New Law Changes Contingent Worker Landscape in Brazil

On March 31, 2017, Brazilian President Michel Temersigned a law that will significantly alter the contingent worker landscape in Brazil.  The statute is one of the government’s initiatives to modernize Brazilian labor laws in an effort to align itself with current business practices elsewhere.  These changes have been proposed in Congress periodically for nearly 20 years and were always defeated by its opponents on the left, until now.

The new law makes three major changes:

• Previously, employers were not permitted to outsource any core business activities to non-employees. Therefore, the use of contingent labor was largely restricted to activities such as cleaning and security.  With the new law, the restrictions on duties has been removed and companies can now use contingent labor for any business function.
• Liability in the past was shared jointly between the client (the consumer of contingent labor) and the staffing agency. Under the new law, the staffing agency has primary liability in case of any liability.  The client has secondary liability in case the staffing agency is unable to meet the obligations of a lawsuit.
• The length of assignment for temporary workers was previously limited to three months. Under the new law, temporary workers can have an assignment of up to nine months.  Contract workers, who are distinct from temporary workers under Brazilian law, now have an unlimited length of assignment.

While Brazil is Latin America’s largest economy, the country has been mired in a deep recession since 2014 and has an unemployment rate in excess of 12%.  Backers of the new law believe it will decrease costs of employment in Brazil and create a more competitive environment for companies, increasing growth and decreasing unemployment.  Brazil’s employment laws have not been changed significantly since the 1950’s and the cost to employ workers has significantly exceeded its neighbors’.

Pride has been on the ground in Rio de Janiero and Sao Paulo since 2012, providing recruiting and training services in-country.  We believe the time is right for global companies to take another look at opportunities to expand in Brazil, the world’s 5^thlargest country in population and 9^thlargest in GDP. Our local expertise makes us the ideal partner for global firms considering taking advantage of this new, contingent-friendly environment.