment contract, the employee has a duty of loyalty to the employer and therefore cannot carry out competing activities unless the employer has given authorisation in this regard. Exclusivity does not apply to employees hired on demand (i.e., for work on occasional days, weeks or months).
On account of the constitutional principle of the freedom of every person to work, the employee may carry out competing activities after a contractual termination of employment, unless he or she has executed a non-compete agreement with the former employer.
Based on court precedents, a non-compete agreement must be executed at the moment of hiring (either included in the employment contract or in a separate document) and must meet the following requirements: (1) it must be limited in geographical area; (2) the former employee is compensated during the non-compete period; (3) it must be for a limited period; and (4) it must be limited to the business area of the employer. Although there is no regulatory legislation, the labour courts have judged non-compete agreements to be valid only when these four requirements are present and provided that the compensation established for the period of non-competition is equal to the salary received by the employee during the term of the employment contract. Note that when an employment contract is terminated, if the employer then requires the employee to execute a non-compete agreement, the employee is not under an obligation to do so.
Regarding confidentiality and non-solicitation agreements after termination of an employment contract, these will be valid and payment of an indemnity will not be necessary. For these obligations to be valid after termination of the employment contract, an express agreement in this regard is required.
The employment contract must also contain provisions governing the protection of intellectual or industrial property to the extent applicable and particularly in accordance with the duties being performed by the employee. Regarding provisions concerning inventions created by employees (works made for hire) that are the property of the employer, the contract must provide that compensation paid already includes compensation for intellectual property comprising inventions and enhancements.
i Working hours
The Federal Constitution establishes that the maximum number of hours to be worked by an employee is eight hours per day, 44 hours per week and 220 hours per month.
Special working hours may include continuous rotating shifts, which may only last a maximum of six hours per day, and may be extended to up to eight hours per day subject to a collective bargaining agreement in this respect.
The company must grant a break for rest and a meal whenever the working period is more than four hours, which will be 15 minutes for a working period of up to six hours and of one to two hours for a working period of more than six hours. The break for rest and a meal is not included as part of the working hours.
Working hours do not apply to employees whose working day is proven to be entirely external work with no control of time or hours worked (including employees under home office schemes), as well as to employees who are shown to hold positions of trust, in other words, employees who perform management (or administration) activities as legal representatives of the company and who are not subject to time or hours worked, or monitoring or control. These employees do not have the right to payment of overtime.
Companies with more than 20 employees are required to maintain control of working days for employees who are subject to compliance with working hours. Records of working hour may be manual, mechanical or electronic, so that employees may record the times of entry, exit and breaks.
If an employee works beyond his or her contractual working day, the company must remunerate the excess hours as overtime, with a minimum rate of 50 per cent more than the ordinary wage for an hour, although there are collective bargaining agreements that establish higher percentages. The employee may work only two overtime hours per day, so that the working day is limited to a maximum of 10 hours.
Hours worked on Sundays or holidays, if not offset in the subsequent week, must be remunerated with a supplement of 100 per cent of the ordinary wage, irrespective of whether they exceed the daily or weekly limit.
Foreign workers may work in Brazil if they hold a residency visa, which is temporary. Requirements for granting visas are set forth in the law and in the regulations of the Ministry of Justice.
For the granting of a temporary residency visa, among other requirements, the foreigner must receive a job offer from a Brazilian company (subsidiary or not) or show evidence that he or she has a graduate degree.
In relation to a temporary visa for an employee who has an employment contract with a Brazilian company, subject to fulfilling the qualification and experience requirements for the job, the maximum term is two years, which can be postponed subject to application and confirmation by the immigration authorities. The permitted number of foreigners holding this visa is limited to a proportion of one-third of the total number of Brazilians hired by the company, in addition to compliance with the rule of two-thirds of payroll salaries. Furthermore, if a foreigner is performing work that is also performed by a Brazilian employee, other requirements such as salary parity may apply, as provided for by the Ministry of Justice. The proportionality requirement is only applicable for the purposes of immigration. The employee must receive remuneration in Brazil and, if he or she continues to receive remuneration from the company abroad, he or she must submit his or her full monthly earnings (in Brazil and abroad) for the purposes of taxation in Brazil. Thus, the Brazilian company must consider for tax and FGTS purposes the amounts received by the foreigner abroad. It should be determined whether there is a tax treaty in place between Brazil and the country of origin for the purposes of offsetting taxes. Dependants of a holder of a temporary visa may also work in Brazil provided that they request authorisation from the immigration authority.
When working in Brazil, a foreign worker who has the status of an employee of a Brazilian company is protected by Brazilian labour legislation, irrespective of the provisions of a foreign employment contract. Thus, the company must afford the foreigner the same rights guaranteed by law to Brazilian workers and it is advisable that he or she be included in the local benefits policy.
The provision of services by a foreign worker who does not hold a work visa, or whose visa has expired or is irregular, may result in administrative sanctions for the company and deportation of the foreigner.
Foreigners holding visit visas (for tourism or business) are not authorised to perform work activities in return for payment. Exceptions apply for audits, consultancy, news coverage (journalism) and working on flights or vessels as a crew member.
Brazilian legislation does not prohibit the application of global policies to employees, provided that they do not violate Brazilian law and it is not necessary to obtain approval by the employees or by any government agency for the policies to be implemented. Policies on discrimination, sexual harassment and corruption must comply with applicable Brazilian law.
A global policy should be implemented with care, because concepts, expressions or even words may have a different legal effect if applied in Brazil, giving rise to consequences that would otherwise not occur in other countries. An example is anti-corruption legislation, such as the US Foreign Corrupt Practices Act – practices may be in accordance with the legislation of the country of origin, but as far as the policy in other countries is concerned, including with regard to the form of a potential investigation, certain practices may have legal implications. Thus, prior analysis of the possibility of application of the policy is recommended.
The policies become constituent parts of employment contracts, including disciplinary measures, and may not be altered to the detriment of employees. The policies should be implemented in Portuguese to avoid any allegation by the employee of lack of understanding thereof and so that they can be enforceable. As for the form, they may be in writing or distributed via the company's intranet.
It is important for a company to have written or documentary evidence that its employees are aware of the policies, particularly if, based on the terms of those policies, an employee could fail to receive any payment due to him or her, or be subject to a disciplinary measure. In the event of subsequent implementation, depending on the nature of the policy (e.g., a code of conduct or ethics), it is recommended that the company offer training for its employees and have evidence thereof, on account of the potential civil liability of the company in the event of damage caused by the employee to another employee or to third parties. If the company so wishes, it may also hold a copy to be available to employees.
Maternity leave entitlement is 120 days. An employee may opt to commence paid leave up to 28 days before the expected birth date or just after the child is born.
An employee who has an abortion is still entitled to maternity leave but only for two weeks. The law permits abortion in limited situations; voluntary abortion is not one of them.
Adoption or child custody also entitles a parent to parental leave, the duration of which depends on the child's age:
Maternity and paid leave may be extended to 180 and 20 days, respectively, if the employer joins a government programme called Company-Citizen. In recognition of participation in this programme, employers are entitled to specific tax benefits.
Paternity leave is five days only. During both maternity and paternity leave, an employee continues to receive his or her base salary plus related employment benefits.
Pursuant to the Civil Code of Brazil, documents must be translated into Portuguese by a certified translator.
It is recommended that all documents, including job offers, employment contracts, internal policies, confidentiality agreements and bonus policies, be executed in Portuguese (or Portuguese and another language).
The Federal Constitution provides that in companies with more than 200 employees, an employee must be elected with the exclusive purpose of representing fellow employees in discussions with the employers.
According to the CLT, which regulates this matter, the number of employees who may be elected depends on the size of the company:
- between 200 and 2,999 employees: three representatives;
- between 3,000 and 4,999 employees: five representatives; and
- more than 5,000 employees: seven representatives.
These representatives have provisional job tenure for one year after they have completed their term as a representative.
In addition, in respect of representation with unions, the law determines that employers and employees must be represented by unions regardless of their acceptance or membership.
Only unionised employers and employees have to pay union dues. In addition to monthly dues, unionised employers and employees are also required to pay other types of contributions to the union.
Employees are also represented by an internal committee for the prevention of occupational accidents, which must be set up by employers, according to the level of risk of the company's activity and the number of employees. Employees elected to this committee will have employee rights during their term of office and for up to one year thereafter.
i Requirements for registration
In addition to the Brazilian General Data Protection Law, which was enacted in 2018 and came into force in September 2020, a principle in the Federal Constitution also protects employees' privacy and confidentiality.
Employers can collect and process personal data belonging to employees, in short, if the data is needed to fulfil the employment agreement, if it is required by labour legislation or other applicable law, to meet an employer's legitimate interest (provided that proportionality and necessity are considered) and, under very strict requirements, if the employee consents to the processing.
Employees' medical data (which are sensitive data) may not be disclosed by the employer to third parties. Only the employee, his or her physician, or the company's occupational physician may have access to this information, which cannot be used for discriminatory purposes. If sharing an employees' medical data is necessary, the employee must provide his or her express consent.
Employee data that may be required by public authorities includes data that may be included by the employer in the annual report on social information, the general report on employment and unemployment, and the severance fund payment receipt and social security information.
To comply with the security principle and avoid data breaches, the employer should take organisational and technical steps to guarantee that all personal data is kept safe and confidential. To the same extent, it is recommended that third parties should only be engaged for the processing of employees' personal data if they can provide guarantees that they will process the data in a secure manner. If any data breach affects employees' data, the company will need to assess whether the breach represents risks to the employees' rights and freedoms and, if so, notify both the Brazilian Data Protection Authority and the employees.
ii Background checks
The CLT has no specific provisions on the types of background checks an employer may conduct to investigate a job applicant or an employee during the employment relationship, nor any provisions setting limits on employers undertaking these investigations. Thus, background checks are reviewed according to the principles of the Federal Constitution relating to the protection of employees' privacy and confidentiality. Certain practices relating to background checks can be adopted by employers, provided that they are reasonable and proportional to the work to be performed by employees. Certain regulations and court precedents permit background checks on prospective employees who will assume specific job positions (e.g., finance managers of certain entities or domestic workers).
There is no law forbidding termination of employment in Brazil, except in the cases of vested employee rights provided for by law, such as for a pregnant employee, a representative of the workplace's internal committee for the prevention of occupational accidents, an employee who has suffered an occupational accident, a union official or in a case of vested employee rights provided for in a collective bargaining agreement or internal policy.
If an employer needs to terminate employees' contracts because of new technology rendering their services unnecessary, the need to cut costs or if the activities of the company are to be terminated or transferred, the employer may simply terminate employment contracts without cause, but with notice and the payment of severance to the affected employees, which is mandatory in such cases.
If redundancy terminations are necessary, a review should be undertaken to determine whether the company employs any workers possessing vested employment rights, as these employees may not be dismissed as a result of redundancy.
Certain collective bargaining agreements grant benefits or provide for indemnities when terminations derive from redundancy, and certain employers offer payments that are higher than those provided for by law when contractual termination occurs as a result of discontinuance of a job or function. In these circumstances, it is also sometimes the case that consultation with the union is required before the terminations.
Transfer of business
Labour legislation provides that changes to corporate shareholdings do not affect employment contracts with employees. Thus, in the event of a change of control, a previously existing employment contract is maintained and employees may challenge any alteration made to the employment contract that is to their detriment.
Employment succession will be considered whenever there is continuity of the business. Thus, even if only the assets of the Brazilian company are being acquired (totally or partially), labour succession of employers will still be considered and existing contractual employment conditions must be maintained.
Likewise, if the successor company continues to employ its employees, but in the future ceases to pay employment rights or its partners cease to exist, nothing can hinder employees, including those that came with the business, from holding the company that acquired the assets (totally or partially) liable for the obligations. The predecessor company will only be held jointly and severally liable with the successor if there was fraud in the transfer of business.
The law provides that former shareholders are liable for labour-related debts relating to the period in which they were shareholders. This liability is limited to labour lawsuits filed up to two years after the company's by-laws were amended to allow for removal of the shareholders. Before proceeding with enforcement attempts against a former shareholder, the plaintiff must try to enforce the award first against the company and then against its current shareholders. In the event of fraud in the change of the corporate shareholders structure, the former shareholders will be jointly and severally liable for labour-related debts.
The labour rights relating to mandatory severance pay vary according to the type of termination, as follows.
Termination without cause at the employer's initiative
- Prior notice of 30 days, increased by three days for each year of service for the same company;
- salary balance in the termination month;
- unused earned vacations and one-third additional payment;
- prorated vacation and one-third additional payment;
- 13th-month salary (or prorated 13th-month salary, depending on the date of the termination);
- a deposit in the employee's dedicated FGTS account (equivalent to 8 per cent of severance pay as specified by law);
- a 40 per cent FGTS fine based on the amount deposited in the employee's dedicated FGTS account;
- any other labour right relating to the termination provided for in a current collective bargaining agreement; and
- any other compensation or benefit contractually agreed with the employee.
Termination with cause at the employer's initiative
- Salary balance in the month of termination;
- earned vacation and one-third additional payment; and
- a deposit in the employee's dedicated FGTS account (equivalent to 8 per cent of severance pay as specified by law).
Termination as a result of resignation by the employee
- Salary balance in the termination month;
- 13th-month salary (or prorated 13th-month salary, depending on the date of the termination);
- earned vacations and one-third additional payment;
- prorated vacation and one-third additional payment; and
- a deposit in the employee's dedicated FGTS account (equivalent to 8 per cent of severance pay as specified by law).
Termination by mutual agreement is also possible. In this situation, severance pay is the same as stipulated for a termination without cause at the employer's initiative, except for (1) the notice, which is reduced by half, and (2) the FGTS fine, which is also reduced by half (from 40 per cent to 20 per cent). Moreover, the employee may collect only 80 per cent of the FGTS deposited in his or her severance fund account.
In any termination, the law provides the employer with a limit of 10 days from the date of termination for paying severance.
There are three hot topics that should be closely monitored by companies in 2021.
The first relates to developments in the Supreme Court cases on the monetary update of labour-related debts. The official written decision should become available in early 2021 and it is expected that the parties involved in such cases file motions seeking clarification. These requests for clarification will be a good opportunity for the Supreme Court to refine its decisions and fill gaps. Further, it is important to monitor how the labour courts will react to these decisions as most labour judges tend to be protective towards employees.
Another relevant matter for 2021 is teleworking. Most employers decided to put their employees in working-from-home schemes during 2020 because of the covid-19 pandemic. Companies took advantage of an Executive Act issued by the federal government to facilitate the adoption of teleworking. However, this Act expired and the state of emergency declared by Congress came to end on 31 December. Therefore, companies that want to continue to offer employees working-from-home regimes, whether full-time or predominantly, must comply with the existing teleworking regulations, which include carrying out individual amendments to employment agreements. It is also advisable to put in place an internal teleworking policy. Most companies will have to review their teleworking procedures during 2021 to comply with the teleworking regulations.
In terms of judicial disputes in labour-related matters, it is expected that companies will face individual claims from employees for work-related illness because of covid-19 infections. Employees will probably seek damages alleging that they were infected in the workplace or because of their work (for instance, travelling and commuting, or attending business meetings and carrying out tasks in clients' premises and other places outside the company's premises). Former employees may also seek reinstatement to their positions, claiming that they had temporary job protection because of work-related illness. To have better chances of success in these types of disputes, it is important that companies make sure they are following all federal and local hygiene rules and HSE standards in the workplace.
Another hot topic in 2021 will be employers' capacity to compel their employees to have a covid-19 vaccine and whether they can punish or even dismiss employees who refuse to have the vaccine. On the one hand, there is the collective right to have a safe community and work environment alongside the the HSE regulations that require employers to maintain a safe workplace. However, on the other hand is the right for individuals to have their own religious beliefs and opinions. Further, there are individuals with specific health conditions that may make the vaccine dangerous. Discussions about these matters started in 2020 and it was possible to see very different opinions from lawyers, in-house counsels, judges, prosecutors, professors and other professionals in the labour field. The Supreme Court also ruled that although vaccination cannot be forced on people, it can be mandatory by means of indirect acts (such as prohibitions to take flights or to access certain private or public premises). Although this judgment did not concern an employment matter, and did not assess how far employers can go when it comes to protecting the workplace, it can be expected that employment-related cases will be filed with labour courts in 2021.