Employers must engage in a discussion with the employee unions before engaging in any mass terminations, according to a June 2022 ruling by the Brazilian Supreme Court. The ruling reverses lower labor precedent followed since 2017 and will apply to all mass layoffs going forward.
In the case, one of Brazil’s largest employers – a multinational aerospace company – engaged in about 4,000 layoffs back in 2009 without consulting the employee union. At the time, there was no specific regulatory requirement on mass terminations in Brazil’s labor code. When Brazil updated its labor laws in 2017, a component was added to the labor code which, according to L&E Global, stated that mass terminations did not require prior union consultation. Per the updates, labor courts in the country subsequently held union consultation was not necessary for a mass layoff.
The Supreme court’s ruling changes – but does not necessarily reverse – these labor court rulings. Specifically, the ruling held that a discussion – not to be confused with needing to secure approval – must be held. According to L&E Global’s citation of the case, the point is to create dialogue to work to ease the “social and economic impact” of the terminations.
HR Policy Global’s Take: Change of cadence for multinationals in Brazil. By requiring discussion, but not permission, companies considering mass layoffs will risk being ensnared with the union in an already hotly contested issue.