Key aspects of labor reform and the influences on eSocial

On Nov-11-2017, a new labor law entered into force, which is being considered as the biggest change ever in the Consolidated Labor Laws (Consolidação das Leis Trabalhistas - “CLT”). The doubts are still great among employers and workers, and some aspects of the Law 13,467/2017 will become clearer over time as a result of the new procedures and new case law by Labor Court.

Furthermore, on Nov-14-2017 Provisional Measure No. 808 was published, amending the rules related to pregnant women, self-employed workers, intermittent work, 12 working hours resting 36 hours and allowance, among other issues.

What are the major changes?

The labor reform will highly affect labor relations, influencing employment contracts, carrying the idea that deals should prevail on legislated. We prepared a list of 10 key changes:

1) Collective agreements

The collective labor convention and the collective bargaining agreement prevails upon the law when also providing for framework on hazard degree and journey extension in unhealthy places, including the possibility of hiring medical examination, excluding a prior medical-leave by Ministry of Work (MTb) competent authorities, in fully compliance with health, occupational health and safety standards provided by MTb law or regulatory standards.

In addition to the above cases, collective labor convention and the collective bargaining agreement prevails upon the law when deal with pact on working hours, annual time bank, intra-day range (subject to a minimum limit of thirty minutes for over than six working hours), positions and salaries plan, teleworking, profit sharing, among other issues.

2) Working hours

The 12 hours working hours per 36 rest hours, which is subject to collective bargaining and labor convention agreements was regulated, except for companies and health sector entities. Health care workers can perform individual written agreement with the employer to determine that kind of journey.

3) The intra-day interval

Failure to grant or partially grant the intra-day minimum interval for rest and meal implies a compensatory nature payment only suppressed the period, increased in 50% on the compensation amount of regular working hours.

4) Intermittent work

Workers are allowed to this mode, which is the labor agreement where the services provision under subordination is not continuous, alternating periods of service with inactivity, established in hours, days, or months, regardless of the employee activity and employer, except for the pilots, governed by specific legislation.

If the employee is not convened within one year, the intermittent employment contract is terminated. Moreover, when the contract ends, the indemnified prior notice shall be payable by half and compensation termination without a cause and other funds in full.

It was decided that, by December 31, 2020, the terminated employee with employment relationship agreement for an indefinite period might not provide services for the same employer by means of intermittent employment contract for a 18 months period counted from the termination date.

5) Self-Employed Worker

It is authorized to hire self-employed workers under non-exclusive agreement, continuous or not, apart from recognition of employment relationship. The self-employed worker may provide services of any kind to other services receivers with the same or not economic activity in any employment agreement form. Driver, estate broker, sales representative and other categories may be hired as self-employed workers.

The employer should be aware of the labor problems risk with this hiring mode. Working conditions must absence of a hierarchical relationship, a self-employment characteristic, otherwise, no matter the hiring form: the agreement is likely be canceled and recognized as an employment relationship (Article 9, of the CLT).

6) Vacation

The employee may enjoy vacation up to three periods, since agreed by employee, where one of them should not be less than 14 days and the others may not be less than 5 days, each. This possibility covers workers under 18 and older than 50 years-old.

Moreover, it is forbidden start the vacation two days preceding a holiday or a paid weekly rest day.

7) Home Office

Telework (providing service mainly outside the employer's facilities, using information and communication technologies, which, by its nature, does not constitute external work) should expressly state the individual employment agreement, specifying the activities and expenses for acquisition, maintenance, and supply of technological equipment and infrastructure required to provide the remote work.

The employer shall expressly and ostensive instruct the worker to prevent diseases and accidents at work, and provide a terms of responsibility for employee’s signature, under the commitment to follow the instructions received from company.

8) Termination of employment relationship

The employment relationship may be terminated by agreement between employee and employer, in which case the prior notice severance and FGTS balance (40%) indemnity will be payable by half and the other labor funds is payable in full. The termination of employment relationship agreement enables turnover of worker’s FGTS linked account, limited to 80% of deposits value, and does not authorize to enter into the Unemployment Insurance Program.

It is no longer a condition to validate the termination of employment relationship official confirmation at the Union or the Ministry of Labor authority, except for the cases of stable employees, in which this requirement remains.

The employer must give the employee the documents proving the communication of termination to the competent bodies, as well as the payment of amounts in termination instrument or payment receipt, up to 10 days from the contract termination.

9) Union Contribution

The union contribution became optional, as the discount of employees’ union dues is subject to prior authorization and expressed in behalf of representative labor union or profession.

10) Funds that are not part of salary

The amounts, although usual, paid as allowance, meal allowance, daily travel, and bonus that are not part of employee remuneration, do not take part into the employment relationship agreement and does not constitute tax base of any labor and social security burden.

The function bonuses given to those who hold a position of great responsibility at the company's hierarchy are part of the salary.

In addition, a limit for the allowance was fixed, which, in order to not be considered salary, may not be greater than 50% from the monthly remuneration.

Labor reform and eSocial

In addition to bring changes in the relationship between employers and employees, the Labor Reform will be incorporated into the Digital System for Bookkeeping of Taxes, Social Security and Labor Obligations (eSocial). With the effective date of Law No. 13,467 / 2017, eSocial was adapted to record transactions according to the new rules.

It is noteworthy that, from Jan-01-2018, the eSocial should be mandatory for companies that recorded the annual revenue in 2016 greater than BRL 78 million. The other companies and taxpayers should adopt the new system from Jul-7-2018.